Australia does not have sectoral collective bargaining, but a form of industry- or occupation-wide regulation, called the Modern Awards, which sets industry-specific wage floors that vary by skill levels. While about 36% of employees are directly covered by collective agreements, 23% are only covered by bonuses. That is, about three-fifths of employees have wages that are not set by the employer and the individual employee, but by collective bargaining or by an external regulatory body. This is well above the average rate of collective bargaining in OECD countries. The system has been in place for several decades and a similar organisational regime existed in New Zealand until 1991 – see Peetz and Rasmussen (2018[68]) for a detailed analysis of how the Modern Awards work. In France, Italy and Portugal, there is no change in the level of bargaining and the degree of effective centralisation since, as indicated in Chapter 2, collective bargaining on wages in these countries remains fairly centralised. This may seem surprising, since in recent decades the principle of favourability has been reversed in France and other reforms have encouraged collective bargaining at company level. However, as explained in Chapter 2, decentralization in France extended only to non-wage conditions, while wage bargaining remained strictly in the hands of sectoral collective bargaining. In Italy, the scope of collective bargaining at company level has also been broadened, but there is still a tension between the rules established autonomously by the social partners, which define a hierarchical relationship between levels of bargaining, and the case law that an agreement at company level can always deviate from sectoral agreements. Overall, wage negotiations remained fairly centralized during the reporting period. Finally, recent reforms in Portugal have significantly changed the way tariff systems work, but have also been partially withdrawn. At this point, wage negotiations still seem fairly centralized. The chapter also contains a detailed discussion of how wage coordination works and the characteristics that allow organised decentralisation to achieve good labour market results at the same time, to offer firms flexibility and to support the ability to adapt to structural change.

The main findings are: Australia: In 1993, the Australian Government passed the Industrial Relations Reform Act, which replaced centralised wage setting with collective bargaining at company level. In 1996, the federal government introduced the Industrial Relations Act, which introduced individual statutory contracts into the federal system. These individual agreements were abolished in 2009; [87] Murtin, F., A. de Serres and A. Hijzen (2014), ”Unemployment and the coverage extension of collective wage agreements,” European Economic Review, vol. 71, pp. 52-66. [11] Traxler, F., S. Blaschke and B.

Kittel (2001), National labour relations in internationalized markets, Oxford University Press, Oxford. The guidelines of leading organizations set standards or objectives that should be followed in negotiations at lower levels. They are present in several countries, but they are generally mandatory only in countries where the main trade unions or employers` organisations are relatively strong and centralised (in the Nordic countries and, to a much lesser extent, in France and Italy). In summary, coordinated systems using national data on labour market outcomes for 35 OECD countries between 1980 and 2016 and a new characterisation of collective bargaining systems are associated with higher employment rates, lower unemployment, better integration of vulnerable groups and less wage inequality than fully decentralised systems. Poorly coordinated and largely decentralised centralised systems occupy an intermediate position, achieving similar results to fully decentralised systems in terms of unemployment, but sharing many of the positive effects on other outcomes with coordinated systems. Sweden: In the 1980s, key agreements played an important role before their introduction; Note: ***, **, *: statistically significant at levels 1, 5 and 10%, respectively. In order to assess the statistical significance of collective bargaining institutions as a whole, the focus should be on the F test, which tests the common meaning of all coefficients on interactions with hourly labour productivity. Standard errors (in parentheses) are grouped at the country and industry level. When comparing collective bargaining systems across countries, coordinated systems – including those characterized by organised decentralisation – are associated with higher employment rates and lower unemployment (including for youth, women and low-skilled workers) than fully decentralised systems. Mostly centralized systems without coordination are somewhat in between. Degree of flexibility: Sectoral or national agreements can differ considerably in the degree of flexibility they offer to businesses.

For example, the possibility of opt-outs or the transfer of the application of the principle of favour to the social partners can increase the flexibility of the system and allow a stronger link between wages and the performance of enterprises, with higher employment and productivity on the rise and higher wage inequalities on the other.