Collec i e ba gaining
h ough he
magni ying glass: A
compa ison be ween
he Ne he lands and
Po ugal
Alexande Hijzen
Ped o S. Ma ins
Jan e Pa le lie
Wo king Pape
# 618
2017
Collec i e ba gaining h ough he magni ying glass:
A compa ison be ween he Ne he lands and Po ugal*
Alexande Hijzen
(OECD and IZA)
Ped o S. Ma ins
(Queen Ma y Uni e si y o London, No aSBE and IZA)
Jan e Pa le lie
(De Nede landsche Bank and Uni e si y o Ams e dam)
Abs ac
This pape con ibu es o a deepe unde s anding o sec o -le el ba gaining sys ems and hei ole
o labou ma ke pe o mance. We compa e wo coun ies wi h seemingly simila collec i e
ba gaining sys ems, he Ne he lands and Po ugal, and documen a numbe o ea u es ha may
a ec labou ma ke ou comes, including: i) he scope o lexibili y a he i m o wo ke le el
wi hin sec o -le el ag eemen s; ii) he emphasis on ep esen a i eness as a c i e ion o ex ensions;
iii) he e ec i eness o coo dina ion ac oss ba gaining uni s; and i ) p o-ac i e go e nmen policies
o enhance us and coope a ion be ween he social pa ne s.
Keywo ds: indus ial ela ions, social dialogue, employmen
JEL: J5, P52
________________________________
* The idea o his pape eme ged when he au ho s we e isi ing he In e na ional Mone a y Fund (IMF). The
au ho s a e g a e ul o he IMF o i s hospi ali y and would like o hank Niels Ach e be g, Ma k Bake , Helge
Be ge , Ma ko Bos, Be nd B andl, Romain Du al, An ónio Mon ei o Fe nandes, And ea Ga ne o, Jakob de Haan,
Joop Ha og, Hes e Houwing, Ronald Janssen, Jannie Moo en, Ma k Pea son, Ba an Riel, Cy ille Schwelnus,
Jelle Visse and Ben Wes mo e o help ul commen s and sugges ions. Ma ins also hanks suppo om he
Eu opean Union (g an VS/2016/0340). The iews exp essed in his pape a e hose o he au ho s and canno be
a ibu ed o he IMF, he OECD o hei membe coun ies o o DNB. Also he au ho s a e esponsible o any
emaining e o s. Ma ins was Sec e a y o S a e o Employmen in he Go e nmen o Po ugal in 2011-2013
and was co- esponsible o designing and implemen ing he 2012 labou ma ke e o m men ioned in he pape .
2
1. In oduc ion
Collec i e ba gaining is an impo an ea u e o labou ma ke s, especially in Con inen al Eu ope whe e
collec i e ag eemen s (CAs) ypically co e mo e han h ee qua e s o he wo k o ce. Collec i e
ba gaining p o ides oice o wo ke s, and in doing so, has he po en ial o enhance wo king condi ions,
inc ease p oduc i i y, educe inequali y and help minimise indus ial con lic . A he same ime,
collec i e ba gaining has some imes been associa ed wi h wage d i o wage igidi y, wi h ad e se
consequences o employmen . Downwa d nominal wage igidi y in pa icula can be an issue o
coun ies wi hou hei own mone a y policy ha a e con on ed wi h an ad e se demand shock in a
low in la ion en i onmen . Collec i e ba gaining also has come unde p essu e as a esul he declining
membe ship o bo h employe and employee o ganisa ions – pa ly d i en by he expansion o he
se ice sec o , indi idualiza ion, immig a ion, de egula ion, globalisa ion, and, mo e ecen ly, he
eme gence o new o ms o wo k, such as h ough digi al pla o ms (e.g. Ube ).
T adi ionally, he policy deba e on collec i e ba gaining has ended o concen a e on he le el o
ba gaining. A widesp ead iew was ha sys ems wi h p edominan ly sec o -le el ba gaining lead o
excessi e wage claims ela i e o p oduc i i y. As a esul , hese sys ems end o be associa ed wi h
weake labou ma ke pe o mance han ei he cen alised sys ems, which p o ide lexibili y a he
agg ega e le el by inducing unions and employe associa ions o in e nalise he e ec s o wage claims
on economy-wide employmen , o decen alised sys ems, which p o ide wage lexibili y a he i m
le el (Calm o s and D i ill, 1988). Howe e , expe iences ha e di e ged no iceably e en among
coun ies whe e sec o -le el ba gaining is widesp ead. In pa , his is likely o e lec he ole o o he
policies and ins i u ions. Howe e , i is also plausible ha he ole o collec i e ba gaining o good
labou ma ke pe o mance no only depends on he deg ee o cen alisa ion, bu also on he speci ic
ules and ins i u ional p ac ices ha cha ac e ise each sys em. Indeed, se e al p e ious s udies ha e
a emp ed o shed ligh on one o mo e o hese ac o s, including coo dina ion (OECD, 2004; 2006).
This pape aims o inc ease ou unde s anding o collec i e ba gaining sys ems h ough an in-dep h
compa ison o he collec i e ba gaining sys ems in he Ne he lands and Po ugal.
1
This is in e es ing
because i) on he ace o i , he Du ch and Po uguese sys ems a e ai ly simila , ii) hei labou ma ke
pe o mance is a he di e en , and iii) he indus ial ela ions sys ems di e ma kedly in hei ma u i y
1
Reade s in e es ed in a compa ison o collec i e ba gaining sys ems ac oss all OECD coun ies a e e e ed o
OECD (2017).
3
and, consequen ly, he way ope a ional p ac ices ha e e ol ed o e ime, wi h po en ially impo an
implica ions o labou ma ke esilience.
The collec i e ba gaining sys ems in hese wo coun ies sha e many impo an ea u es: i) sec o -le el
ba gaining is dominan ; ii) collec i e ba gaining co e age is e y high, o e 80%; iii) ade union
densi y is a he low, ep esen ing a ound o less han 20% o he wo k o ce, and declining; i )
adminis a i e ex ensions o collec i e ag eemen s - ha ex end hei applicabili y beyond he
membe ship o he social pa ne s in he sec o - a e ai ly impo an . Ye , despi e hese appa en
simila i ies, he wo sys ems appea o ha e di e ed impo an ly in hei adi ion o indus ial ela ions
and wi h i , hei abili y o adap o new challenges. This is also e lec ed in many o he de ailed
di e ences in ins i u ional ules and p ac ices ha cha ac e ise collec i e ba gaining sys ems in he wo
coun ies.
