The role of trade unions in determining pay has diminished over the last three decades in most developed economies. However collective bargaining still plays a significant role in many sectors of the economy with many employers still negotiating pay through such structures. The aim of this paper is to find out whether collective bargaining agreements still deliver for workers in Northern Ireland in terms of higher wages. Data from the Understanding Society survey is used calculate whether a premium exists for workers covered by collective agreements, once all other relevant factors have been taken into account.
While qualifications and education remain the most important determinants of pay, a significant collective bargaining premium remains. This has significant implications for employees in terms of securing a larger share of income but also for employers and the productivity potential of the Northern Ireland economy. Previous studies have identified a causal link between collective bargaining and productivity both at the firm and sectoral level. Workers covered by a collective agreement may earn more but employers clearly also gain from these arrangements. Northern Ireland suffers from chronically weak productivity growth, and skills underutilisation is a key contributor to that. Collective bargaining therefore represents a significant policy lever open to the Northern Ireland Executive to encourage and more coordinated and integrated approach to industrial development in the region.