Where Do Unions Add Value? Predominant Organizing Principle, Union Strength and Manufacturing Productivity Growth in the OECD

Abstract

This article deploys comparative historical data on 14 OECD countries to examine the significance of predominant union structure for the impact of union strength on the (medium‐term) growth in hourly labour productivity in manufacturing. The analysis shows that where craft and general unionism predominates, union strength has a deleterious impact on productivity growth. Where enterprise unionism predominates, union strength is irrelevant. However, where industrial unionism predominates, union strength promotes productivity growth. These effects exist independently of established economic influences on aggregate productivity growth. The findings are interpreted as displaying the importance of the character of the governance that unions provide for their productivity impact.

Does egalitarian pay add value? Pay compression, union structure and manufacturing productivity growth in the OECD

“…Marsden (1999) refers to the role of industrial unionism in both Germany and France in arguing that inter-firm institutions are central to coherent attachments of pay to occupation and post. Vernon and Rogers (2013) indicate that recent evidence confirms that under industrial unionism, attachments of pay to post have been clearer, and still more so where industrial unions are strong. These contributions suggest that there may be comparative historical variation not only in aggregate pay compression, and in its reflection of unionization, but, systematically with predominant union structure, in the coherence of this compression.…”

“…Such analyses of the implications of industrial as opposed to both enterprise unionism and craft and general unionism suggest the purchase of a simple dichotomy opposing industrial or ‘encompassing’ (Streeck, 2005) unionism with what is termed here ‘segmented’ unionism, spanning traditions of both enterprise and craft and general unionism. Indeed, while Vernon and Rogers (2013) adopt a triple classification of predominant union structure, the principal distinction in their findings is between the productivity growth effects of union strength under industrial unionism and under both craft/general and enterprise unionism.…”

“…Hibbs and Locking (2000) deploy longitudinal establishment-level data to analyse the implications of the union pay policy in Sweden, showing that productivity was improved by inter-enterprise pay compression (‘equal pay for equal work’), but retarded by inter-occupational compression (‘equal pay for all work’). Vernon and Rogers (2013) deploy comparative historical data to show that under industrial unionism, union strength (gauged by unionization rates) promotes manufacturing productivity growth, while under enterprise and most particularly craft and general unionism, union strength retards it. These are striking findings, as efforts to identify aggregate productivity effects of the procedural formalities of bargaining have been unsuccessful.…”

“…These are striking findings, as efforts to identify aggregate productivity effects of the procedural formalities of bargaining have been unsuccessful. Vernon and Rogers (2013) attribute their results to the contrasting effects of unions with distinct structures on the generality, elaboration and security of the attachments of pay to post which employees find motivating. However, the productivity effects of aggregate pay compression remain obscure.…”

Improving Productivity: The Case for Employee Voice and Inclusive Workplace Practices

“…Recent evidence suggests that in national settings where industrial unionism predominates, stronger trade unions are associated with higher productivity growth at the national level (Vernon and Rogers 2013). Moreover, coordinated bargaining systems can also lead to significant productivity gains for individual firms/workplaces (Braakman and Brandl 2016).…”