In he Ne he lands, a e he Wassenaa ag eemen o 1982 ended a wage spi al and ma ked an e a o
consensual labou ela ions, he sys em has g adually adap ed o eme ging challenges such as mone a y
uni ica ion, globaliza ion, and popula ion ageing. I has done so in inc emen al s eps, and wi hou
changing he undamen al ea u es o he sys em. Po ugal, on he o he hand, eme ged om a long-
las ing conse a i e dic a o ship a li le mo e han 40 yea s ago. While eal wage adjus men s we e
ela i ely easible in he high-in la ion en i onmen o he 1970s and 1980s, he collec i e ba gaining
sys em in a low-in la ion en i onmen had no been pu o a p ope es un il he global c isis o 2008.
In he con ex o a Eu opean adjus men p og am, Po ugal implemen ed ab up and o en con o e sial
labou ma ke e o ms, including in collec i e ba gaining. Compa ing he Po uguese and Du ch
expe iences allows us o specula e on he ole o e o ms induced by g adual, conce ed social dialogue
ins ead o c isis and ex e nal p essu e.
In p inciple, hese di e ences indus ial ela ions and ope a ional p ac ices could ha e po en ially
impo an implica ions o labou ma ke pe o mance. Indeed, he wo coun ies di e ma kedly in
hei ack eco d on his poin . Acco ding o Eu os a , in 2007 he employmen a e o hose aged 15-
64 was 76% in he Ne he lands, agains 68% in Po ugal.
2
The unemploymen a e in 2007 o hose
aged 15-64 was 3.2% in he Ne he lands, agains 8,5% in Po ugal. In 2012, his was 5,9% and 16,3%
espec i ely, and 5,0% agains 9,2% in 2017. Whe he hese di e ences in indus ial ela ions and
ope a ional p ac ices also accoun o some obse ed di e ences labou ma ke pe o mance, including
labou ma ke de elopmen s since he global inancial c isis is no analysed in his pape . Ce ainly,
2
This di e en ial is mos p onounced among he younge coho s, and hose aged be ween 55-60 yea s.
4
he e we e many impo an di e ences ha a e likely o accoun o much o he di e en expe iences
obse ed du ing he c isis ha we e un ela ed o he sys em o collec i e ba gaining. These ela ed o
he dep h and na u e o he shocks hi ing bo h coun ies as well as he b oade economic and
ins i u ional en i onmen (e.g. he educa ional le el o he wo k o ce, i m p o i abili y, employmen
p o ec ion legisla ion, ac i e labou ma ke p og ams, sho - ime wo k). Mo eo e , gi en he di e en
na u e o he c isis, he need o wage adjus men in he Ne he lands was much less p onounced han in
Po ugal, pu ing less p essu e on collec i e ba gaining in he Ne he lands as a de e minan o labou
ma ke esilience.
Fo ou compa ison, we ocus on ou elemen s o collec i e ba gaining ha ecei ed much discussion
in he ecen policy deba e because o hei po en ial implica ions o labou ma ke pe o mance: i)
decen alisa ion, ii) adminis a i e ex ensions, iii) he applica ion o ag eemen s a e expi a ion o
e ospec i ely (ul a- and e o-ac i i y), and i ) coo dina ion and coope a ion be ween social pa ne s.
Ou analysis poin s o a numbe o speci ic ea u es o sec o -le el collec i e ba gaining sys ems ha
a e likely o be impo an o labou ma ke pe o mance. Fi s , he scope o lexibili y a he wo ke
and i m le els wi hin sec o -le el ag eemen s may be impo an . While he Du ch sys em has held on
o sec o -le el ba gaining, i has g adually inc eased he scope o lexibili y a he i m o wo ke le el
wi hin sec o ag eemen s. This is in con as wi h he case o Po ugal, whe e decen alisa ion has only
been in oduced ecen ly, and so a does no appea o ha e signi ican ly inc eased he scope o
lexibili y a he i m le el. Second, conce ns abou he possible ad e se employmen e ec o co e age
ex ensions can be alle ia ed by subjec ing hem o ep esen a i eness c i e ia and p o iding a clea and
anspa en amewo k o exemp ions om ex ensions. Thi d, he applica ion o e o-ac i i y and
ul a-ac i i y o non-signa o y pa ies may ein o ce he isk ha collec i e ag eemen s become an
obs acle o downwa d wage adjus men in he con ex o deep ecessions, pa icula ly in pe iods o e y
low in la ion). Fou h, e ec i e coo dina ion be ween ba gaining uni s and high quali y labou ela ions
a e c ucial o high-pe o mance collec i e ba gaining sys ems. While enhancing he coo dina ion o
collec i e ba gaining ou comes and he quali y o labou ela ions is beyond he di ec con ol o policy
make s, he Du ch expe ience poin s o a numbe o help ul s a egies based on a combina ion o
‘ca o s’ (e.g. ax concessions, e en g ea e in ol emen in aining ac i i ies) and ‘s icks’ (including
he possibili y o es ic ing he ex ensions o collec i e ag eemen s).
When con empla ing he exac ecipes ha come ou o his compa ison, i is wo h bea ing in mind
how he adi ion o indus ial ela ions and he p ocess o change a e in e wined. Pe haps, he mos
impo an elemen o he Du ch adi ion is no ound in i s speci ic ins i u ional ules and p ac ices, bu

5
in i s abili y o adap o eme ging challenges such as mone a y uni ica ion, globaliza ion, and popula ion
ageing.
3
,
4
This s ands in con as wi h he Po uguese sys em which has adi ionally been slowe o
adap . The igidi y o he Po uguese sys em was exposed du ing he inancial and so e eign deb c ises,
p omp ing he in oduc ion o ab up and o en poli ically con o e sial labou ma ke e o ms,
including in collec i e ba gaining.
5
As he economy eco e s, he challenge o Po ugal is o adop a
mo e long- e m pe spec i e, while a he same ime p omo ing a cons uc i e en i onmen o social
dialogue and e o m ha helps he Po uguese labou ma ke wi h he speci ic challenges i aces. In
ha ega d, elemen s ha enhance he quali y o labou ela ions gain pa icula impo ance. These
should come o e and abo e he o he ins i u ional ea u es—men ioned abo e—needed o enhance he
esilience o he labou ma ke o possible u u e shocks in he Eu ozone.
