BARGAINING STRUCTURE AND RELATIVE EARNINGS IN GREAT BRITAIN*
| Published date | 01 July 1977 |
| Date | 01 July 1977 |
| Author | A. W. J. Thomson,M. Farbman,C. Mulvey |
| DOI | http://doi.org/10.1111/j.1467-8543.1977.tb00083.x |
British
Journal
of
Industrial Relations
Vol.
XV
No.
2
BARGAINING STRUCTURE AND RELATIVE EARNINGS IN
GREAT BRITAIN*
A.
W.
J.
THOMSON, C. MULVEY
AND
M.
FARBMAN~
THE issue of bargaining structure became one
of
the main focal issues in the debate
on the British industrial relations system
as
a
result of the report by the Donovan
Commission in
1968.
However, since then there has been little further detailed
analysis
of
its
implications, partly because bargaining structure is extremely
difficult
to
define and categorise,‘ and partly because there is no accepted theory
concerning the outcome of different types of bargaining structure and hence no
effective concept of
the
optimum structure in any particular circumstances. In this
article we wish to use
1973
New
Earnings
Survey data to carry out
a
ground-
clearing exercise, namely examining the earnings associated with various bar-
gaining structure categories, and relating the findings to hypotheses inferred from
the existing literature.
As
Ulman has noted ‘The availability of reliable informa-
tion on the economic effects
of
bargaining structure would be most useful in
assessing the relative returns to alternative policy combinations’.* We cannot
however claim to be taking more than the
first
step in pursuing Ulman’s objective.
For
one thing, to do this accurately requires standardising for possible intervening
variables which we are unable
to
do
at
present. Another factor is that the introduc-
tion of policy implications raises other questions which we can only touch on. In
particular it implies the concept of an optimum bargaining structure, but this in
turn raises the issue of whose viewpoint is being considered. Unions and work
groups, companies, plants, and employer associations may well have different and
non-complementary objectives in bargaining structure, and the national interest
may well be different yet again. Moreover, optimality implies some criteria of
efficiency and we are not yet in a position
to
provide these, since apart from the
points already made, bargaining structure must also take account
of
many factors
other than earnings. Finally, there is the question of whether bargaining structure
is
an exogenous or an endogenous variable. Despite these difllculties
a
start
must
be made in providing
a
basis
for
the economic analysis of bargaining structure and
we offer
a
commentary on the cross-tabulated data
as
a
first step
in
this
direction.
I.
THEDATA
For the purposes of our project, the Department of Employment provided
us
with
special analyses of theNew
Earnings
Survey
1973
data which they compiled to our
specification. The specification took the form of computer programmes which we
prepared. The analyses did not disclose any confidential data provided by em-
ployers
on
the survey returns. The information itself consists of cross-tabulated
data on earnings by type of agreement by industry, sex and manuahon-manual
status. The sample size
is
extremely large, covering for our purposes some
137,000
full-time employees aged twenty-one and over in the case of males and eighteen
*
We are grateful to the Department
of
Employment and especially Tom Kavanagh and
Trevor Williams for providing substantive and methodological assistance with the data in
this article,
to
Ms.
Sophie Houston for carrying out the programming, and to the Social
Science Research Council for a research grant. We also acknowledge helpful comments on
an earlier draft by Dr
P.
B.
Beaumont,
Dr
S.
R.
Engleman, and Professor
L.
C.
Hunter.
t
The authors are respectively Senior Lecturer in Applied Economics, Senior Lecturer in
Applied Economics, and Lecturer in Applied Economics at the University of Glasgow.
176
BARGAINING STRUCTURE AND RELATIVE EARNINGS
177
and over in the case of females, excluding those whose pay was affected by absence
during the relevant pay-period including the survey references date in
1973.
The
wording of the relevant question in the
Survey
was: ‘Please indicate the type of
negotiated collective agreement, if any, which affects the pay and conditions of
employment of this employee, either directly
or
indirectly’. Four mutually exclu-
sive collective agreement types are identified in the N.E.S.:
(a)
national agreement
plus supplementary company/district/local agreement; (b) national agreement
only;
(c)
company/district/local agreement only; and (d) no agreement. The cross-
tabulated data indicate gross earnings, weekly and hourly,
at
mean values and by
components (overtime, incentive pay and shift premia) and also the distribution
of
earnings. The data are of course not perfect; as with all large-scale sample surveys,
the N.E.S. is inevitably subject
to
statistical sampling error and, despite checking,
to
some minor inaccuracies.
It
should also be noted that the question asked about
pay and conditions; it is thus possible that in some cases pay might be negotiated
at
one level, conditions
at
another, and hence the employee would have been reported
as affected by both a national and
a
local agreement, even though our interest is in
pay alone. Finally, there is inevitably some interaction between the covered and
non-covered groups via the labour market. In this sense the pay of all employees is
‘affected’ by collective agreements, but we assume that this type of influence was
not what employers had in mind when answering the question. Certainly few
employers found any ambiguity in the question.
The basic bargaining structure, broken down into the subgroups
to
which
our
earnings data refer, is given in Table
1.
As
can be seen, there are very substantial
differences between and within both the industrial and labour force groupings.
It
is
beyond the scope of this paper to try
to
explain these in detail, but two or three
points should be made. First, there is a very considerable difference between
coverage by collective agreement and union membership; in
1973
the percentage of
the total N.E.S. sample covered by a collective agreement was
71.8,
while accord-
ing to Price and Bain,3
48.5
per cent of the labour force were union members in
1973.
Thus almost a quarter of the labour force would appear to be covered by
collective agreements without being union members. Second, in looking
at
trends,
there is,
as
might be expected, a fairly close correlation between the growth of
agreement coverage and union membership growth, although with the former
growing somewhat faster. We have made some crude calculations using the
1968
and
1970
N.E.S. data on bargaining structure, which, although not directly com-
parable with those for
1973,
show in rough terms that the percentage of the N.E.S.
sample covered by collective agreements has risen from approximately
62.0
per
cent to
71.8
per cent between
1968-73,
while the Price and Bain data suggest an
increase in union membership from
43.1
per cent in
1968
to
48.5
per cent in
1973.
Third, within the bargaining categories themselves, the most noticeable feature is
a
small but clear trend towards company, district and local agreements, the great
majority of which we estimate
to
be comprised of company agreements. This is of
course in line with the Donovan recommendations, with the publicity given
to
such
companies
as
Chrysler, Dunlop and Cadbury which have left employer associa-
tions, and with general observations about developments in bargaining ~tructure.~
11.
ASSUMPTIONS
AND
HYPOTHESES
RELATING
TO
BARGAINING
STRUCTURE
There is only a limited literature in Britain on the analysis of bargaining
structure, and much of what exists is concerned with institutional rather than
economic i~sues;~ the American literature is somewhat more comprehensive and
theoretical, with such writers as Livernash and Weber examining the determin-
ants and impact of different types
of
bargaining structureI6 but this work has also
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