Opting Out of Pay Devolution? The Prospects for Local Pay Bargaining in UK Public Services

Abstract : Throughout the 1980s, government ministers strongly advocated the decentralization of pay determination in the public services. Despite this exhortation, by the end of the decade rates of pay and salary structures were rarely determined at workplace level. This paper explores the resilience of national pay determination and considers whether it will survive the radical restructuring of public services initiated in the last few years. The analysis focuses mainly on the health and education services, arguing that distinctive organizational, occupational and political characteristics of the services still constrain the devolution of pay bargaining. In the face of tight budgets and the recent introduction of pay restraint, service managers have sought to make paybill savings through unilateral changes in work organization rather than through devolved collective bargaining.     

Incomes Policy for Europe? or Will Pay Bargaining Destroy the Single European Market?

With European economic and monetary union, pay bargaining encounters a new set of constraints: devaluation is no longer available to compensate for inflation, and economic restructuring for the Single Market will place great strain on wage structures. The article analyses the problems posed to pay bargainers, and argues that, instead of pressing for more centralized bargaining, greater encouragement should be given to pay systems that favour more flexible use of labour and reduce the tendency to transmit inflationary pressures from one group to another. Joint regulation has a critical part to play in the effectiveness of these systems.     

Workplace Industrial Relations 25 Years after Donovan: An Employer View

Some common management themes of the 1980s can be traced to Donovan and are revealed in practice by the 1990 Workplace Industrial Relations Survey. The paper considers the relevance of factors not endorsed by Donovan and concludes that, while in terms of industrial action in manufacturing — the focus of concern in the mid-1960s — there is evidence that more order and responsibility has been injected into industrial relations at plant level, we cannot yet maintain that inflationary dangers have been overcome. Collective bargaining is, however, now revealed as affecting only a minority in the private sector, and public services behaviour looks increasingly out of step. The paper suggests that future surveys may therefore need to be recast to capture changing patterns of employer – employee relationships and their links to economic success.     

Gender Pay Gap,Voluntary Interventions and Recession: The Case of the British Financial Services Sector

State institutions and trade unions put pressure on the British financial services sector to reform its gendered practices and reduce its gender pay gap following both the recession and the Equality and Human Rights Commission (EHRC) Inquiry (2009). This article considers the effect of these pressures by comparing the gender pay gap pre‐, during‐ and post‐recession periods. Using Labour Force Survey data, the article finds a marginal pay gap reduction in the post‐recession period, a reduction that was greater in financial services than in the rest of the economy. However, the financial services pay gap remained resilient and substantially higher at the top of the earnings distribution. Union membership and collective bargaining were shown to reduce the pay gap including for women members with children. In contrast, countervailing factors, including ethnicity and post‐recession longer working hours, contributed to the pay gap. The study reveals the limitations of voluntary interventions against a resilient gendered culture.     

The Limits on Pay as a Strategic Tool: Obstacles to Alignment in Non‐Union Environments

Strategic human resource management literature emphasizes the potential of pay to secure strategically desirable employee outcomes for the employer. Strategic pay, in contrast with pluralist models of pay determination, assumes an absence of collective bargaining constraints. This article analyses the process of determination of non‐unionized managerial, professional and technical pay in seven leading consumer goods firms that claim to use pay as a strategic tool. It demonstrates that implemented pay practice is often remote from what is aspired to strategically. Despite the absence of collective bargaining constraints, there remain unavoidable obstacles to the ability of management to implement pay systems aligned to strategic goals. These constraints impose fundamental limitations on the use of pay as a strategic tool.     

Internalization v. Decentralization: An Analysis of Recent Developments in Pay Bargaining

It is commonly assumed, particularly within the human resource management literature, that decentralized bargaining, performance-related pay and individualized wage-setting arrangements represent a further extension of the internal labour market and a source of efficiency gains in production. Drawing on new data on company pay policies, this paper advances an alternative interpretation of recent innovations in pay and bargaining. It is argued that moves to fragment bargaining and reward systems threaten to undermine the organizational principles of internal labour markets and may, therefore, raise the costs of managing the employment relationship.     

Variable Pay and Collective Bargaining in British Retail Banking

The growth of variable pay schemes (VPS) appears to threaten collective approaches to pay determination, which are based on standardization and centralization. This article utilizes case study research to analyse the still little‐known relationship between collective bargaining and VPS. It focuses on the retail banking sector, where trade union representation and collective bargaining remain relatively robust. The research identifies an emergent process whereby the growth of bonus schemes has both supplanted collective profit‐share and permitted greater standardization of merit‐pay awards. Unions have therefore achieved some success in terms of limiting variation in base pay, at the same time as the overall purchase of collective bargaining on employee earnings has diminished. The factors contributing to this development are explained.     