The emainde o his pape is s uc u ed as ollows, ocusing on di e en componen s o sec o al
collec i e ba gaining. Sec ion 2 discusses decen alisa ion. Sec ion 3 examines he ole o ex ensions.
Sec ion 4 discusses he ole o ul a and e o-ac i i y. Sec ion 5 discusses he ole o coo dina ion and
us be ween he social pa ne s. Finally, Sec ion 6 concludes.
2. Decen alisa ion
In many coun ies wi h na ional o sec o al ba gaining, decen alisa ion has been “ he name o he game
in indus ial ela ions” (Visse , 2013b). Decen alisa ion e e s o he c ea ion o mo e space o
nego ia ions o e wo king condi ions a he le el o he i m, es ablishmen o wo kplace (Visse ,
2016b), in con as o he sec o al o na ional le els.
6
Decen alisa ion is o en seen as a way o imp o e
3
Visse e al. (2000) go e en u he by saying ha he Du ch expe ience “shows ha a escue o he Eu opean
social model is possible, e en unde he condi ions o a mo e es ic i e mac o-economic policy en i onmen ,
and inc eased p essu e on i ms o adap o ex e nal ma ke p essu es.”
4
O cou se, he abili y o he Du ch sys em o adap o eme ging challenges in he pas does no gua an ee ha i
can also wi hs and u u e challenges. Declining membe ship a es o unions and employe associa ions and a
g owing impo ance o lexible wo k a angemen s will es he abili y o he Du ch sys em o adap and, i
needed, ein en i sel also in he u u e.
5
Acco ding o some, hese e o ms e en cons i u ed a “ on al assaul ” o “Eu opean a ack” on collec i e
ba gaining (Ma ginson, 2014; Van Gyes & Schul en, 2015). See Van Ou s e al. (2016) o a desc ip ion o he
somewha simila G eek case.
6
Whe he o no his inc eased space is used in p ac ice and esul s in mo e di e en ia ed wo king condi ions
ac oss wo ke s is a di e en and mo e complex ques ion ha we do no discuss he e. Fo ins ance, he legal
possibili y o i m-le el ag eemen s i sel can in luence he con en o sec o al ag eemen s e en in he absence
o ac ual i m-le el ag eemen s.
6
labou ma ke pe o mance h ough enhanced adap abili y and esilience o i ms. Fo ins ance,
Dus mann e al. (2014) ha e a gued ha decen alisa ion played a key ole in he ecen s ong
pe o mance o he Ge man labou ma ke .
While sec o -le el ba gaining emains p edominan in bo h he Ne he lands and Po ugal, wi h sec o al
ag eemen s co e ing a ound h ee qua e s o employees, bo h coun ies ha e sough o c ea e mo e
scope o ba gaining a he i m le el. In he Ne he lands, hese discussions s a ed in he ea ly 1980s –
when ba gaining pa ies a he na ional le el (‘cen al pa ies’) played an impo an ole in wage se ing
- and ins i u ional e o m happened inc emen ally. In Po ugal, decen alisa ion became an agenda i em
much mo e ecen ly as a esul o he 2011 c isis and he subsequen adjus men p og am. Consequen ly,
he changes ha e been mo e ab up and also mo e p one o e e sals.
In he Ne he lands, an ag eemen in 1982 by he main union and employe ep esen a i es (“Wassenaa
ag eemen ”) is widely seen as se ing he s age o he decen alisa ion o collec i e ba gaining o e
wages and wo king condi ions. I e ec i ely signalled he end o ac i e in e e ence by he go e nmen
in wage se ing ia wage eezes, e en i , in p ac ice, i e ained a ce ain deg ee o con ol h ough he
h ea o in e en ion (De Bee , 2013).
7
The mo e hands-o app oach by he go e nmen inc eased he
esponsibili y o he social pa ne s o ou comes a he sec o al le el. In he bipa i e ag eemen o 1993
(“Een Nieuwe Koe s”, “A New Cou se”), he cen al pa ies emphasised he need o cus omiza ion
and di e en ia ion in wage se ing. Mo eo e , i a gued o a g ea e emphasis on decen alised o i m-
le el ba gaining o achie e his.
In con as o o he coun ies whe e decen alisa ion e ec i ely led o collec i e ba gaining aking place
simul aneously a he sec o and i m le els (e.g. Ge many), in he Ne he lands he main ou e o
decen alisa ion has been o inc ease he scope o cus omiza ion wi hin sec o al ag eemen s by
allowing o mo e lexibili y a he wo ke le el wi hou equi ing an addi ional laye o ba gaining a
he le el o he i m (Visse , 2016b). One eason o his is ha , in he Ne he lands, union p esence a
he i m le el is limi ed. The me al indus y is somewha o an excep ion (Visse , 2016a). T ade unions
e ain a ela i ely s ong p esence in his sec o also a he local le el, which makes wo- ie ba gaining
a possibili y in p inciple. Howe e , ins ead o adop ing a ully- ledged wo- ie sys em, collec i e
7
This is discussed in mo e de ail in Sec ion 3.4.
7
ag eemen s o he me al indus y a e cha ac e ised by de aul s anda ds which apply only i a i m-
le el ag eemen ails o ma e ialise a e a ce ain pe iod o ime.
8
Decen alisa ion wi hin sec o al ag eemen s has aken a ious o ms (SER, 2006; an Lie & Zielscho ,
2014; Volke ink e al., 2014). Fi s , he e has been a g adual shi om s anda ds in collec i e
ag eemen s ha speci y na ow bounds o pay and wo king condi ions, owa ds minimum s anda ds
ha p o ide mo e space o issues such as pe o mance- ela ed pay. Minimum s anda ds nowadays
cha ac e ise he majo i y o pay clauses in sec o -le el ag eemen s (Visse , 2013a; Van Lie &
Zielscho , 2014).
9
The nego ia ion o highe s anda ds is le o wo ke -le el ba gaining and in some
cases o local unions o wo k councils (e.g. o wo king hou s, see an Lie & Zielscho , 2014).
