Regulating Collective Bargaining in Developing Countries: Lessons from Three Developed Countries

John Pencavel

Working Papers from Stanford University, Department of Economics

Abstract: September 1997

What can developing economies learn from the experience of developed economies about how best to regulate unionism and collective bargaining? This paper addresses this question by offering four principles that should guide economic policy on unionism and collective bargaining and then by examining the record of three countries - Australia, New Zealand, and Britain - to illustrate the operation of these principles. Although these three countries share a common heritage, their approach to these issues has been quite different: Australia and New Zealand designed quasi-judicial systems that have intervened extensively in collective bargaining while Britain has followed a tradition in which the explicit role of law was small.

These characterizations have changed a good deal in the last fifteen years with the role of the law playing a larger part in Britain and with the systems in Australia and New Zealand undergoing substantial reform. I argue that, appearances notwithstanding, the changes in Australia have been meager while those in New Zealand have been much more radical. I argue also that the traditional characterization of Britain was never accurate and that the influence of the state on collective bargaining was indirect yet substantial. Clearly, industrial relations have changed considerably in Britain since 1979, but I suggest the changes in product market competition and the associated move toward enterprise bargaining have been the principal cause of the changes in collective bargaining and the diminished role of unionism.

Date: 1997-09
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