Unions and Collective Bargaining in the Wake of the Great Recession

This paper provides the first definitive estimates of union density in Portugal, 2010-2012, using a unique dataset. The determinants of union density at firm level are first modeled. Next, estimates of the union wage gap are provided for different ranges of union density. Since these estimates fully reflect the reality of an industrial relations system in which collective agreements are extended to nonunion workers and firms, the final issue examined is contract coverage. The pronounced reduction in the number of industry-wide agreements and extension ordinances in recent years has been uncritically equated with a fall in coverage. However, the authors show that the number of workers covered by new and existing agreements has remained largely unaffected by economic crisis. The reduced frequency of new agreements and extensions is instead attributed to downward nominal wage rigidity in deflationary times, rather than (as yet) the expression of a crisis in collective bargaining.