10
Second, an inc easing numbe o sec o al ag eemen s include a ange o wo king condi ions om which
employe s and employees can choose, so-called “à 1a ca e” p o isions, ha allow ading o pay and
o he wo king condi ions. Fo ins ance, a pa o g oss sala y can be used o inance addi ional lea e o
highe pension en i lemen s (Volke ink e al., 2014). In he la e case, he o al budge is s ill se by
sec o -le el ba gaining, bu wo king condi ions can be cus omised o wo ke s’ p e e ences.
Impo an ly, decen alisa ion in he Ne he lands has o e ed mo e lexibili y o i ms and wo ke s
wi hou unde mining sec o al ba gaining o i s co e age (De Bee , 2013). As such, he Du ch case
p o ides an example o “o ganised decen alisa ion” (T axle , 1995). As o 2014, 78% o employees
we e co e ed by a sec o al-le el ag eemen , while he sha e o wo ke s co e ed by a i m-le el
ag eemen was 8% (De Ridde and Euwals, 2016). The sha e o employees co e ed by any collec i e
ag eemen has been a he s able o e ime a a ound 85%.
11
8
This is also common in Denma k, a coun y wi h e y high ade union densi y (Visse , 2016b).
9
Based on a 2014 su ey o 2014 ag eemen s, Van Lie & Zielscho (2014) epo ha 52% o ag eemen s a e
o a minimum na u e, whe e de ia ions a e only possible o he upside. In 28% o cases, de ia ions a e possible
in bo h di ec ions. In 7% o CAs, de ia ions a e no allowed ( he emaining CAs do no s ipula e whe he
de ia ions a e allowed).
10
In he Ne he lands, unlike in Ge many, unions a e only weakly a ilia ed o wo k councils (Visse , 2016b).
Fo his eason, bo h ade unions and employe s may be eluc an o delega e nego ia ing powe o he wo k
councils.
11
In 2015 somewha ewe ag eemen s we e signed. The numbe o ag eemen s picked up again in 2016
(AWVN, 2016).
8
In Po ugal, decen alisa ion o collec i e ba gaining is a much mo e ecen and ab up phenomenon,
and i has la gely been imposed om he ou side as pa o he adjus men p og am a he han by he
social pa ne s hemsel es (as in o he Sou he n Eu opean coun ies - see Ma ginson, 2014). This is
also ela ed o he poli ical de elopmen s in he coun y, which has eme ged om a long-las ing
conse a i e dic a o ship ( ha uled ou independen unions) a li le mo e han 40 yea s ago. The union
mo emen ha was bo n ollowing he 1974 e olu ion, in a highly poli ically cha ged con ex , has
g adually become mo e mode a e. This p ocess in ol ed many s eps, including: he b eak-up o he
hen single union con ede a ion in o wo (1978); he c ea ion o a na ional o um o ipa i e dialogue
(CPCS, 1984); a i s income policy ag eemen (1986) which sough o con ol in la ion; he
membe ship o CPCS by he la ges union con ede a ion (CGTP, 1987); an impo an labou e o m
owa ds educing he e y high le el o employmen p o ec ion and segmen a ion ha exis ed a he
ime (1989, see Ma ins, 2009); he 2003 in oduc ion o he labou code ha also ea u ed he
possibili y o e mina ion o collec i e ag eemen s; and a numbe o ipa i e ag eemen s signed since
he ea ly 1990s, on a e age e e y wo yea s, e en i excluding CGTP, in pa icula hose o 1990 and
1992.
While he e ha e always been a numbe o i m- o holding-le el ag eemen s in he p i a e sec o , hese
la gely conce ned single i ms o g oups o i ms ha had p e iously been pa o he public sec o and
we e subsequen ly p i a ised.
12
The his o ical absence o i m-le el ba gaining in Po ugal e lec s a
numbe o ac o s. Fi s , he s ic applica ion o he a ou abili y p inciple educes incen i es o i m-
le el ba gaining. This en ails ha , in case o di e ging s anda ds in di e en ag eemen s co e ing he
same wo ke s, i is he mos a ou able condi ions ac oss all ag eemen s ha apply o employees. I s
s ic applica ion is i sel a consequence o he s ong legalis ic adi ion in labou ma e s, also shaped
by many yea s o high in la ion, which excluded he possibili y o de ia ing downwa ds om sec o al
s anda ds in i m-le el ag eemen s, unless he e was a iew ha , o e all, he new e ms would be mo e
a ou able o (incumben ) wo ke s.
13
Second, s ong compe i ion be ween he wo main unions,
12
Be o e he global inancial c isis, only a ound 50-75 o he 300,000 i ms in Po ugal concluded o enewed a
i m- o holding-le el collec i e ag eemen in any gi en yea . The numbe o hese ag eemen s has emained
la gely unchanged o e he inancial and so e eign deb c ises. One should also no e ha , on op o hese o mal
ag eemen s, he e is an addi ional numbe o in o mal i m-le el ag eemen s, signed wi h wo ke councils o
la ge i ms. While no quali ying as de ju e collec i e ag eemen s, hese co espond as de ac o ag eemen s
be ween i ms and wo ke s’ ep esen a i es, se ing a la ge numbe o wo k condi ions ha a e espec ed by
bo h employe s and employees.
13
The s a e adi ionally exe s a s ong ole in he egula ion o he labou ma ke , simila ly o he F ench
model. This has limi ed he scope o sel - egula ion by he social pa ne s (see T axle , 2003; Molina, 2014;
15
In Po ugal, bo h he ole o ex ensions and he need o ep esen a i eness c i e ia emain con en ious,
wi h i ually all social pa ne s ad oca ing he o me and ejec ing he la e . One impo an eason
why ep esen a i eness c i e ia a e con o e sial is ha employe associa ions ha e oo ew membe s
in mos cases o allow concluding su icien ly ep esen a i e ag eemen s, a leas by he s anda ds o
ep esen a i eness o coun ies such as he Ne he lands. As a esul , he in oduc ion o s ic
ep esen a i eness c i e ia in 2012 may ha e played a ole in b inging sec o -le el ba gaining o a
s ands ill (al hough i is di icul o disen angle i s e ec om ha o he economic c isis). While he
2015 e o m conside ably educed he s ingency o ep esen a i eness c i e ia, i also isks
ein oducing he p oblems associa ed wi h non- ep esen a i e ex ensions (see Box 1 o ecen
e idence on he employmen e ec s o ex ensions in Po ugal).
