What Does Sectoral Agreements Mean

In principle, an agreement between trade unions and employers` or employer organisations applies only to signatory parties (“the principle of dual membership”). The Erga omnes clauses extend the conditions set out in a collective agreement to all workers, not just members of the signatory unions. Erga omnes clauses are generally incorporated into the law. However, in most countries where agreements are legally binding only for members of undersigned unions (Table 4.1), employers often voluntarily provide the same similar conditions or conditions to all workers in the company (sometimes because employers do not know who is unionized). Erga omnes clauses simplify the system (since the same conditions apply to all workers), increase fairness, limit rivalries and help social peace, and reduce transaction costs. However, Erga-Omnes clauses can also deter workers from becoming members of a union (a typical parasitism problem). In Belgium and Finland, two more centralised and coordinated countries, sectoral agreements play an important role, while leaving some room for agreement at a lower level to change the standards set out in the general agreements. The particular characteristic of these two systems is the strong form of coordination imposed (or induced) by the state. However, the evidence of recent decades shows the need for a more nuanced picture of the impact of institutional frameworks in collective bargaining on the labour market and on economic outcomes.

In fact, it seems that different systems can achieve similar results, while similar formal systems can produce very different results depending on the practical functioning of the system. This is the case, for example, in Denmark, Germany, France, Portugal or Italy, where wages are generally negotiated at the sectoral level, but the large differences in the rules and uses of extensions, opt-outs and coordination practices lead to considerable differences in labour market outcomes, but also in confidence in the national system of collective bargaining and its functioning. ← 8. The legal provisions that validate the agreements for all companies and workers (as in Iceland, Italy and Spain) are equivalent to those of renewals, but also, to some extent, compulsory membership in an employers` organisation as in Austria. Otherwise, collective bargaining could take place at the national level for an entire sector, covering all workers and employers in that sector. This last point is what is meant by sectoral collective bargaining. Collective bargaining in Japan is highly decentralized: most enterprise-level negotiations take place without national or sectoral agreements.