Union Presence and Labour Productivity in British Manufacturing Industry. A Reply to Nolan and Marginson

Evidence on the association between union presence and labour productivity in British manufacturing industry is surveyed. The weight of the evidence suggests that around 1980 highly unionized organizations had a lower level of labour productivity than corresponding less highly unionized organizations, but that during the first half of the 1980s unionized work-places, firms and industries had superior productivity growth to their less unionized counterparts. Various criticisms made by Nolan and Marginson of earlier studies on unions and productivity are evaluated.     

The Effects of Unions on Firm Behavior: An Empirical Analysis Using Firm-Level Data

We evaluate the use of firm-level union coverage rates in empirical models of firm behavior and performance. We focus on the potential for measurement error in both firm- and industry-level data, and find that firm-level union coverage rates provide more precise estimates of union effects. Higher union coverage at a firm is associated with slower employment and sales growth, decreased productivity in nonmanufacturing firms, increased productivity in manufacturing firms, lower profitability, and less investment in durable assets, such as research and development.     

Unionism and Employer Discrimination: Analysis of 8(a)(3) Violations

The choice model of firm violations of section 8(a)(3) of the NLRA specified here was tested for the period 1972–1979 using a sample of firms from the New York and American Stock Exchange. The results show that previous violations of this section of the Act, relative per cent of union organization, and changes in firm employment are statistically significant determinants of the marginal benefits of violations. These findings generally support union officials' claims that the penalties in the Act are not strong deterrents to management violations and may be considered a relatively low cost of doing business. However, assertions by union officials that product market factors are important in firm decisions to violate the Act are not supported. In addition, the results do not support NLRB officials' belief that firms that commit violations are not likely to commit them again. The fact that there are no significant differences in violations by firms in our sample as a result of product market variables or industry implies that ethical considerations may be a factor in choosing to violate the Act. Since current penalties are low, and past violations are significant in determining current violators, an increase in penalties may reduce violations by those who do not consider the ethical implications of the Act. If the intent of the current NLRA is to reduce the coercion of employees by employers, an amendment to increase the economic costs to employers seems indicated.     

Did the Retreat of UK Trade Unionism Accelerate during the 1990–1993 Recession?

It is widely believed that recessions are periods of accelerated structural change, with major reorganizations or adjustments being made under intense pressure. These changes are made to ensure the survival of firms, exploit opportunities created by difficulties facing other firms, or take advantage of temporary falls in the opportunity cost of initiating and carrying out changes. This line of argument suggests that we should expect to see firms making major changes in their investments in human capital, and in their industrial relations practices. Our results are only partially consistent with this view. What seems to be clear from the data generated by our surveys is that firms are not reluctant to make changes in their bargaining strategies and industrial relations systems. This should be no surprise. Unlike investments in plant and equipment, these changes do not require much cash, and the opportunity cost of making them is much lower in recessions than in booms. However, the observed changes in union recognition have not occurred primarily in firms that were severely affected by the recession. Increases in pay decentralization and reorganization of work-force arrangements were no more likely to be initiated by distressed firms than by firms only moderately affected by the recession. It follows, then, that the retreat of UK unionism observed during the 1990–3 recession was, in the main, a continuation of existing secular trends. The mild acceleration in the pace of change revealed by our survey may be cyclical, but the trend is unlikely to be reversed as recovery gathers pace.     

The Impact of Union Wage Concessions on Union Premiums

Previous research showing that union wage premiums actually rose from the late 1970s to the mid-1980s suggests that concession bargaining was more media hype than the result of a fundamental change in collective bargaining. Our study found that nonrandom attrition of workers from the union sector does lead to an upward bias in the measured growth of union premiums, but concession bargaining was not a sufficiently widespread occurrence to reduce the size of union premiums during the sample period.     

