Economic Factors Affecting the Collective Bargaining Agreement Coverage Rate in Turkey: Cointegration Approach
Atilla AydınThe right to unionize is now considered as one of the most important indicators of contemporary democracy. Here, unionization rate is defined as the ratio of the number of union members to the total number of employed workers. However, on its own, unionization does not mean anything and it is considered along with the right to collective bargaining. This study used collective bargaining agreement coverage rate data to investigate the effects of economic variables on the collective bargaining agreement coverage rate. It used the share of industrial sector added value in gross domestic product (GDP), per capita income, and inflation as independent variables. The study covered the period of 1988–2022 using the Johansen cointegration and autoregressive distributed lag bound tests. The findings revealed that the variables are cointegrated in the long term. A 1% increase in the share of industrial value added in GDP increases the unionization rate by approximately 3.40%. While a 1% increase in inflation reduces the actual unionization rate by 0.49%, a 1% increase in per capita national income reduces it by approximately 1.18%. Additionally, the study established an error correction model, determining that the deviations experienced in the short term disappear in the long term.
Türkiye’de Toplu İş Sözleşme Kapsama Oranını Etkileyen İktisadi Faktörler: Eşbütünleşme Yaklaşımı
Atilla AydınSendikalaşma hakkı, günümüzde çağdaş demokrasinin en önemli göstergelerinden biri olarak değerlendirilmektedir. Sendikalaşma oranı, sendika üyesi işçi sayısının toplam çalışan işçi sayısına oranı olarak tanımlanmaktadır. Ancak sendikalaşma, tek başına bir anlam ifade etmemekte ve toplu iş sözleşme hakkı ile birlikte ele alınmaktadır. Bu çalışmada toplu iş sözleşmesi kapsama oranı verisi kullanılmıştır. Çalışmanın amacı, iktisadi değişkenlerin toplu iş sözleşmesi kapsama oranı üzerindeki etkilerini araştırmaktır. Bu bağlamda sanayi sektörü katma değerinin GSYH içindeki payı, kişi başına gelir ve enflasyon bağımsız değişkenler olarak ele alınmıştır. Çalışmanın veri arâlığı 1988-2022 yılları olup yöntem olarak Johansen eşbütünleşme testi ve ARDL sınır testi kullanılmıştır. Çalışmadan elde edilen bulgulara göre değişkenler uzun dönemde eşbütünleşiktir. Sanayi katma değerinin GSYH içindeki payında gerçekleşen %1’lik artış fiili sendikalaşma oranını yaklaşık %3,40 oranında arttırmaktadır. Enflasyondaki %1’lik artış fiili sendikalaşma oranını %0.49 düşürürken, kişi başına milli gelirdeki %1’lik artış fiili sendikalaşma oranını yaklaşık %1,18 düzeyinde aşağı çekmektedir. Ayrıca hata düzeltme modeli kurulmuş ve kısa dönemde yaşanan sapmaların uzun dönemde ortadan kalktığı saptanmıştır.
The right to unionize is recognized as one of the most important indicators of modern democracy. In this context, the most important factors are the unionization rate, defined as the ratio of the number of unionized workers to the total number of employed workers, and collective bargaining coverage rate, defined as the ratio of the number of workers benefiting from a collective bargaining agreement to the number of workers earning wages. This study aims to determine the economic factors affecting the collective bargaining coverage rate in Turkey. The study uses the following independent variables: the share of industrial sector value added in GDP, inflation rate, and per capita income, to discuss the effects of market conditions on collective bargaining coverage rate.
Unionization is generally associated with legal and social factors. Görmüş (2020) and Mülayim (2023) investigated the factors affecting the collective bargaining coverage rate, namely, unionization rate, level of collective bargaining agreements, and incentive scheme. However, few empirical studies investigate the relationship between unionization and economic variables. Oswald (1982) argued that an increase in unionization will raise wages, leading to decreased employment and output. Blanchard and Summers (1986) concluded that a high unionization rate increased the natural unemployment rate in the 1980s. Ramjas (1989) found that an increase in the unionization rate negatively impacts worker productivity. Bean and Crafts (1995) reported that an increase in the unionization rate negatively affects total factor productivity. De Groot (2001) found that unions will increase the general wage level and inflation if the wage increase cannot be compensated by productivity increases. Meanwhile, Daveri and Tabellini (2000) analyzed the economic effects of taxation processes, finding that if excessive taxation is passed on to workers, labor costs and unemployment increase and union density decreases. Van Reenen (1996) and Wrigles (2002) argued that while creative enterprises pay higher wages, competitive enterprises have a low general wage level. Here, unions become stronger and resources cannot be allocated to research and development activities, resulting a slowdown in growth. Turnbull (2003) found that unionization slows down GDP growth, while Baker et al. (2005) identified a significant relationship between collective bargaining coverage and unemployment. Murtin et al. (2014) found that if the collective bargaining coverage rate is higher than the unionization rate, wages will become rigid and harm employment. Barbier-Gauchard et al. (2023) found that nominal wages and employment fall when unionization is weak, putting downward pressure on inflation. Empirical studies generally associate unionization with the labor market. In contrast, this study examines unionization and collective bargaining coverage from a broader, macroeconomic perspective.
This study uses the Johansen cointegration test and ARDL bounds test to determine the long-term relationship between variables. To apply the cointegration test, all variables should be stationary of the same order. In this framework, the stationarity of the variables is investigated with conventional and structural break unit root tests. Moreover, long-term parameters are estimated and the effects of each variable on the collective bargaining coverage rate are decomposed. Finally, an error correction model is constructed to analyze the short run.
According to the results, a 1% increase in the share of industrial value added in gross domestic product (GDP) increases the collective bargaining coverage rate by approximately 2.19%. This result is natural considering that unionization tendency is generally higher in the industrial sector. Meanwhile, a 1% increase in inflation decreases the collective bargaining coverage rate by approximately 0.19%; the increase in inflation decreases real wage and employment level. The increases in enterprises’ input costs are expected to be compensated by the pressure on wages and collective bargaining agreements. In countries with weak collective bargaining power, the inflationary process results in a decline in real wages and distorts income distribution. This framework can explain the negative impact of the inflation rate on collective bargaining coverage. A 1% increase in per capita income decreases the collective bargaining coverage rate by approximately 0.77%. Evaluating this result along with the functional income distribution structure in Turkey is important. Increasing the rate of collective bargaining coverage is important for workers’ rights and democratization. Based on this study’s findings, a structural change in favor of the industry will increase the rate of collective bargaining. High inflation is among today’s most important problems. Nowadays, the fight against inflation is carried out by turning expectations into positive and reducing economic risks. The study finds that a decrease in inflation will increase the rate of collective bargaining coverage. Additionally, the implementation of economic policies aimed at improving income distribution will also increase the collective bargaining coverage rate. Moreover, spreading economic growth to all segments of society is important for ensuring economic stability. To this end, this framework indicates that regulations to prevent the erosion of wage incomes, tax policies in favor of labor incomes, and the fight against inflation should be implemented.
