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OECD finds that centralised or coordinated collective bargaining strengthens labour markets

13 June 2017

The 2017 Employment Outlook the OECD published today concludes that centralised and coordinated collective bargaining systems is one of the only two labour market institutions that work to keep unemployment under control when the economy is hit by a shock.

In doing so, the OECD confirms trade union experience. When the economy improves, centralised or coordinated bargaining ensures that the benefits of a growing economy are widely shared amongst workers. When the economy worsens, such bargaining makes it easier to find adjustment through wages and working time thereby avoiding a massive wave of workers being fired throughout the economy.

The OECD also makes the link with short-time work schemes that partially compensate for lost wages, correctly pointing out that such systems often require the involvement of social partners.

It is essential that the OECD, governments and other international institutions align their policies with this conclusion. The “old” labour market reform agenda of fragmenting wage formation systems by pursuing company-by-company bargaining needs to be replaced by a policy agenda that promotes strong and coordinated social dialogue.

Commenting on the publication the TUAC General Secretary John Evans said “The OECD is now recognising that higher level bargaining and coordinated collective bargaining improves labour market performance. The OECD now has to translate this into country recommendations that strengthen collective bargaining systems instead of going for uncontrolled decentralisation”.