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Performance pay and collective bargaining: a complex relationship

Paul Marginson in S Corby, S Palmer, E Lindop(eds), Rethinking Reward, Palgrave Macmillan, pp102-19


The rise of performance payments systems (PPS) is widely presumed to entail negative consequences for the capacity of trade unions to regulate levels of, and increases in, pay through collective bargaining. Yet, remarkably little is known about the actual relationship between variable pay and collective bargaining – whether the former undermines, leaves in place or prompts a reconfiguration of the latter. Much of the relevant literature ignores the role of unions, and therefore the implications for collective bargaining. The chapter addresses what is a significant gap. It reviews the management objectives associated with, and union responses to, different types of PPS and argues that the relationship between PPS and collective bargaining is open to a range of possibilities. Drawing on a comparison of company case studies in two sectors for the UK, and cross-national evidence from three further European countries with different institutional arrangements for collective pay setting, the chapter concludes that the implications of VPS for collective bargaining are shaped by the type of scheme involved, the level at which it operates, sectoral characteristics and cross-country differences in the institutions underpinning collective bargaining.