Local pay negotiations are not about union breaking

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The Independent Online
THE TREND of devolution in pay bargaining is by no means as universal as Paul Routledge suggests ("Goodbye to all that", 30 July). In fact in the private sector there is evidence that it is actually being reversed, as companies experience some of the disadvantages of local pay deals - lack of expertise and resources to manage pay locally, pay "leap-frogging", and blockages to lateral career development. BP, Philips and Shell UK have re-centralised aspects of pay determination in recent years. This view is supported by a Warwick University study into the private sector which found that the continuance of centralised payroll budgeting "significantly limits any apparent decentralisation of decision-making on pay".

Nor is it the case that the move to local pay has the objective of "diminishing the strength of the unions and driving down wages". From a historical perspective, the creation of national bargaining structures often reflected the desire to end the anarchic situation of numerous local disputes and strikes. The figures quoted on the fall of employee numbers covered by collective bargaining reflect much broader trends - the decline of traditional industries where unions are strong and the growth of the service sector and part-time jobs.

Evidence suggests the move to local pay bargaining tends to increase pay costs. National pay determination can be inflexible to local market needs, but it makes centralised control much easier. Pay administration costs also invariably increase.

The key to sensible pay determination in many large public and private sector organisations is often to find an appropriate balance between a central framework and co-ordination of pay policies, and local flexibility to reflect varying market, business and employee needs. Scare-mongering as to hidden agendas of pay cuts and union de-recognition achieves nothing.

Duncan Brown

Towers Perrin, London WC1