The collective negotiation in public administration and the experience of Organisation for Economic Co-operation and Development countries

Abstract

This report reviews the governance of decentralised pay setting in the central government administrations in Australia, Denmark, Finland, the Netherlands, New Zealand and the United Kingdom. The six countries reviewed are not a random sample. They have been chosen because they have experience and interest in decentralised pay setting. As pay systems become more flexible, centralised pay setting becomes less rational and less efficient, since a differentiation reflecting individual competences, performances and business needs has to be based on information provided by and held at the local level.

Australia's and New Zealand's constitutional and administrative setup reflects their British origins. They have single level collective bargaining, but also individual employment contracts in workplaces covered by collective agreements. The arrangements in the United Kingdom are similar to those in Australia and New Zealand, but not as systematically evolved. Here, the Treasury handles the monitoring of compliance with the bargaining parameters, and the budget and the bargaining processes are not fully separated. The Cabinet Office is responsible for promoting good human resource management, and the Public Service Commissioner plays a more secondary role.

Denmark's and Finland's constitutional and administrative setups reflect the Nordic social and administrative culture with, inter alia, strong and reformist trade union movements. They have two level collective bargaining, with some employment conditions being regulated in central collective agreements, and others in local agreements.

Pay bargaining in the Netherlands is less decentralised, and the arrangements are in flux. The Netherlands has single level bargaining in 13 sectors. Five of these are called cabinet sectors, where the employer is represented by a minister, five are subsectors within the education sector, and three are sub-central government levels (provinces, municipalities and water boards).

One of the conclusions of the comparative review is that there are two main alternatives for pay setting arrangements. These have in common the existence of a separate and professionally competent central agency able to govern and monitor the behaviour of the pay setting entities, and the provision of a standard and predictable envelope for the pay bill to the decentralised pay-setters. Each of the models works well in the context of the countries that operate it: - Remit-based approach: A model with a central organisation that operates a remit system that enables a monitoring of the adherence to or observance of the government's bargaining parameters, and that also may promote common human resource management values and practices. This model is used in Australia and New Zealand.; - Consensus-based approach: A model with a central employer's office and a two level system for collective agreements. In these systems, it is the central collective agreements which provide the frameworks for decentralised pay setting. This model is used in Denmark and Finland.