Comparative Industrial Relations Research: Towards Reversing the Gender Bias

This paper seeks to begin the reversal of the gender bias in comparative industrial relations research which is still focused on comparing and contrasting the regimes that cover mainly male manual workers. There is little systematic evidence on industrial relations practices in private or even public services, for non-manual workers or for atypical workers. These employment areas are central for women's employment and are of increasing importance in the labour market, but few attempts have been made to compare industrial relations regimes by reference to the protection they afford to women. Taking into account industrial relations practice in these areas can change significantly the classification and estimated coverage of collective bargaining systems. By 'mainstrearning' gender issues it also becomes clear that current macroeconomic policy proposals have major gender implications that are ignored in current debates     

Contesting Local Pay: The Decentralization of Collective Bargaining in the NHS

Local pay determination formed a key plank in the Conservative government's attempt to restructure industrial relations in the NHS, and to 'reassert managerial control' of the paybill at local (trust) level. This paper reports the findings of a national survey of Unison lead negotiators, complemented by case study interviews and documentary research, on the processes and outcomes of local pay determination, and its impact on industrial relations at both national and local levels. The paper strongly refutes recent suggestions that local pay leads to 'improved' industrial relations and greater pay equity. Moreover, and contrary to claims that Staff Side organizations are 'too weak' to challenge 'new managerial strategies', the study's findings show that the search for managerial control remains, as always, a contested terrain.     

Licensing Strategies in the Presence of Patent Thickets

Many key industries (e.g., biomedical, pharmaceuticals, telecommunications, and information technologies) are characterized by cumulative innovations, where the introduction of a new product or service often requires many complementary technologies. When these technologies are protected by intellectual property rights owned by many firms, patent thickets exist, which researchers have argued may hinder the development of cumulative innovations. Specifically, patent thickets may lead to excessive royalty burdens for potential licensees, which is called “royalty stacking,” and if such costs are passed on to consumers, prices of products based on cumulative technologies will be driven up, dubbed as “double marginalization.” The literature, however, does not address these issues under different forms of licensing contracts. This article develops a game‐theoretic model where a downstream firm seeks to license N patents that read on its product from upstream firms. It discusses a variety of licensing forms widely used in practice and attempts to discover whether royalty stacking and double marginalization occur under these forms of licenses. It also studies the impact of bargaining power between parties. It is found that when patent ownership becomes more fragmented, neither royalty stacking nor double marginalization occurs under profit‐based royalty, fixed fee, and hybrid licenses. Such problems occur only under pure quantity‐based or pure revenue‐based royalty licenses when the downstream firm's bargaining power is low. It is also shown that no matter how fragmented the ownership structure of patent is, hybrid licenses consisting of a fixed fee and a quantity‐ or revenue‐based royalty rate lead to the same market outcomes as a fully integrated firm that owns all the patents and the downstream market. This article has interesting implications for both research and practice. First, the results show that even under the same patent ownership structure, different forms of licenses lead to quite different market outcomes. Therefore, it is suggested that firms and policy makers pay more attention to contractual forms of licenses when trying to minimize the negative impact of patent thickets. Second, the extant literature has largely assumed that quantity‐based royalties are used, where double marginalization is the most severe. In practice, revenue‐based royalties are most common, under which double marginalization is much milder. Third, the results show that patent pools can be most effective in mitigating royalty stacking and double marginalization when quantity‐based or revenue‐based royalties are the sole or primary payment form, especially when downstream firms have low bargaining power.     

Strategy and Circumstance: The Success of the NUJ's New Technology Policy

This article assesses the success of the National Union of Journalists (NUJ) in negotiating the introduction of computerised editorial systems (direct input) into provincial newspapers. It employs a quantitative and qualitative analysis to suggest that the NUJ has been exemplary in using the New Technology Agreement (NTA) as a bargaining tool in order to limit the negative effects of technological change and to secure notable benefits — particularly pay increases. This contrasts with other survey evidence which concludes that NTAs have fallen short of the TUC's original objectives in advocating their use. The success of the NUJ is attributed to an appropriate match between the union's new technology policy/strategy and the particular industrial circumstances. It may also explain the recent moves towards decollectivisation in the newspaper industry.     

Integration and Dealignment in Public Enterprise Industrial Relations: A Study of British Rail

This paper considers whether a process of dealignment of workplace organizations from the national union and industrial relations system has occurred in British Rail. As a starting point, it is noted that workplace representatives have traditionally been closely integrated with other actors in the system. Integration has been based on the supply of bargaining resources by the national union and other bargaining institutions. If new management industrial relations policies have cut back the supply of these, it is possible that workplace organizations will dealign themselves from the national union. This hypothesis is considered using data obtained from a survey of train drivers' representatives. It is found that there is no evidence for dealignment and that in a significant minority of cases closer rather than weaker links are being forged.     

The Union Response to International Corporations

The purpose of this paper has been to examine, on a pre-liminary basis, some of the implications of the international corporationunion interface for individual countries. It has been suggested that the impact of this interface will depend on the production strategy of the international corporation, the solidarity of the coalition of the unions in different countries, and the economic and political conditions prevailing in the individual countries. In order to gain a deeper understanding of the bargaining relationship between unions and international corporations, it is suggested that research will have to be conducted on the following topics: the industrial relations decision-making process of international firms, in particular the ways in which these firms react to international collective bargaining; the alternative strategies open to unions in international collective bargaining; the impact of international unionism and international firms on the industrial relations system of individual countries; the problems associated with international collective bargaining involving unions with different political ideologies; and the impact of international unionism on economic and political integration and the perception of national governments.     

