International evidence supports multiple-employer bargaining

Most OECD countries use multi-employer bargaining. A 2019 OECD report found that countries with these arrangements tended to have higher employment, lower unemployment, lower wage inequality and more co-operative industrial relations than countries with single-employer bargaining systems like Australia.

In Austria, Denmark, Germany, the Netherlands, Norway, Sweden and Japan, multi-employer bargaining is an important part of macroeconomic policy because it allows wages to be co-ordinated across sectors and enterprises. This involves employer associations and unions ensuring wages negotiated in sectoral and enterprise agreements are consistent with established wage targets that align with inflation benchmarks.

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Multi-employer bargaining can also help to address gender pay inequity by narrowing the gap between male-dominated and female-dominated jobs and sectors. A 2020 OECD report found that multi-employer arrangements are “necessary to negotiate targeted raises in female-dominated and low-paid sectors”.

It can also be good for skills and training. Co-ordinating training activities via multi-employer bargaining in Denmark and Germany helps to address skills shortages. This is because it encourages employers to work together to devised common strategies to meet their workforce needs, rather than poaching each other’s skilled workers, as tends to happen in Australia.

Agreements that cover sectors or multiple enterprises can also reduce transaction costs for smaller employers who might not have the internal resources to negotiate an enterprise agreement.

The “Secure Jobs, Better Pay” bill aims to lift wages for low-paid workers deprived of bargaining power and create more balance between employers and employees. Promoting multi-employer bargaining will likely help achieve these goals without destroying the economy, despite what employers claim. This is because international evidence indicates that well-designed, co-ordinated multi-employer bargaining systems can be good for workers, employers, and the economy more broadly.

Associate Professor Chris F Wright researches and teaches industrial relations policy at the University of Sydney Business School, where he is Co-Director of the Sydney Employment Relations Research Group. On Thursday, he will give expert witness evidence before the Senate Education and Employment Legislation Committee’s inquiry into the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022.