Decentralising social dialogue: panacea or illusion?

Analysis

Decentralisation of collective bargaining has been one of the key trends concerning labour market regulation of the last decades. Most of European countries have developed – with different breath and scope – procedures and reforms to strengthen the company level of bargaining. The Great Recession has stressed this orientation, particularly in those countries which were under financial pressure. One of the motives is that European institutions (both the Commission and the Council), through the European Semester, have been systematically promoting decentralisation of collective bargaining as one of the main measures to modernise European labour.

The reasons have their roots in very different aspects. Countries with an intermediate degree of centralisation can achieve better employment and inflation results by pursuing greater decentralisation of wage setting (through collective bargaining). Additionally, in the presence of productivity differentials across industries and regions, decentralisation can make wages responsive to these differences. This is due to the fact that company level bargaining better accommodates incentives to achieve higher levels of efficiency, for example, by productivity-related pay. Summing up, decentralisation would better serve the needs of both companies and job seekers, while improving overall labour market efficiency and job creation.

This paper from Marc De Vos (Visiting Fellow Itinera and Dean Macquary University Sidney) and Daniel Pérez del Prado (PhD. Associate Professor at the Department of Social and International Law of Carlos III University of Madrid) focuses on the cases of four Mediterranean countries – France, Italy, Spain, and Portugal – in order to assess how decentralisation has been carried out and, most importantly, what kind of practical results have been achieved.