COLLECTIVE BARGAINING IS HELD UNDER ARCHAIC RULES - IDESA


Informe Nº: 26/02/2018

COLLECTIVE BARGAINING IS HELD UNDER ARCHAIC RULES

The bank strikes, the threatening negotiations of the teacher unions, the mobilizations and the fracture of the General Confederation of Labor (CGT) mark a new cycle of intensification of union conflicts. In advanced countries, the intensity of conflicts diminishes with a more active and comprehensive use of the collective bargaining. Apart from wages, almost always other issues are discussed, such as how to improve productivity, the incorporation of technical advances and the adaptation of labor relations to the changes in modern life. In Argentina, except for large companies, the negotiation is only for salary increases.

Although inflation is the immediate cause that triggers wage demands, the degradation of collective bargaining is fundamentally due to the design of labor institutions. A key factor in this sense is the ultra-activity clause of the collective bargaining law that sets the indefinite validity of the agreements once they have expired. This rule is what explains why in Argentina most of the collective agreements date back to the 70s and 80s.

A recent study by the OECD, Employment Outlook 2017, shows how this topic of ultra-activity is regulated in the modern world. According to this source, a sample of 24 developed countries with medium-high income shows that:

  • 70% do not have ultra-activity regulated by law.
  • 17% have ultra-activity regulated by law but it sets a maximum term that generally does not exceed 12 months of the term set in the agreement.
  • 13% have ultra-activity regulated by law but can be eliminated in the negotiation.

These data show that the ultra-activity, with such rigidity as established in Argentina, cannot be seen in any advanced country. In these countries most of the agreements expire in the terms agreed by the parties, that is, ultra-activity is not imposed by law. In other countries it is contemplated in the law, but restricted with a deadline or can be eliminated during the collective bargaining. These are fundamental labor regulation difference in designs that can generate very different dynamics in the negotiation. For this reason, collective bargaining agreements in developed countries are renewed every 21 months on average, while key aspects of the agreements in Argentina were set more than 40 years ago.

The degradation of the negotiation is aggravated by the requirement that collective agreements must be applied by all employers in the sector, even if they do not belong to the signing business organization. In advanced countries, the extension of sectorial collective agreements to unaffiliated employers occurs exceptionally, at the request of the parties and it must be demonstrated that the representativeness is greater than 50% of the workers covered by the signed agreement. There are three cases only where the extension is automatic and without demonstration of representativeness as it happens in Argentina, which are France, Italy and Spain. It is not by chance that these are the countries with the most severe labor problems in Europe.

A dynamic collective negotiation is the tool that will allow reducing the traumatic impacts of the fourth industrial revolution on the labor market. In developed countries, it is the way to innovate in labor regulation, tending to address the impacts generated by robotization, digitalization and artificial intelligence in the most just and efficient way possible. Setting wages is not the most important aspect that is subject to dialogue and negotiation.

In Argentina, with frozen regulations and a strong centralization, the tendency is to only negotiate wages. The result is high levels of conflicts and the silent destruction of jobs due to technological change that displaces workers to informality. To reverse these trends it is necessary to advance in the modernization of labor institutions, especially, to limit the ultra-activity and to raise the representativeness of the negotiating parties.

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