Bargaining (De)centralization, Macroeconomic Performance and Control over the Employment Relationship

Published date01 March 2003
DOIhttp://doi.org/10.1111/1467-8543.00259
AuthorFranz Traxler
Date01 March 2003
Bargaining (De)centralization,
Macroeconomic Performance and
Control over the Employment
Relationship
Franz Traxler
Abstract
Based on data for 20 OECD countries, this p aper analyses the effect of bargain-
ing centralization on performance and control over the employment relationship.
Rejecting both the corporatist thesis and the hump-shape thesis, the paper finds
that performance either increases or decreases with centralization, depending
on the ability of the higher level to bind lower levels. There is a clear effect on
control in that bargaining coverage significantly declines with decentralization.
Employers can therefore expect to extend management prerogatives, rather than
improve performance, when enforcing decentralization. Hence the literature on
bargaining structures when focusing on performance has lost sight of their
contested nature.
1. Introduction
Few issues have proved to be so contested in both industrial relations practices
and scholarly debates as the (de)centralization of collective bargaining.
Regarding practices, Crouch (1993a: 881) has noted that the conflict over
the level of bargaining ‘seems like the working out of a Hegelian dialectic’.
Since the late 1960s and early 1970s, militant shop-floor groups have pressed
for the decentralization of bargaining. In stark contrast to shop-floor labour
movements, employers pursued an objective of centralization until the late
1970s. Characteristically, the most centralized bargaining systems across the
OECD, as established in the Scandinavian countries, were all launched by
the employer representatives (Bowman 2001; Due et al. 1995; Swenson 1991).
Since the 1970s both sides of industry have reversed their position, in that it
is now organized labour that defends multi-employer settlements at branch
or central level against employer attacks. Similarly, scholarly debates on
Franz Traxler is at the University of Vienna.
British Journal of Industrial Relations
41:1 March 2003 0007–1080 pp. 1–27
#Blackwell Publishing Ltd/London School of Economics 2003. Published by Blackwell Publishing Ltd,
9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.
bargaining (de)centralization have been highly controversial, as far as the
economic performance of alternative levels of bargaining is concerned.
But how do these two controversies relate to each other? One possible
interpretation is that the conflicts over bargaining practices are driven by a
concern about the comparative performances of the distinct bargaining levels.
The most rigorous version of this argument is that performance require-
ments and any changes thereto determine and shape industrial relations
practices. With regard to the above question, this reasoning contends that
the observed tendencies of decentralization are the irresistible consequences
of the shift from Fordist to post-Fordist production systems and the cor-
responding changes in performance requirements for bargaining (Swenson
and Pontusson 2000). The alternative is an agency-centred perspective which
interprets the conflict over the bargaining level as part of the struggle for
power and control over the terms of employment (Tho
¨rnquist 1999). This
qualifies the relevance of performance, which then works as a justification of
an actor’s preferred bargaining level in public discourses rather than as an
economic imperative for a certain bargaining level.
The first line of reasoning clearly dominates the recent literature on
bargaining, in that it has focused overwhelmingly on efficiency outcomes
and has rather lost sight of the earlier concern with the contested nature of
the bargaining structure. This paper examines whether this predominant
view matches reality. On the basis of a comparison of 20 OECD countries
for 1970–96, I empirically examine the significance of the conflict over the
bargaining level by comparing the scale of its impact on economic perform-
ance with its effect on the control of the employment terms. The more
indeterminate are the economic effects of bargaining (de)centralization, and
the more far-reaching its consequences for control, the more strongly do
considerations of power tend to dominate performance in (de)centralization
processes, and vice versa. Hence the structure of the paper is as follows.
I begin with a review of the literature on centralization and performance,
which provides the basis for formulating an alternative hypothesis. Since
this hypothesis implies that control considerations may affect the bargain-
ing level much more than mainstream reasoning suggests, I then focus on
how control considerations relate to centralization. This is followed by a
description of the operationalization of the key variables. I then present the
empirical findings on the performance effects of bargaining centralization
and their impact on control over the employment relationship, and also
analyse the interplay of performance and control. I conclude by summariz-
ing these findings and discussing their implications for the future develop-
ment of bargaining.
2. (De)centralization and performance
Discussions of the performance effects of the bargaining level tend to concur
with regard to the highest (i.e. cross-sectoral) degree of centralization, but to
2British Journal of Industrial Relations
#Blackwell Publishing Ltd/London School of Economics 2003.

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