24
To sol e his conund um, one possibili y may be o ix a imeline o g adually inc easing he s ingency
o ep esen a i eness c i e ia. This should e en ually elimina e non- ep esen a i e ex ensions, while a
he same ime p o iding employe associa ions ime o inc ease hei membe ship le els, especially
among smalle i ms, which accoun o a la ge sha e o employmen . Ano he op ion could be o ollow
he Du ch p ac ice o a double c i e ion. Fo ins ance, in addi ion o he cu en h eshold o 50%, he e
could be an addi ional ange – e.g. be ween 30 and 50% - whe e he go e nmen would g an ex ensions
only when ce ain addi ional condi ions a e me (such as e o s o imp o e he ep esen a i eness o
ba gaining pa ies)
25
. Fu he mo e, o bo h ypes o ex ensions, he go e nmen could equi e he
exis ence o a clea dispensa ion amewo k, as is equi ed o quali y o ex ensions in he Ne he lands.
Table 1. Ex ensions: condi ions and exemp ions
Ne he lands
Po ugal – p e 2012; and
om 2017
Po ugal – be ween 2012
and 2017
Tes o public
in e es
Yes - bu a ely called
upon explici ly
No, decision is en i ely
disc e iona y, no based
on objec i e and
e i iable c i e ia
No
24
Recen ly, in June 2017, a u he e o m in Po ugal elimina ed comple ely he ep esen a i eness
equi emen . I also equi ed ex ensions o be issued no la e han se en weeks a e he eques by he
subsc ibing pa ne s.
25
We hank Jelle Visse o his sugges ion.

16
Rep esen a i eness
c i e ia
Sha e o wo k o ce in
signa o y i ms should
exceed 60% (o 55%
wi h addi ional
sc u iny and 50% in
excep ional
ci cums ances)
No
2012 - 2014: Sha e o
wo k o ce in signa o y i ms
should exceed 50% o o al
employmen in ele an sec o .
2015 - 2017: sha e o
wo k o ce in signa o y i ms
should exceed 50%; o a leas
30% o employe associa ion
membe s ( i ms) should ha e
no mo e han 250 employees
( he la e c i e ion being me
in almos all cases)
Exemp ions
Applica ion p ocedu e
o go e nmen o
hough dispensa ion
ules in collec i e
ag eemen s
No
No
4. The con inui y o sec o -le el ag eemen s: e o and ul a-ac i i y
In o de o ensu e he con inui y o igh s and obliga ions in collec i e ag eemen s, hey may en e in o
o ce e o-ac i ely, i.e. be o e hei signa u e da e, and/o emain e ec i e ul a-ac i ely, i.e. beyond
he da e o hei expi a ion. These wo ins umen s a e no equi alen om he pe spec i e o wo ke s
o i ms. Re o-ac i i y mainly ma e s o wages, since i ypically imposes an obliga ion on i ms o
pay wage a ea s, whe eas ul a-ac i i y seeks o p ese e he con inui y o no only wage loo s bu
also o he non-wage wo king condi ions. Consequen ly, e o and ul a-ac i i y a e bes seen as
complemen s o ensu ing he con inui y o collec i e ag eemen s. As mos ecen discussions ha e
ended o ocus on he p os and cons o ul a-ac i i y we will s a wi h his.
4.1 Ul a-ac i i y
Ul a-ac i i y en ails ha collec i e ag eemen s emain e ec i e a e hei da e o expi a ion. In doing
so, i p o ides a o m o income secu i y o wo ke s in he medium e m in a simila manne as he
s a u o y minimum wage. This can also enhance labou peace and help os e a long- e m pe spec i e
in collec i e ba gaining. A he same ime, ul a-ac i i y ends o educe incen i es o collec i e
ba gaining and signing new ag eemen s, pa icula ly when wages may o he wise ha e o be
enego ia ed downwa d, such as o example du ing a ecession. This is because i has a endency o
shi he ocus o collec i e ba gaining om he dis ibu ion o o e all en s o ha o addi ional en s,
which a e mo e limi ed and may indeed be nega i e in a ecession. The p o-cyclical na u e o economic
17
en s c ea es p o-cyclical incen i es o collec i e ba gaining, and hese a e ein o ced in he con ex o
ul a-ac i i y. While he p o-cyclicali y o collec i e ba gaining in i sel may no be an issue, weak
incen i es o enego ia ion educe such p o-cyclicali y in di icul economic condi ions. This may
hampe labou ma ke esilience since i educes he likelihood o inding mu ually bene icial solu ions
in pe iods whe e hese a e mos needed.
26
Ul a-ac i i y educes he scope o nominal and eal wage educ ions once collec i e ag eemen s ha e
expi ed. While his is unlikely o be an impo an issue in no mal imes, i could become an obs acle o
wage adjus men in ecessions, pa icula ly in a low-in la ion en i onmen . In no mal economic imes,
he e is li le need o downwa d wage adjus men , while in ecessiona y pe iods wi h high in la ion,
such as hose ollowing he oil shocks in he 1970s o cu ency c ises in eme ging ma ke s, downwa d
eal wage adjus men s can be achie ed simply h ough wage mode a ion wi hou ha ing o cu nominal
wages. Howe e , in a low- o e en nega i e-g ow h and in la ion en i onmen such as he ecen
inancial and so e eign deb c isis, ul a-ac i i y can unde mine labou ma ke esilience in coun ies
wi hou independen mac o-economic policies by inc easing he deg ee o downwa d nominal wage
igidi y—limi ing he scope o eal wage adjus men o es o e ex e nal compe i i eness and clea he
labou ma ke .
27
Bo h Po ugal and he Ne he lands ha e some o m o ul a-ac i i y, bu i s scope di e s (Table 2a). In
he Ne he lands, ul a-ac i i y only applies o o ganised i ms and no o i ms co e ed by an
adminis a i e ex ension. This means ha a e he expi a ion da e o a collec i e ag eemen , non-
o ganised i ms a e allowed o cu wages as long as wages do no all below he s a u o y minimum
wage, o e ing an incen i e o ba gaining pa ies o s ike a new ag eemen . In Po ugal, ul a-ac i i y
ela ed o clauses ha de e mine he enewal o ag eemen s is limi ed o 18 mon hs om 2009 and 12
mon hs om 2014. Howe e , in con inuing employmen ela ionships ha s a ed when he collec i e
ag eemen was in o ce, employe s canno cu nominal wages o adjus downwa d mos o he wo king
26
Employe s migh an icipa e ha hey a e unlikely o win majo concessions in economic down u ns, leading
o g ea e smoo hing o e he business cycle and mo e wage mode a ion du ing economic booms. Howe e , his
may no be enough o cope wi h unexpec edly la ge ad e se shocks such as he ecen global inancial and
so e eign deb c ises.
