Collective Bargaining Importance

Collective bargaining is a process of negotiating between management and workers represented by their representatives for determining mutually agreed terms and conditions of work which protect the interest of both workers and the management.

According to Dale Yoder’, “Collective bargaining is essentially a process in which employees act as a group in seeking to shape conditions and relation­ships in their employment”.

Michael J. Jucious has defined collective bargaining as “a process by which employers, on the one hand, and representatives of employees, on the other, attempt to arrive at agreements covering the conditions under which employees will contribute and be compensated for their services”.

Thus, collective bargaining can simplify be defined as an agreement collectively arrived at by the representatives of the employees and the employers. By collective bargaining we mean the ‘good faith bargaining’.

It means that proposals are matched with counter proposals and that both parties make every reasonable effort to arrive at an agreement’ It does not mean either party is compelled to agree to a proposal. Nor does it require that either party make any specific concessions.

Why is it called collective bargaining? It is called “collective” because both the employer and the employee act collectively and not individually in arriving at an agreement. It is known as ‘bargaining’ because the process of reaching an agreement involves proposals and counter proposals, offers and counter offers.


The basic objective of collective bargaining is to arrive at an agreement between the management and the employees determining mutually beneficial terms and conditions of employment.

This major objective of collective bargaining can be divided into the following sub-objectives:

  1. To foster and maintain cordial and harmonious relations between the employer/management and the employees.
  2. To protect the interests of both the employer and the employees.
  3. To keep the outside, i.e., the government interventions at bay.
  4. To promote industrial democracy.


The need for and importance of collective bargaining is felt due to the advantages it offers to an organization.

  1. Collective bargaining develops better understanding between the employer and the employ­ees:

It provides a platform to the management and the employees to be at par on negotiation table. As such, while the management gains a better and deep insight into the problems and the aspirations of die employees, on the one hand, die employees do also become better informed about the organisational problems and limitations, on the other. This, in turn, develops better understanding between the two parties.

  1. It promotes industrial democracy:

Both the employer and the employees who best know their problems, participate in the negotiation process. Such participation breeds the democratic process in the organisation.

  1. It benefits the both-employer and employees:

The negotiation arrived at is acceptable to both parties—the employer and the employees.

  1. It is adjustable to the changing conditions:

A dynamic environment leads to changes in employment conditions. This requires changes in organisational processes to match with the changed conditions. Among other alternatives available, collective bargaining is found as a better approach to bring changes more amicably.

  1. It facilitates the speedy implementation of decisions arrived at collective negotiation:

The direct participation of both parties—the employer and the employees—in collective decision making process provides an in-built mechanism for speedy implementation of decisions arrived at collective bargaining.

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