Partnership under pressure: shifts between stability and fragility in decentralised bargaining in Danish and Australian Manufacturing

Anna Ilsøe
, Andreas Pekarek og Ray Fells

The decentralisation of collective bargaining has been a major trend in many developed economies over recent decades. This downward shift in agreement-making has added a new dimension of volatility to the relationship between unions and employers, notwithstanding differences in the bargaining frameworks across countries. Seemingly durable and productive union-management relationships can deteriorate and collapse; difficult relationships can be constructively reformed. These phenomena are beginning to receive renewed attention in an emergent literature on decentralized agreement-making, but our understanding of the processes and dynamics of company-level bargaining is incomplete. This paper seeks to develop a better understanding of the factors that shape the trajectory of decentralized bargaining arrangements in practice, through a comparison of local union-management negotiations in Australia and Denmark.

Our theoretical departure point is Walton et al.’s (1994) work on strategic union-management negotiations. In particular, we build on their ideas about the interactions and outcomes of negotiations to posit that collective bargaining relationships can be classified along a spectrum from fragility to stability. Our aim is to elaborate the factors which explain differences in the dynamics and outcomes of decentralized union-management negotiations.

Our analysis is empirically grounded in case studies of local union-management negotiations in Australia and Denmark. We selected countries with dissimilar frameworks for decentralized bargaining to assess the relative importance of institutional factors in shaping the nature of local union-management negotiations. In Australia, decentralized bargaining is highly regulated and provides the means by which workers can attain terms and conditions above the minima set out in industry-specific ‘awards’ determined by a government regulator. By contrast, decentralized bargaining in Denmark is far more voluntarist and serves to customize the provisions set out in sector-level collective agreements.

At the same time, we sought to control for other variables by matching our cases at the industry level. Specifically, we conducted two in-depth case studies of local union-management negotiations in closely matched Danish and Australian manufacturing firms. Our analysis is based on ‘process tracing methodology’ and draws on multiple interviews with the main negotiators from both the union and the management side throughout the 2014 collective bargaining round, as well as non-participant observation of negotiations.

We identify three key factors that are critical in shaping the quality of decentralized bargaining relationships at local level: the extent to which the parties attain their goals; the distribution of power between the parties; and the interpersonal dynamics (including trust and information exchange). However, the voluntarist regulatory frame work in Denmark appears to leave local negotiators with a larger room for manoeuvre to develop these factors compared to the legalistic regulatory frame work in Australia. Our findings have implications for both bargaining practice and public policy. In practical terms, the stability / fragility of bargaining relationships is likely to influence the viability of mutual gains bargaining and, more generally, the pursuit of union-management ‘partnerships’. At the public policy level, our findings suggest that differences between the institutional settings of national industrial relations systems may tend to push company-level bargaining towards either fragility or stability.