Mediate and be dammed

2003

New research suggests that the involvement of third parties in disputes - like the Government with the fire-fighters or Ken Livingstone with the tube workers – can often be counterproductive.

Since the third parties often have no direct involvement, motivation or claim in the dispute, their intervention can often hold up proceedings.

A study led by Dr Paola Manzini of Queen Mary, University of London, examined the effect on negotiations of the presence of third parties not directly involved but able to provide additional resources to help reach agreement.

In joint work with Clara Ponsati of Universitat Autonoma de Barcelona, the researchers observed that since the third party, or ‘active mediator’, had no direct claim to the dispute, the only threat against the other parties is to withhold the additional resources which could be contributed and to stall agreement.

The study highlights the incentive for governments to decentralise negotiations and become ‘active mediators’ rather than directly involved negotiators.

Privatisation, for instance, creates a three-party framework, with negotiations between management and workers, and the Government in the role of the ‘active mediator’.

The report says its findings suggest the Government should use legislation to limit its involvement as far as possible, for instance, by introducing tougher requirements for firms to consult the workforce before taking decisions which may have a great impact on jobs.

But, says Dr Manzini: “Interestingly, the present UK Government seems to favour less and less these mandatory interventions. The undesired effect is that governments become progressively more active players in negotiations.”

The study suggests that the smaller the budget allocated to a public service, the better the outcome from the perspective of the public sector as a whole. The Government can manage to retain most of its budget, gaining a bargaining advantage which it would not have if it was directly involved in negotiations.

It may pay for the Government to hold out and delay agreement if by so doing it manages to keep most of its resources, says the report.

But a weak union may make it worthwhile for the Government to intervene in public sector negotiations. The Government can even provide positive contributions and still be better off as compared with a situation of straightforward bargaining between the employer and the union, it observes.

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