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The De-Collectivisation of Pay Setting in Britain 1990-1998: Incidence, Determinants and Impact


  • A Charlwood


Overall, collective bargaining coverage has dropped by around fourteen percentage points. This paper investigates the causes and consequences of the decline in collective bargaining in Britain between 1990 and 1998. One in three workplaces that practiced collective bargaining in 1990 had abandoned it by 1998 and the incidence and coverage of collective bargaining in newer workplaces was lower than in the workplaces they replaced. The abandonment of collective bargaining was not associated with an increase in individualised payment mechanisms or with the use of 'high involvement' HRM practices. Workplaces that abandoned bargaining reported less impressive productivity gains than other workplaces. Male wage inequality rose as a result of the decline of bargaining coverage and of weaker unions where collective bargaining remained. Higher levels of job creation in workplaces that abandoned collective bargaining balance these negative outcomes.

Suggested Citation

  • A Charlwood, 2005. "The De-Collectivisation of Pay Setting in Britain 1990-1998: Incidence, Determinants and Impact," CEP Discussion Papers dp0705, Centre for Economic Performance, LSE.
  • Handle: RePEc:cep:cepdps:dp0705

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    References listed on IDEAS

    1. Mark B. Stewart, 1983. "On Least Squares Estimation when the Dependent Variable is Grouped," Review of Economic Studies, Oxford University Press, vol. 50(4), pages 737-753.
    2. John Forth, 2000. "The determinants of pay levels and fringe benefit provision in Britain," National Institute of Economic and Social Research (NIESR) Discussion Papers 171, National Institute of Economic and Social Research.
    3. Bryson, Alex, 2002. "The union membership wage premium: an analysis using propensity score matching," LSE Research Online Documents on Economics 4953, London School of Economics and Political Science, LSE Library.
    4. repec:eme:rleczz:s0147-9121(06)26009-6 is not listed on IDEAS
    5. Richard B. Freeman, 1980. "Unionism and the Dispersion of Wages," ILR Review, Cornell University, ILR School, vol. 34(1), pages 3-23, October.
    6. 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.
    7. John H. Pencavel, 2004. "The Surprising Retreat of Union Britain," NBER Chapters,in: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980-2000, pages 181-232 National Bureau of Economic Research, Inc.
    8. 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.
    9. David Card & Thomas Lemieux & W. Craig Riddell, 2003. "Unionization and Wage Inequality: A Comparative Study of the U.S, the U.K., and Canada," NBER Working Papers 9473, National Bureau of Economic Research, Inc.
    10. David Metcalf, 2001. "British Unions: Dissolution or Resurgence Revisited," CEP Discussion Papers dp0493, Centre for Economic Performance, LSE.
    11. Addison, John T. & Bailey, Ralph & Siebert, W. Stanley, 2003. "The Impact of Deunionisation on Earnings Dispersion Revisited," IZA Discussion Papers 724, Institute for the Study of Labor (IZA).
    12. Metcalf, David, 2001. "British unions: dissolution or resurgence revisited," LSE Research Online Documents on Economics 20124, London School of Economics and Political Science, LSE Library.
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    More about this item


    Collective bargaining; de-collectivisation; wage dispersion;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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