Expanding collective bargaining coverage

The general assumption is that increasing coverage will automatically reinforce the right of employer and employee representatives to negotiate without government interference. Yet since this argument ignores the negative freedom of association – the right not to associate – it makes neither legal nor economic sense. It is competition from outsiders that ensures the appropriateness of a collective agreement, making the positive and negative freedoms of association equally necessary. Moreover, it is impossible to determine the optimal degree of collective bargaining coverage either theoretically or empirically. Although empirical research has identified various characteristics that influence the likelihood of an establishment choosing to be bound by collective agreements, these are mainly structural factors such as how a company is organised or the extent of its export business. The actual motives have not yet been sufficiently investigated. Policymakers would therefore be well advised to refrain from interfering with the autonomy of collective bargaining, and particularly from attempts to force companies into collective agreements. At the same time, the two sides of industry must face up to the need to expand their memberships and convince their members of the benefits of the German collective bargaining system.