27
When social pa ne s ha e a sha ed unde s anding o he nega i e employmen consequences, such isks can
be alle ia ed wi h coo dina ed suppo o wage mode a ion. This unde lines he impo ance o coo dina ion and
coope a ion, which is discussed in Sec ion 5 below.
18
condi ions unless he wo ke ag ees and, in some cases, he labou inspec o a e is in ol ed. Ul a-
ac i i y also applies o all co e ed i ms, including hose co e ed h ough ex ensions.
The applica ion o ul a-ac i i y o ex ensions can ha e impo an implica ions o he incen i es o
ba gaining pa ies, especially when he e is a need o downwa d nominal wage lexibili y. Guima ães
e al. (2015) show ha in he a e ma h o he c isis nominal (base) wage cu s ha e been i ually absen
in Po ugal, while downwa d nominal wage igidi y has become binding o he la ge majo i y o
(con inuing) wo ke - i m ma ches as e lec ed by he pe asi eness o nominal wage eezes. While in
pa his could e lec he ole o binding wage loo s, suppo ed by ul a-ac i i y, i may also e lec he
need o union consen o cu ing nominal wages in a con ex whe e employmen p o ec ion is e y
s ic . In any case, he lack o incen i es o enego ia e wages downwa d, possibly ein o ced by ul a-
ac i i y, may ha e con ibu ed o he sha p d op in he numbe o new con ac s --no in he numbe o
con ac s in o ce, howe e —du ing he c isis, alongside he collec i e ba gaining e o ms men ioned
abo e.
In he Ne he lands, bo h employe s and ade unions saw he need o wage mode a ion in he a e ma h
o he c isis. Mo e ecen ly, enewing collec i e ag eemen s has p o en di icul in a ious se ice
sec o s, such as e ail ade and hospi ali y ( an de Valk, 2016). Howe e , his la gely has e lec ed
he ole o di icul economic condi ions in hese sec o s and he weak posi ion o adi ional ade
unions, a he han ul a-ac i i y.
Table 2a. Ul a-ac i i y
Ne he lands
Po ugal – p e 2012
Po ugal – since 2012
Scope
Ul a-ac i i y o collec i e
ag eemen , no o pa ies
bound by ex ensions
Ul a-ac i i y applies o
bo h collec i e ag eemen
and ex ensions.
Ul a-ac i i y applies o
bo h collec i e ag eemen
and ex ensions.
Du a ion
Unlimi ed - unless s a ed
o he wise in collec i e
ag eemen
Time-limi ed unless s a ed
o he wise in collec i e
ag eemen : i e yea s up o
2009 and 18 mon hs since
2009
Time-limi ed unless s a ed
o he wise in collec i e
ag eemen : 12 mon hs
Applica ion
Wo ke s who we e
employed by i m p io o
expi a ion
Wo ke s who we e
employed by i m p io o
expi a ion
Wo ke s who we e
employed by i m p io o
expi a ion
19
4.2 Re o-ac i i y
In bo h Po ugal and he Ne he lands, he e is a possibili y o ac i a e collec i e ag eemen s, en i ely o
in pa , e ospec i ely so as o ensu e con inui y o igh s and obliga ions. A di e ence be ween he
wo coun ies is ha in he Ne he lands his possibili y only applies o he signa o y pa ies o
ag eemen s and no o hose bound by subsequen ex ension, whe eas in Po ugal, un il he e o m o
2012, e o-ac i i y applied o bo h signa o y pa ies and hose bound by ex ensions. The a ionale o
e o-ac i ely applying ag eemen s and ex ensions is o ensu e ha a le el playing is ully p ese ed,
consis en wi h he spi i o sec o -le el ba gaining and he logic behind ex ensions.
The applica ion o e o-ac i i y o ex ensions has been a sou ce o conce n, howe e . The eason is
ha ex ensions a e ypically adminis e ed wi h some delay. This means ha he deg ee o e o-ac i i y
ends o be mo e impo an o ex ensions han o he o iginal ag eemen s. Fo example, Hijzen and
Ma ins (2016) epo ha in Po ugal du ing he pe iod 2010-2011, he ypical delay wi h which
ex ensions en e ed in o o ce ela i e o he ele an collec i e ag eemen ended o be abou 6 mon hs.
To he ex en ha collec i e ag eemen s a e publicly documen ed and he e is li le unce ain y as o
whe he o no hey will e en ually be ex ended, his should no pose any p oblems as long as i ms
ha e a ional expec a ions and do no ace any inancial ic ions. Howe e , i many i ms unexpec edly
become liquidi y-cons ained as a esul o a majo un o eseen mac oeconomic shock, he equi emen
o e o-ac i ely pay wage inc eases o e a conside able pe iod o ime could well lead such i ms o
lay o wo ke s, wi h signi ican ad e se implica ions o agg ega e employmen . Hijzen and Ma ins
(2016) indeed ind sugges i e e idence ha e o-ac i i y con ibu ed impo an ly o he ad e se impac
o ex ensions on employmen g ow h du ing he c isis in Po ugal (see Box 1).
As pa o he labou ma ke e o m o 2012, e o-ac i i y o ex ensions was abolished in Po ugal
(and has no been eins a ed since). This means ha e o-ac i i y p o isions unde he Po uguese and
Du ch sys ems a e now e y simila (Table 2b).
Table 2b. Re o-ac i i y
Ne he lands
Po ugal – p e 2012
Po ugal – since 2012
20
Scope
Possible o ac i a e (pa o
he) CA e ospec i ely, bu
no o ex ensions
Possible o ha e en e CA
e ospec i ely, including
o ex ensions
Possible o ac i a e CA
e ospec i ely, bu no o
ex ensions
5. Coo dina ion and coope a ion
Apa om he di e ences in ules go e ning he ba gaining p ocess discussed abo e, he Ne he lands
and Po ugal di e in he deg ee o which he ac ions o ba gaining uni s a e synch onised
(‘coo dina ion’) and he quali y o social dialogue be ween ba gaining pa ne s (‘coope a ion’).
