The Appropriate Design of Collective Bargaining Systems: Learning from the Experience of Britain, Australia, and New Zealand

The experiences of three countries -- Britain, Australia, and New Zealand -- are drawn upon to suggest how the legal framework for collective bargaining ought to be designed to bring forth unionism's most desirable features. For most of the twentieth century, these three countries have adopted quite different regulatory postures: Australia and New Zealand (until recently) intervened extensively into the procedures for wage determination and set up compulsory arbitration tribunals to underpin wages; by contrast, Britain's support of collective bargaining was indirect. In all cases, however, this regulation of collective bargaining complemented other economic policies that contributed to inferior economic performance, something that has now been recognized in New Zealand and Britain by reforms that have taken place during the past two decades. The lessons for economic policy are that superior macro-economic performance is easier to attain when collective bargaining is regulated not by an assortment of mandates and constraints set down in legal code, but by allowing managements and workers to design bargaining protocols that suit them and by promoting competition in product and factor markets. In specifying the framework of collective bargaining, the state should not be partisan and should encourage the resolution of disputes at the level of the firm or place of work.