This aspect is a disincentive to managers, and its cost is carefully priced by cautious employers. A powerful argument for national level wage negotiations is their potential to stabilise national pay levels by standardising rises and thus avoid wage leapfrogging between different groups of workers. In countries where bargaining is normally at national level, managers are keen to negotiate regionally because this allows pay variations. They say it lets them motivate workers to strive for increased productivity by compensating the most productive areas. Unions retort that it is divisive, making workers compete with each other because nationally they no longer have a united interest.
Individual contracts weaken labour unity, and undermine collective bargaining.
Managers say this system allows them to reward individual workers. Often companies that favour individual contracts are quite open about their hostility to unions. Workers with individual contracts have little motivation to increase production voluntarily, and workplace morale is generally poor. Firms have discovered that offering collective incentives to workers on individual contracts, are awkward to implement and prohibitively expensive, which indicates that they are not as individual as their proponents would have us believe. Meanwhile bosses were free to ratchet up their advantage, increasingly demanding non-unionised workplaces, and began to set the entire bargaining agenda.