ECONOMIC ISSUES IN CONCILIATION AND ARBITRATION
| DOI | http://doi.org/10.1111/j.1467-8543.1977.tb00086.x |
| Date | 01 July 1977 |
| Published date | 01 July 1977 |
British Journal
of
Industrial
Relations
Vol.
XV
NO.
2
ECONOMIC ISSUES IN CONCILIATION AND ARBITRATION
LAURENCE C. HUNTER*?
I.
INTRODUCTION
Conciliation and arbitration have long been part of the British system of indus-
trial relations, but although
a
good deal of economic analysis has been devoted to
the bargaining process, and to its breakdown in the form of strikes, relatively little
attention has been paid to the economics of third-party intervention. This paper
seeks to remedy that deficiency,
at
least in part, by examining some economic
aspects of third-party involvement in disputes.
It
must be stressed
at
the outset
that this is set primarily within
a
British context, for while some parts of the
analysis may be wider in application, the particular
mores
and form of different
national legislative and institutional frameworks have an important bearing on
the third-party role, and generalisation about process and outcome is inevitably
hazardous.
Concentration on the economic aspects is not to be interpreted
as
implying that
only
an economic approach makes sense. Conciliation and arbitration, like other
issues in industrial relations, involve many different
considerations-institution-
al, sociological, psychological and legal, as well as economic. The point of applying
economic methods is
to
discover whether economics can help towards
a
better
understanding, but it must remain a partial contribution, to be supplemented by
other disciplinary approaches. It is in this spirit that the present paper is offered,
recognising that some experts may feel that other methods of analysis have more to
contribute on this topic. Given the wide range of possible influences in the area of
third-party involvement and the importance of subjective factors in the tactical
development of negotiation, one cannot disregard such opinion. But equally, that is
not sufficient reason for dismissing economics from this area.
Although the
processes
of third-party involvement are not central to the present
purpose, some initial definitions and perspectives are necessary, and these are
presented in Section
11.
Section
I11
moves on to the main economic issues, including
the reasons why parties to a dispute seek,
or
agree to, third-party intervention (and
why they may not do
so);
and a preliminary consideration of economic determin-
ants of conciliation activity. In Section IV we explore the choice between concilia-
tion and arbitration, and the nature of the public interest in third-party interven-
tion, which has led in Britain to the establishment of a public conciliation and
arbitration service. Section V provides
a
brief summary.
11.
DEFINITIONS
AND
PERSPECTIVES
Conciliation and arbitration have in common the introduction of a third, impar-
tial party into the negotiating process to assist in the resolution of a dispute. The
need for such involvement arises from a recognition by at least one party that
*
Professor of Applied Economics, University of Glasgow.
1
Thanks for comments
on
an
earlier draft are due to the editors
of
this issue, the members
of
a seminar at Aberdeen University and to my Glasgow colleagues, Phil Beaumont, Mike
Farbman, Charles Mulvey and Andrew Thomson: if this collective advice has not entirely
been translated to the best effect, the responsibility is the author’s. The assistance of A.C.A.S.
in providing data on conciliation is also gratefully acknowledged, as
is
the computational
assistance provided by Margaret Sharp.
226
ECONOMIC
ISSUES
IN CONCILIATION AND ARBITRATION
227
voluntary agreement is not likely to be reached without some assistance from
outside. The condition for such involvement will normally be that both parties
eventually agree to call on outside help, but of course one party may take the
initiative. There are important differences, however, in the two approaches,
The essence of conciliation is that when bargaining reaches deadlock
a
third,
independent party is introduced
to
try
to
help the protagonists towards a solution.
Each stage of the process is voluntary, and the role of the conciliator is
to
clarify the
areas of agreement and disagreement,
to
act as an intermediary in the exchange of
information and proposals, and to suggest approaches to a settlement. At no stage
does the conciliator have authority to make an enforceable judgement and he must
work by trying
to
move the position of
at
least one party to break the deadlock. The
decision to remain in conciliation,
or
to reject any of the approaches suggested,
resides with the principal parties.
Whereas conciliation is
a
continuation of the negotiating process, arbitration is
essentially
a
recognition that further negotiation will be fruitless and that a
settlement will have to be imposed from outside. The arbitral role is thus one of
hearing the cases presented by the parties, and reaching
a
decision in favour
of
one
side or the other
or
(not infrequently) making some compromise award. Normally
this award is not enforceable, but in practice nearly all awards
are
implemented
even if
a
party is unhappy about the outcome. Not to accept an award is to
depreciate the contribution of future arbitrations, and the short-term disadvan-
tage of a particular award needs to be weighed against the long-term value of this
way out of deadlocked disputes.
In both conciliation and arbitration, the timing of intervention is important.
Where disputes have not been taken through all stages of procedure, or where in
the absence of formal procedure negotiations have been incomplete, the introduc-
tion of a third party may undermine the bargaining machinery by encouraging
half-hearted or irresponsible stances in the expectation that
a
third party will
‘rescue’ the situation.
It
is important then that the parties should not be pressed too
quickly into seeking third-party assistance. For similar reasons, it is important
that the authority of official negotiators should not be undermined by providing
third-party services in unofficial or unconstitutional disputes, over the heads of the
official representatives (in practice this will be on the trade union side). Thus in the
case of an unofficial strike, conciliation will normally be restricted to discussions
with authorised officials of the trade union concerned, although unofficial leaders
may be present, and the conciliation function will be directed towards achieving
a
resumption of work and the rechannelling of the dispute back into regular pro-
cedural form. As Goodman and Krislov have recently summarised the position,
‘Third-party conciliation is thus supplementary to established machinery: it is
voluntary, and policy has invariably been to prevent
it
undermining or becoming
a
substitute for these preferred methods.”
These observed constraints on conciliation, together with the very high propor-
tion of all British strikes that are unofficial and unconstitutional, have produced
a
situation in which, measured in simple quantitative terms, the contribution of
conciliation has remained relatively small, until very recently. Over the last
fifteen years or
so,
when the number of industrial stoppages has ranged between
1,100
and nearly
4,000
a
year, the number
of
conciliation cases has generally been
less than
500,
although there has been a sharply rising trend since 1970-a matter
to which we shall have to return. However, care has
to
be taken in the interpreta-
tion of these figures, for a number of reasons. In the first place, the number of actual
stoppages of work is only
a
small fraction of the total annual number of disputes,
and it is properly this latter which should be used
as
a
base for assessing the
quantitative importance of conciliation. Secondly, not all efforts
at
conciliation
are
To continue reading
Request your trial