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The Management of Pay as the Influence of Collective Bargaining Diminishes


  • W Brown
  • P Marginson
  • J Welsh


The management of pay in Britain has changed substantially in recent years. The paper starts with a theoretical discussion of the extent to which individual employers can exercise discretion in the management of their employees' pay. It then examines the ways in which pay is used to secure productive effort. An analysis of the influence of trade unions leads on to an examination of the diminishing influence of collective bargaining in British pay determination. The implications of this are discussed for employer pay strategies, within and between firms, and internationally. It concludes with the consequences of diminishing trade union influence for the distribution of pay.

Suggested Citation

  • W Brown & P Marginson & J Welsh, 2001. "The Management of Pay as the Influence of Collective Bargaining Diminishes," Working Papers wp213, Centre for Business Research, University of Cambridge.
  • Handle: RePEc:cbr:cbrwps:wp213
    Note: PRO-2

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    References listed on IDEAS

    1. David Card, 1992. "The Effect of Unions on the Distribution of Wages: Redistribution or Relabelling?," NBER Working Papers 4195, National Bureau of Economic Research, Inc.
    2. Machin, Stephen, 1996. "Wage Inequality in the UK," Oxford Review of Economic Policy, Oxford University Press, vol. 12(1), pages 47-64, Spring.
    3. S Oxenbridge & S Deakin & W Brown & C Pratten, 2001. "Collective Employee Representation and the Impact of Law: Initial Response to the Employment Relations Act 1999," Working Papers wp206, Centre for Business Research, University of Cambridge.
    4. repec:fth:prinin:287 is not listed on IDEAS
    5. Stewart, Mark B, 1987. "Collective Bargaining Arrangements, Closed Shops and Relative Pay," Economic Journal, Royal Economic Society, vol. 97(385), pages 140-156, March.
    6. William Brown & Simon Deakin & David Nash & Sarah Oxenbridge, 2000. "The Employment Contract: From Collective Procedures to Individual Rights," British Journal of Industrial Relations, London School of Economics, vol. 38(4), pages 611-629, December.
    7. Stewart, Mark B, 1991. "Union Wage Differentials in the Face of Changes in the Economic and Legal Environment," Economica, London School of Economics and Political Science, vol. 58(230), pages 155-172, May.
    8. Stephen Machin, 2000. "Union Decline in Britain," British Journal of Industrial Relations, London School of Economics, vol. 38(4), pages 631-645, December.
    9. John M. Abowd & Francis Kramarz & David N. Margolis, 1999. "High Wage Workers and High Wage Firms," Econometrica, Econometric Society, vol. 67(2), pages 251-334, March.
    10. Blanchflower, David G & Oswald, Andrew J & Garrett, Mario D, 1990. "Insider Power in Wage Determination," Economica, London School of Economics and Political Science, vol. 57(226), pages 143-170, May.
    11. Machin, Stephen, 1997. "The decline of labour market institutions and the rise in wage inequality in Britain," European Economic Review, Elsevier, vol. 41(3-5), pages 647-657, April.
    12. Paul Marginson & Keith Sisson, 1998. "European Collective Bargaining: A Virtual Prospect?," Journal of Common Market Studies, Wiley Blackwell, vol. 36(4), pages 505-528, December.
    13. Ramaswamy, Ramana & Rowthorn, Robert E, 1991. "Efficiency Wages and Wage Dispersion," Economica, London School of Economics and Political Science, vol. 58(232), pages 501-514, November.
    14. Blau, Francine D & Kahn, Lawrence M, 1996. "International Differences in Male Wage Inequality: Institutions versus Market Forces," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 791-836, August.
    15. Akerlof, George A, 1984. "Gift Exchange and Efficiency-Wage Theory: Four Views," American Economic Review, American Economic Association, vol. 74(2), pages 79-83, May.
    16. Nolan, Peter & Brown, William, 1983. "Competition and Workplace Wage Determination," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 45(3), pages 269-287, August.
    17. Stewart, Mark B, 1990. "Union Wage Differentials, Product Market Influences and the Division of Rents," Economic Journal, Royal Economic Society, vol. 100(403), pages 1122-1137, December.
    18. Lindbeck, Assar & Snower, Dennis J, 1986. "Wage Setting, Unemployment, and Insider-Outsider Relations," American Economic Review, American Economic Association, vol. 76(2), pages 235-239, May.
    19. Weiss, Andrew & Landau, Henry J, 1984. "Wages, Hiring Standards, and Firm Size," Journal of Labor Economics, University of Chicago Press, vol. 2(4), pages 477-499, October.
    20. Richard B. Freeman, 1991. "How Much Has De-Unionisation Contributed to the Rise in Male Earnings Inequality?," NBER Working Papers 3826, National Bureau of Economic Research, Inc.
    21. Hodgson, Geoff, 1982. "Theoretical and Policy Implications of Variable Productivity," Cambridge Journal of Economics, Oxford University Press, vol. 6(3), pages 213-226, September.
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    Cited by:

    1. William Brown & Paul Ryan, 2003. "The Irrelevance of Trade union Recognition? A Comparison of Two Matched Companies," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 6(3), pages 383-408, September.
    2. Damian Grimshaw, 2010. "United Kingdom: Developing a Progressive Minimum Wage in a Liberal Market Economy," Chapters,in: The Minimum Wage Revisited in the Enlarged EU, chapter 14 Edward Elgar Publishing.

    More about this item


    wage determination; collective bargaining; remuneration management; bargaining structure; income distribution; trade union effects; employer pay strategy;

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining


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