5.1 Coo dina ion
Coo dina ion among ba gaining uni s can posi i ely in luence mac oeconomic lexibili y (Blancha d
and Wol e s, 2000; OECD, 2006; T axle and B andl, 2012). Indeed many coun ies wi h some o m
o coo dina ed ba gaining, such as Scandina ian coun ies, Ge many, o Japan, ha e enjoyed
compa a i ely high and s able employmen o e he yea s (IMF, 2016). Coo dina ion can be s a e-
imposed based on s a u o y con ols such as indexa ion, s a e-sponso ed h ough social pac s, can ake
he o m o ag eemen s be ween o wi hin he cen al employe and wo ke o ganisa ions, o can be
led by end-se e s ( esul ing in so-called end o pa e n ba gaining) (T axle e al., 2001). The issue
o coo dina ion ypically a ises in coun ies p edominan ly cha ac e ised by sec o -le el ba gaining bu
e ec i e coo dina ion can also be achie ed in coun ies wi h decen alised ba gaining sys ems.
The Ne he lands has a long adi ion o s a e-sponso ed coo dina ion unde which non-binding cen al
ag eemen s be ween he main employe and union con ede a ions, wi h o wi hou in ol emen o he
go e nmen , ha e been ai ly common since he Wassenaa ag eemen in 1982. Such ag eemen s can
shape expec a ions and es ablish no ms in ela ion o collec i e ba gaining and mac o-economic policy,
wi hou imposing any o mal igidi y on he pay policies o i ms (Visse , 2013b). This ype o
coo dina ion equi es inclusi e and ep esen a i e employe and union con ede a ions. Since such
ag eemen s can be agile in p ac ice, i is impo an o hem o be unde pinned by ins i u ional
a angemen s ha p o ide a s able suppo o social dialogue a he na ional le el.
In he Ne he lands, o ensu e he con ede a ions ha e a manda e, bo h union and employe
con ede a ions ypically ha e an annual discussion ound wi h hei membe s o se guidelines o wage
inc eases and o he ba gaining p io i ies. Especially o ade unions, his in e nal coo dina ion is qui e

21
s ong, as sec o al unions o ins ance ag ee on a maximal wage demand and can e en possibly eam
up wi h employe s agains dissiden unions. To suppo bi- and ipa i e ag eemen s a he na ional
le el, ins i u ional a angemen s also play an impo an ole. The Social and Economic Council (a
ipa i e council o social pa ne s plus independen membe s) and he independen Bu eau o
Economic Policy Analysis (CPB) pa icula ly ma e , p o iding pla o ms o egula discussion
be ween he social pa ne s and de eloping a sha ed unde s anding o he key challenges (Den Bu e
and Mosch, 2003).
The Wassenaa ag eemen o 1982 emains he p ime example o wage coo dina ion o his day. I
e ec i ely b oke he wage-p ice spi al ha was pa alyzing he economy a he ime and he alded a
p olonged pe iod o p ice s abili y and s ong economic g ow h. The ag eemen was eached be ween
employe and employee o ganisa ions, bu was also suppo ed by he go e nmen e.g. wi h ax
concessions ha dampened he ad e se e ec o wage mode a ion on ne incomes. Since hen, he e
ha e been se e al o he ins ances whe e social pa ne s a he na ional le el aimed o in luence wage
se ing no ably in he la e 1990s and ea ly 2000s, o en wi h p essu e om he go e nmen (including
h ough a h ea no o g an ex ensions). Cen al ecommenda ions on wages in hese yea s se ed as
an impo an inpu o collec i e ba gaining (Van Hou en, 2008).
Coo dina ion also plays an impo an ole ega ding o he aspec s o collec i e ba gaining. An
impo an example conce ns he le el o en y wages se in collec i e ag eemen s. In he ea ly nine ies,
he go e nmen g ew inc easingly wo ied abou declining employmen o lowe -skilled wo ke s,
which coincided wi h an inc easing gap be ween he s a u o y minimum wage and en y scales o
collec i e ag eemen s. In esponse o go e nmen p essu e, including he h ea no o g an ex ensions,
cen al pa ies issued a ecommenda ion o b ing he minimum wage scales in collec i e ag eemen s
down o he le el o he na ional minimum wage. This app oach p o ed highly success ul. Whe eas in
1994, he di e ence be ween he minimum wage in CAs and he na ional minimum wage (NMW) was
on a e age 12%, his came down o 2,2% in 2004 and 1.7% in 2014 (Roje , 2002; Min SZW, 2005 and
2015). Cu en ly, a simila app oach is aken o allow o special en y scales o suppo he pa icipa ion
o (pa ially) handicapped pe sons (“Pa icipa iewe ”). O he examples include he acili a ion o
empo a y and pa - ime wo k, he employabili y o olde wo ke s and he inclusion o exemp ion
p ocedu es in collec i e ag eemen s (see Sec ion 3). Such measu es ha e likely con ibu ed o he s ong
s uc u al pe o mance o disad an aged g oups in he Du ch labou ma ke .
Ac i e wage coo dina ion ac oss ba gaining uni s has been adi ionally limi ed in Po ugal. Despi e
he absence o ac i e coo dina ion, he labou ma ke emained ela i ely esilien un il he mid-1990s,
22
pa ly as in la ion was also ela i ely high by Eu opean s anda ds, allowing eal wages o espond
s ongly o changes in unemploymen wi hou equi ing any adjus men in nominal wages (Ma ins e
al., 2012). As in o he high-in la ion coun ies, he p ospec o EMU membe ship also ac ed as ca alys
o se e al pac s o b ing wage in la ion down du ing he 1990s (Faje ag & Poche , 2000). As he en y
in o EMU emo ed his ca alys and in la ion came down in he la e 1990s, he abili y o eal wages o
adjus d opped.
The main eason why ac i e coo dina ion did no ma e ialise in Po ugal, e en du ing he pos -2000
pe iod, was ha i p o ed di icul o each ag eemen s be ween all (cu en ly ou ) employe
con ede a ions and he wo main union con ede a ions. As discussed abo e, e en when compa ed o
o he new democ acies, ela ions be ween ba gaining pa ies in Po ugal had been a he ad e sa ial
and pa ies o en lacked a sha ed unde s anding o he economic p oblems a hand (Faje ag & Poche ,
2000; Na ali & Poche 2009). Despi e he equen occu ence o ipa i e ag eemen s, one o he wo
majo union con ede a ions ( he la ges one) a ely subsc ibed o hem. The ipa i e ag eemen o 2012
was no able in ha i did b ing oge he he main employe and he smalle union con ede a ions and
also included many measu es owa ds g ea e labou cos lexibili y. Howe e , his may ha e been an
excep ion e lec ing he unique economic con ex a he ime. The 2012 ag eemen played an impo an
ole in ga ne ing suppo om he social pa ne s o many o he e o m measu es ag eed as pa o
Po ugal’s adjus men p og am.
