Collective Bargaining and Disclosure of Information: A View From Labour Economics

Pages45-51
DOIhttps://doi.org/10.1108/eb055367
Published date01 March 1978
Date01 March 1978
AuthorTerry Sullivan
Subject MatterHR & organizational behaviour
Collective Bargaining and Disclosure
of Information: A View From Labour
Economics
Terry Sullivan
Lecturer in Labour Economics
and Industrial
Relations,
Department
of Adult
Education,
University
of Nottingham
Introduction
Industrial relations can be said to be concerned with who
makes the rules relating to employment matters, what rules
will exist and how any adjustments to such rules will be
made. In a large number of industrial relations systems the
process of adjustment is by collective bargaining, and most
industrial relations commentators and practitioners would
accept that the scope for adjustment is constrained by
economic, social and political forces. However, the practi-
calities and dynamics of this adjustment process are such
that decisions can only be in terms of what Williamson[l]
calls 'bounded rationality'. This is a situation where at the
moment of decision, given the quantity and quality of
information that is held, that decision seems rational and
acceptable. However, innate imperfections in information
and its flow eventually show the decision to be something
less than satisfactory. Further, many writers believe that
collective bargaining is characterised by management and
labour having, at the very least, potentially conflicting
objectives so that for each'bounded rationality'is different.
The practical results are often some 'compromise' or
'optimal' outcome that temporarily satisfies the welfare of
the parties but can rarely maximise it. However, we should
note that while the parties may reach a jointly satisfactory
outcome, that outcome could be less than optimal for
society as a whole; an inflationary wage settlement is the
most obvious example.
This indicates that, if adjustments in the industrial relations
system are to be 'optimal', a requirement would seem to be
an adequate supply of information upon which the parties
can base their decisions. By the very nature of the employ-
ment relationship employees have long recognised that the
advantage in terms of quality, quantity, costs and benefits
of information lies with the employer. Hence the long,
historic calls by trade union representatives that employers
should 'open the books'.
Recent history of disclosure of information
In most advanced Western industrial nations the State tends
to believe that collective bargaining is a good thing and
should be encouraged. In recent years British governments
appear to have realised that the corollary of this is that
some degree of information should be made available to
employees for collective bargaining purposes and a number
of governmental and academic documents on this matter
have appeared. Two questions can be applied to this subject.
First, what information is to be disclosed; secondly, what
effect will disclosure have on industrial relations. The first
official statement on disclosure appears to have come in the
ill-fated White Paper, In Place of Strife [2] in which it was
proposed to make disclosure of information to trade unions
a legal requirement. At this stage what should be disclosed
was not known and the White Paper simply talked of 'cer-
tain sorts of information'. As to the possible effects on
industrial relations, the authors felt lack of information
limited the scope of collective bargaining and that it
damaged industrial relations by 'encouraging a retreat to
entrenched positions'. This implies that lack of information
could therefore be a cause of stoppages. Indeed, the assump-
tion that the British strike record was a major contributor
to our relatively poor economic performance underlay
much of this and later official documents.
Although In Place of Strife was withdrawn after trade
union and parliamentary protest, the theme of disclosure
was taken up by the Conservative Government as part of
their Industrial Relations Act, 1971. Here again no indica-
tion of what to disclose was given, but personal confidential
information would not be disclosed and neither would
information which 'would be seriously prejudicial to the
interests of the employer's undertaking'.[3] It was proposed
to draw up a Code of Practice which would set out 'guide-
lines'.
Again, the effect on industrial relations of releasing
more information was thought to be only for the good.
Section 56 of the Industrial Relations Act, 1971 did indeed
make it a general duty on the part of employers to disclose
information which was in line with a Code of Practice and
without which the trade union representatives would be
impeded in carrying out collective bargaining. The Code of
Practice was based on a report which the now defunct
Commission on Industrial Relations was asked to carry out.
The provisions of the Act were never put into practice. It
took the Commission on Industrial Relations over two
years to produce a report and by the time the Government
could get around to considering it, they had lost office and
the incoming Labour Government repealed the Act.
The CIR Report
The CIR Report[4] begged the question of what informa-
tion should be disclosed by opting for 'guidelines' under the
broad headings of organisation, pay, manpower conditions,
finance and future plans and prospects. They recommended
that management should formulate a policy on disclosure
and suggested that such a policy should include frank and
open discussions with the trade unions concerned. They
also suggested that unions decide what information is rele-
vant to their policies and where possible should use their
own initiative and endeavours to use the information which
is publicly available but not necessarily in a usable form.

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