Assessing the legal value added of collective bargaining

Collective bargaining – the negotiation about working conditions between one or more employers and workers’ representatives – can improve wages, working time and various other dimensions of employment. Successful bargaining that takes into account the characteristics of the firms and workers involved can also increase engagement and stability, improve productivity and profitability.

This paper investigates the extent to which collective bargaining in Portugal has changed any employment dimension, over and above existing statutory labor laws. Working conditions result not only from collective agreements, but also from statutory labor legislation. However, in contrast to bargaining, which tends to promote the differentiation of labor conditions across firms and sectors, statutory law implies considerable harmonization of labor conditions and potentially slower adjustment to changing circumstances.

This paper uses an innovative but simple methodology based on detailed comparisons between the contents of several collective agreements and the applicable statutory legislation. In Portugal bargaining covers 90% of employees and statutory law is extensive and detailed, involving more than 560 articles. The analysis focuses on six agreements (metalwork, footwear, construction, hospitality, and finance), and eight employment dimensions (fixed-term contracts, work time, work suspension, and remuneration provisions, excluding minimum wages), leading to more than 400 standards.

The paper concludes that over half of these standards (59%) corresponds to the exact transcription or a very similar version of the equivalent standards in statutory law. Only 27% (11%) of the standards in the agreements offer more (fewer) rights to workers. In summary, collective bargaining in Portugal adds relatively little to statutory law. Promoting collective bargaining (and social dialogue) may benefit from different approaches by policy-makers towards creating greater negotiating space for firms and worker representatives.

Click here to go to the paper by Pedro S. Martins and Joana Saraiva.