28
In he absence o mo e e ec i e coo dina ion by social pa ne s, he na ional minimum wage gains
pa icula impo ance as a coo dina ion de ice. I is ela i ely high by Eu opean s anda ds in Po ugal,
ollowing a push du ing he pe iod 2007-2011, and is se by he go e nmen in consul a ion wi h he
social pa ne s in a disc e iona y manne . Unde such ci cums ances, he minimum wage has he
po en ial o ac an ins umen o wage indexa ion, by se ing a benchma k o collec i ely nego ia ed
wages, e en i i would no be la gely au oma ic as in he case o F ance, o example (Fougè e e al,
2016). By con as , in he Ne he lands, he minimum wage has no s ong coo dina ing ole as i is
conside ably below he median and is se h ough a ixed o mula based on collec i ely nego ia ed
wages. Consequen ly, he minimum wage also has a mo e limi ed impac on he ba gaining p ocess.
28
This ag eemen wen much u he han mos ipa i e ag eemen s, howe e , since i was abou he
adjus men o he economy o he global inancial and Eu ozone deb c ises and also included a eas such as
public adminis a ion and axa ion.
23
5.2 Coope a ion
The e a e s iking di e ences in he quali y o labou ela ions and he deg ee o us be ween social
pa ne s in he wo coun ies. While he quali y o labou ela ions in he Ne he lands is ypically
conside ed e y high, and e en he highes among 18 coun ies in a su ey o manage s conduc ed by
he Wo ld Economic Fo um, i is a he low in Po ugal, as in o he Sou he n Eu opean Coun ies (see
Cha 1). Simila insigh s a e ob ained when looking a he deg ee o us in o he s o us in
ins i u ions. This sugges s ha he quali y o labou ela ions is likely o depend on b oade socie al and
cul u al ac o s and no jus on he main ac o s in collec i e ba gaining and i s ins i u ional
a chi ec u e.
29
While he o ma ion o us be ween social pa ne s, and ha o he wide public in social pa ne s and
hei ins i u ions, is a complex p ocess, i seems plausible ha ce ain ea u es o collec i e ba gaining
sys ems can con ibu e o build us (IMF, 2016):
30
29
Some schola s ace he eme gence o us be ween social pa ne s in he Ne he lands back o he cul u e o
coope a ion and us ha eme ged in he la e Middle Ages be ween he a ious p o inces (P ak and Lui en an
Zanden, 2013) and he join igh o he Du ch agains he wa e (Den Bu e and Mosch, 2003).
30
See Gould and Hijzen (2016) o a ecen analysis o he de e minan s o us and social capi al wi h a
speci ic ocus on inequali y.
Cha 1 Coope a ion in labou ela ions
No e: cha shows he a e age a ing o execu i es o he labo -employe
ela ions in hei coun y, whe e 1 is "gene ally con on a ional" and 7 is
"gene ally coope a i e".
Sou ce: Wo ld Economic Fo um, The Global Compe i i eness Repo
2012–2013, Table 7.01.
0
1
2
3
4
5
6
NL AT IE DE FI LU EEMTCY BE PT SK SI ES IT GR FR
24
 The inclusi eness o ba gaining pa ies, and ha o he collec i e ba gaining sys em mo e
gene ally, is likely o enhance us . Ba gaining pa ies a e less likely o be inclusi e when hey
a e hea ily agmen ed and con ede a ions a e absen o ha e weak co e age. In he case o
ex ensions, ep esen a i eness c i e ia can make he sys em ai e and he eby enhance us —
bo h di ec ly, and indi ec ly by p o iding incen i es o ba gaining pa ies o educe
agmen a ion and expand hei co e age.
 The na u e o p ocedu es wi h espec o op ou and ex ension can also help, such as he use
o objec i e c i e ia o p ocessing eques s, he a ailabili y o accu a e and e i iable
in o ma ion o assessing hem (see Box 2 in he con ex o ep esen a i eness c i e ia, o
example), and he p esence o an independen body in he case o ex ensions.
 Buil -in incen i es o egula enego ia ion migh enhance us . Such incen i es may ake he
o m o ime-limi ed ag eemen s, o al e na i ely, es ic ing ul a-ac i i y o ag eemen s o
ce ain non-wage wo king condi ions. This s eng hens incen i es o he enewal o collec i e
ag eemen s, especially in di icul imes. A he same ime, ules ha would impose collec i e
ba gaining may be coun e -p oduc i e, i he e is no sha ed willingness o each ag eemen s.
 Mechanisms ha make social pa ne s accoun able o he e ec i e implemen a ion o
collec i e ag eemen s could os e us by o cing hem o ake owne ship and educing he
scope o oppo unis ic beha io . S aigh o wa d ways o make he social pa ne s mo e
accoun able include p o iding anspa en , objec i e and accessible in o ma ion on he key
elemen s o collec i e ag eemen s (e.g. a da abase wi h coded in o ma ion o all collec i e
ag eemen s) and elying on independen labou inspec o a es o moni o he e ec i e
implemen a ion o ag eemen s.
Impo an ly, he quali y o labou ela ions is also likely o e lec he success o pas expe iences and,
as such, o be pa h-dependen (Lo enz, 1999; Blancha d & Philippon, 2004; Visse , 2005; Aghion e
al., 2011). Fo example, employee-employe ela ions in he Ne he lands we e much mo e ad e sa ial
a he ime o he Wassenaa ag eemen (1982). Acco ding o Visse and Van de Mee (2011), i was
only in he decade a e Wassenaa ha a consensus eme ged be ween unions and employe
o ganisa ions. Hence, he pac a guably se ed o demons a e o ba gaining pa ies ha comp omises
could be mu ually bene icial and p o ided a basis o u u e collabo a ion and he build-up o us ing
ela ionships. In Po ugal, he ad e sa ial elemen is a guably s ill mo e p esen .
31
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