Types of Collective Bargaining

When looking at the types of collective bargaining, it is important to distinguish it between a collective agreement. There are also different types of collective agreements, but these refer to the outcome of collective bargaining.

For instance, there are single union deals, procedural agreements, substantive agreements, and partnership agreements. All of which refer to the agreement that has taken place as a result of the collective bargaining process.

1. Distributive Bargaining

Distributive bargaining is defined as a negotiation process by which one party benefits at the other’s expense. This usually refers to the redistribution of income in the form of higher wages, higher bonuses, or higher financial benefits. Simply put; anything related to the transfer of money.

In this type of bargaining, the trade union needs to have enough market power to win the negotiation. The employer will want to pay as little in wages. Yet in order to convince them to pay more, the trade unions need enough members to provide a significant incentive.

In other words, a trade union that has 100 percent of the employers’ workforce has significant power. Should they call a strike, it would cause severe disruption to the employer. Consequently, any distributive bargaining will be skewed significantly in favor of the unions.

2. Integrative Bargaining

Integrative bargaining is whereby both sides aim to benefit in what is seen as ‘win-win’ bargaining. Both parties may bring together a list of demands by which an agreement is reached that benefits both parties.

To put it another way, integrative bargaining involves both parties considering the other’s point of view, needs, wants, fears, and concerns. As a result, both parties either lose or gain by the same amount. For example, unions may advocate for greater levels of staff training. Now, this may cost the business more, but it will benefit from greater levels of productivity in the long run.

If workers are better trained, they are equally going to be more productive. So the business and the union workers may gain as a result.

We can also look at integrative bargaining where both sides lose in order to gain. For example, the unions may be willing to give up yearly bonuses in order to have a higher annual salary. Or, alternatively, the union would accept a pay freeze in order to accept better working conditions. So the workers would lose out from lower real wages, whilst the employer would have to invest in better conditions.

3. Productivity Bargaining

Productivity bargaining involves both parties negotiating around productivity and pay. So unions may suggest that higher salaries would boost productivity. However, this is unknown to the business. So target-orientated bonuses may be suggested, or new ways of improving the process.

Unions may suggest new ways of organizing the work force that may increase productivity and therefore create value for the firm. In turn, employers would look to increase employees’ wages as a result.

Simply put, productivity bargaining is where the two parties look to agree to changes that would boost productivity in return for higher wages or other benefits.

4. Composite Bargaining

Composite bargaining refers to a negotiation that focuses on a number of elements that are not related to pay. They are generally related to employee welfare and job security. For instance, it covers factors such as working conditions, policies, recruitment, and disciplinary processes.

The aim is to ensure a mutually beneficial long-term relationship between the employer and employee. It does this by highlighting issues that employees may have, which may impact their long-term future at the company.

Businesses want to retain talent, particularly if they spend time and money training them. Factors such as workload and working conditions can impact this long-term relationship. So it is in the best interest of both parties to ensure that the employees are happy.

5. Concessionary Bargaining

Concessionary bargaining is based on unions giving back previous benefits to the employer. For instance, trade unions may agree to lower wages in return for job security.

This may come during an economic decline whereby job security is more important to the unions than higher wages. Overall, this may actually benefit the company as they won’t have to pay for so many redundancies and can keep workers on.

The main aim of concessionary bargaining is to strengthen the business in order to ensure its survival alongside its employees. So unions give back previous benefits in order to secure the businesses’ long-term future and therefore its members.