Collective bargaining is an important instrument to deal with both old and new challenges, such as technological transitions, in the labour market. Whether considering issues of wage distribution, job quality, workplace adaptation to the use of new technologies, or co‑ordination in times of crisis, collective bargaining remains a unique tool enabling governments and social partners to find tailored and fair solutions. The need for co‑ordination and negotiation mechanisms between employers and workers has, if anything, increased in the changing world of work.
However, collective bargaining, if not well designed, can also introduce distortions in the market and potentially become a source of unfair competition, favouring “insiders” on both the employee and corporate (especially large firms) sides. The effectiveness of a collective bargaining system in delivering favourable outcomes in the labour market hinges on its design, scope, and the adaptability of social partners to the evolving landscape of work. Recent OECD work has shown that the best outcomes in terms of employment, productivity and wages are reached when sectoral agreements set broad framework conditions but leave detailed provisions to firm-level negotiations. Moreover, to allow collective bargaining to develop, state regulations need to leave space for collective bargaining, and local representative structures and promote (or at least not discourage) self-organisation by workers and employers (OECD, 2019[1]).
This policy paper1 starts with a benchmarking exercise to compare the Chilean collective bargaining system with those of other OECD countries. Drawing on a mix of comprehensive literature review and in-house expertise, it then discusses the economic effects of collective bargaining and the importance of its design. Finally, it presents noteworthy practices and ongoing discussions in other OECD countries that can offer valuable insights and inspiration to Chile as it contemplates the introduction of sectoral bargaining models.