Industry-wide work rules and productivity: evidence from Argentine union contract data

Abstract

In the early 1990's, the Argentine government promoted a framework for productivity-based negotiations between firms and unions at low levels of organization. The policy weakened the industry-wide collective bargaining system, which sets working conditions for all firms in an industry. This paper employs newly developed quantile regression approaches to investigate the effect of union practices on productivity within the context of the reform. The findings show that (i) industry-wide practices on displacement of workers and training have a negative impact on productivity; (ii) work practices do not appear to restrict economic efficiency in the post-reform period; (iii) union practices on technology acquisition have an adverse effect on high-productivity growth industries. Productivity seems to improve in an economy promoting policies to weaken industry-wide collective bargaining.

Collective bargaining in developing countries

“…Industry-level negotiation of work rules related to worker dismissal, technology acquisition, and training have a negative association with productivity in the period before the reforms but a positive association with productivity after the reforms. While the results, in general, hold up under alternative specifications of the estimated model [10], it cannot be concluded that all work rules negotiated after the reforms led to an increase in productivity. Also, the results show correlations between work rules and productivity; they do not imply causality.…”

“…Although the relationships among unions, collective bargaining, and wages have been investigated in developing countries [2], the literature is nearly silent on other clauses included in collective bargaining agreements that do not directly determine the level of employment and can be thought of as part of non-wage labor costs. For instance, in Argentina and Uruguay, contracts in the early 1990s included provisions covering the introduction of new technology, training programs, and rules based on productivity advances [9], [10]. Other practices subject to negotiation included working conditions, length of the work week, paid holidays, workplace safety, work environment, job equipment, promotions, and job descriptions.…”

Labor Unionization Structure, Innovation, and Welfare

“…Venn (2009 provides the evidence of bargaining between the employers and the employees at the industry level for the OECD and selected non-OECD countries. The evidence of industry-wide wage bargaining can be found also in Carluccio et al (2015) for France and in Lamarche (2013) for Argentina.…”

Competition, work rules and productivity

“…When U.S. steel makers faced intense foreign competition in the 1980s, plant managers at U.S. Steel began to violate the work rules in the contract to increase productivity (Hoerr, 1988). Lamarche (2013) finds that reductions in work rules increased productivity in Argentina.…”