Research Title: Importance of Collective Bargaining
The researcher has used Harvard Bluebook Law 20th edition, method of citation. In this paper, the researcher aims to understand the theory and practice of collective bargaining principle, with focus on its practices and evolution in the USA and India, specifically. This paper will delve into the process of collective bargaining, its evolution, importance etc. The researcher will also do a comparative study on the difference, if any, in the practices of collective bargaining in India and the USA.
Collective bargaining is not easily accomplished and is often influenced by a lot of factors one being political decentralization. One of the main issues with the principle of collective bargaining is in choosing whether to pursue centralised or decentralised bargaining[footnoteRef:1]. [1: Villarejo, E., 2020. Progress And Problems In Collective Bargaining. [online] Eurofound. Available at: [Accessed 3 April 2020].]
Decentralization can be defined as “the process by which activities of an organization, particularly those regarding planning and decision making, are distributed or delegated away from a central, authoritative location or group”[footnoteRef:2].usually trade unions favour centralised collective bargaining as it tends to strengthen the position of the workers. [2: En.wikipedia.org. 2020. Decentralization. [online] Available at: [Accessed 3 April 2020].]
The concept varies from country to country, with each country dealing with their own labour problems. Collective bargaining is merely a gateway to achieving some relief regarding those problems. However, even though it is believed that there is power in numbers, it is easier said than done when the workers’ job is in jeopardy. Hence, this paper will focus on the concept of collective bargaining in specific countries – India and USA, analyse their issues and how the laborers are fighting these issues through the method of collective bargaining.
- The Evolution of collective bargaining in the USA and India.
- The importance and scope of collective bargaining.
Collective bargaining can be defined as the “ongoing process of negotiation between representatives of workers and employers to establish the conditions of employment.”[footnoteRef:3]The agreement decided upon in this process may not only be related to wages but other aspects as well such as hiring practices, layoffs, promotions, job functions, working conditions and hours, worker discipline and termination as well as benefit programs[footnoteRef:4]. [3: Augustyn, A., 2020. Collective Bargaining | Definition, Objectives, Functions, Types, & Facts. [online] Encyclopaedia Britannica. Available at: [Accessed 3 April 2020].] [4: Augustyn, A., 2020. Collective Bargaining | Definition, Objectives, Functions, Types, & Facts. [online] Encyclopaedia Britannica. Available at: [Accessed 3 April 2020].]
The practice of collective bargaining has existed in Britain since the 18th century when it was first used by Beatrice Webb who was a founder of the field of industrial relations in Britain. This practice was widely accepted and implemented in the United States of America for settling any industrial disputes. As this further developed in the USA, USA is considered to be the motherland of collective bargaining and this has also spread to India as a method of settling industrial disputes.
In the U.S., collective bargaining takes place between the labour union leaders and the management of the company where the union workers are employed. This sort of agreement produces a “collective bargaining agreement” which establishes the rules of employment for a set number of years. And this is obtained through a certain cost which union workers bear, in the form of “union dues.”[footnoteRef:5] [5: Kenton, W., 2020. What Is Collective Bargaining? [online] Investopedia. Available at: [Accessed 3 April 2020].]
Collective bargaining is a group process involving two parties – the employers and the employees. In this process, negotiations form an important aspect of the process where important terms and conditions are discussed during these negotiations and focuses on resolving any issue of the labour. It is a bipartite process which means that there are only two parties involved in this process.
One of the most important aspects of collective bargaining is that it’s a never-ending process. It continues well after an agreement has been made and is implemented. Moreover, this process does not allow the use of any sort of compulsion to influence the other party into agreeing to any particular terms and conditions. The right to bargain collectively is also recognized through international human rights conventions. It is stated under article 23 of the Universal Declaration of Human Rights, which recognizes the ability to join trade unions as a human right. It is also recognized under item 2(a) of the International Labour Organisation’s declaration[footnoteRef:6]. [6: Lawteacher.net. 2020. Trade Unions And Collective Bargaining. [online] Available at: [Accessed 3 April 2020].]
One of the main reasons for collective bargaining is to fight for better working conditions, mainly increased wages. But does collective bargaining actually result in higher wages and better working conditions? Are labour organizations actually able to increase the wages of all their workers at an equal rate? When considering the economic aspect of this, we can assume that the distribution of labour and capital in a single industry moves in accordance with the elasticity of substitution between labour and capital. This means that, while both labour and capital are utilised in an industry, they also serve as substitutes. Unfortunately, in the case of industries, capital employment is favored over labour employment. Hence, collectively bargaining for higher pay and other benefits may not always result in a positive outcome in such industries.
In such a case, the employer would be more than willing to substitute the labour with capital. As such, it can be observed from this scenario that collective bargaining is not always the solution and does not always work. Especially in industries dominated by machinery, here labour are considered expendable. Collective bargaining would bear no fruit here and the result can never be predicted. This paper will analyse the effectiveness of collective bargaining and refer to cases wherein it has been both a success and a failure.