The government may influence collective bargaining and employment conditions in ways which differ greatly among countries. Some of the roles can be listed as under:
1. It may determine employment conditions by law, for example, through setting the minimum wages, legislating the length of holiday or preventing ethnic discrimination.
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2. It may provide some benefits directly, for example, pensions.
3. It may set the ground rules which govern the parties; conduct to take an example, through giving unions the right to bargain, restricting the conditions under which strikes may occur or determining the scope of bargaining.
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4. It may settle disputes which the parties are unable to settle themselves often through mediation or arbitration. In Australia, conciliation and arbitration play major roles in determining the conditions of employment.
5. Through its macro-economic and social policies, it affects the terms of bargaining agreements.
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6. The government is a major employer itself and often bargains with unions representing its employees, frequently setting a pattern for the entire economy. In fact, union density is higher in the public sector, rather than in the private sector in most countries today.
Furthermore, as the presumed representative of the public interest, the government is interested in industrial peace, price stability, increased productivity and non-discriminatory employment patterns. To achieve these objectives, it can pressure the parties (often through legislation).One the other hand, the parties too can pressurize the government (often through political action). Thus, the government is a third party in collective bargaining combining the often conflicting roles of neutral and bargainer.
Three examples illustrate the range of governmental roles:
i. The USA Government is primarily (and perhaps ineffectively) a referee in collective bargaining
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ii. In Latin American countries, where collective bargaining is poorly developed, the parties pressure the state to obtain conditions which in countries (including India) might be obtained through bargaining. However, if government participation is more, collective bargaining process would not be voluntary.