Generating Equality? Equal Pay,Decentralization and the Electricity Supply Industry

Despite the existence of effective equal pay legislation in the UK since 1975 aimed at eradicating pay discrimination, women are still in receipt of only 79.5 per cent of the hourly earnings received by men (EOR 1994b). Whitehouse (1992) claims that a centralized collective bargaining model is more likely to lead to equality for women in the labour market than a liberalized individualistic model. The model was tested at an aggregated level for 13 OECD countries. This article provides a case study which charts a trade union claim for equal pay over a period often years (1984–94), which may be seen as an examination of the Whitehouse proposition at a disaggregated level. The paper highlights the barriers to equality bargaining and analyses the case study to identify the criteria necessary for achieving equality.     

Annual Review Article 1989

This Annual Review Article 1989 considers the rising trend in inflation and earnings and indicates that in a wide variety of industries there was a marked upturn in union bargaining activity and industrial conflict. The Review considers some significant changes in employer preferences for particular unions in new or revised bargaining structures, and concludes with an examination of the debate concerning the 'juridification' of collective bargaining in the context of a possible return to 'adversarial' as opposed to 'new' industrial relations.     

The Impact of Competition on Investment: Evidence From California Hospitals*

I examine the relationship between bargaining leverage and capital investment using data on California’s hospital markets. I find evidence that investment increases with bargaining leverage; a hospital whose bargaining position improves by one standard deviation will increase its investment rate by 16 percentage points. A positive causal relationship between bargaining leverage and investment fits the institutional details of the health care sector, where many firms have non-profit tax status, making it difficult to return monopoly rents to shareholders. Consistent with this explanation, I find that non-profit hospitals with bargaining leverage invest more than for-profit ones, all else equal. I do not find strong evidence that financing constraints matter disproportionately for hospitals operating in more competitive markets, supporting the hypothesis that the incremental investment may not be socially efficient.     

The Erosion of the German System of Industrial Relations

The paper assesses current trajectories of change in the German system of industrial relations by analysing the co-determination and collective bargaining systems. It argues that two parallel developments undermine the institutional stability of the German model. First, the institutional base of the German industrial relations system, which has served as the pre-condition of its past success, has been shrinking during the last two decades. This is due to a decline in coverage by the two major industrial relations institutions: the works council system and wage agreements. Today fewer than 15 per cent of German plants are covered by both a valid collective agreement and a works council. Second, increasing decentralization pressures within collective bargaining tend to undermine the division of labour between co-determination and collective bargaining. The dynamics of an institutional erosion of the German industrial relations institutions and the decentralization of collective bargaining disturbs the fine-tuning of the mediating process between macroeconomic steering capacity and co-operative workplace industrial relations. This tendency has been aggravated by the effects of German unification. The current institutional developments of the German industrial relations system leave serious doubts about the future of a successful model of co-operative modernization.     

Comparable Worth and Factor Point Pay Analysis in State Government

This study examines how factor point systems have treated state government jobs, which are held disproportionately by women, minorities, and union members. The findings indicate that female jobs may gain from comparable worth pay proposals, but the gains are dissipated in actual pay; unionized and minority workers tend to lose both proposed and actual pay; and the dispersion of points and pay is narrowed for jobs covered by collective bargaining agreements     

Minimum Wages and Collective Bargaining: What Types of Pay Bargaining Can Foster Positive Pay Equity Outcomes?

Using data from interviews and collective agreements in five European countries, this article analyses the relationship between collective bargaining and the minimum wage. In a context of changing minimum wage policy and competing government objectives, the findings illuminate how pay bargaining strategies of trade unions and employers shape the pay equity effects of minimum wage policy. Two general forms are identified: direct responses to a changing national minimum wage, and responses to the absence or weakness of a national minimum wage. The article explains how particular intersections of minimum wage policy and collective bargaining, together with country and sector contingencies, shape the form of pay bargaining and pay equity outcomes.     

Financing a central research laboratory: A tool of R & D subsidy policy

Abstract . In this paper we discuss two major issues of financing a central research laboratory.
First, the decision faced by the firm or the division whether to invest in its own laboratory or to rent compatible central laboratory services. The second issue is the price that a central laboratory should charge for renting out its facilities.
Under the assumptions that a laboratory can serve a large number of users over a long period of time and thus diversify the risk of liquidation better than a single firm or division, we show that, under uncertainty, the rent for the central laboratory assets is less than the price that a firm is willing to pay for its usage. This surplus has interesting policy implications for the diversified firm that operates a central R & D laboratory for the use of its divisions and may wish to establish a transfer price system. Moreover, if the government finances a central laboratory to service industrial firms and it follows a policy of subsidizing industrial R & D, the surplus may be given to the user of the laboratory as a direct subsidy.