Plant Closures and Unionization in British Establishments

This paper examines whether there is a link between establishment closure and union presence using data from the 1984–90 panel sample of establishments of the Workplace Industrial Relations Survey. It considers whether the notion that unions damage long term performance and ultimately force uncompetitive establishments to shut down is a reasonable one.
I can find no evidence whatsoever for this hypothesis. There is no evidence that establishment closure and union presence are positively correlated. The relationship is usually negative and sometimes significantly so.
These results are important for at least two reasons: (i) it does not seem that unions have detrimental effects that force establishments to close down in the long run; (ii) the idea that union establishments have been dying at a faster rate forms no part of the explanation of the sharp union decline observed in the 1980s.     

Changes in Wage-setting Arrangements and Trade Union Presence in the 1980s

In this paper we detail the results of a retrospective survey of changes in trade union and wage-setting arrangements in the 1980s for a sample of 558 UK companies. Our key findings are as follows. (1) Complete derecognition of unions in a firm was rare even in firms with low trade union density. (2) Partial derecognition in multi-plant firms was more common. Some 13 per cent of companies with recognized unions in 1984 had had at least partial derecognition by 1990. (3) Large falls in trade union density within a firm have also been rare, though small but observable declines have been commonplace. (4) The coverage of the closed shop has substantially declined, and this decline has been most marked in the last five years. Around one-quarter of firms with recognized unions in 1990, however, still had closed-shop arrangement for at least part of their work-force. (5) There has been no clear decline in the prevalence of multi-unionism or multiple bargaining units. (6) There has been a significant move away from national/industry-wide bargaining, towards negotiations at the individual company or more often the establishment level. (7) In the absence of collective bargaining there have been clear moves away from wage-setting by formal external links, such as wages councils and multi-employer agreements, and even away from worker consultation towards more managerial discretion. (8) In deciding wage settlements, managers are increasingly influenced by company performance and less by multi-employer wage settlements.     

Corporate Real Estate Ownership and Productivity Uncertainty

This article empirically tests the relationship between corporate real estate (CRE) holdings and productivity risks of firms. Using a large sample of public listed U.S. firms for the period from 1984 to 2011, we show that CRE ownership is significantly and negatively correlated with productivity risks of firms. Firms with high‐productivity risk own less CRE assets. When testing dynamic changes to CRE holdings, we estimate a significant and positive elasticity of CRE investments of 5.2% in response to cash flow shocks. If the adjustment cost is high, high‐risk firms are expected to hold less CRE assets, so that they could reduce potential losses associated with CRE holdings when negative productive shocks occur.     

Unions and Investment in British Manufacturing Industry

This paper is concerned with the impact of unions on the investment rate in British industry. On the basis of an analysis of some 72 industries in the manufacturing sector, we find that, ceteris paribus, firms that recognize manual unions and have an average level of union density invest some 23 per cent less than firms that do not recognize unions. However, once we allow for union effects on wages and productivity, this overall effect is reduced to between 4 and 13 per cent, depending on the degree of competition in the product market.     

Exclusion and Disarticulation: The Transport and General Workers' Union in the Road Haulage Industry, 1979–1998

The attrition of trade union organization and collective bargaining in the UK is accepted as having been a principal feature of industrial relations since 1980, but there is no general agreement as to the causes. This paper explores trade union disarticulation and exclusion in a 1979–98 study of the Transport and General Workers' Union Road Transport Commercial trade group, which organizes in the road haulage industry. It emphasizes the importance of the legal framework established by the Conservative government in inhibiting union power at a time of the ongoing restructuring of road haulage, providing companies with the opportunity and incentive to exclude trade union organization and fragment union bargaining power.     

Determinants of Decertification Activity: An Interstate Analysis

In this paper, a model of union decertification activity in the U.S. is estimated for 1960, 1970, 1975, and 1980. Cross-state data permit the use of regressors capturing the effects of demographic, political, and organizational factors not included in previous research on decertification. The estimated results confirm these effects. Tests for stability over the pooled sample periods 1960–1970 and 1975–1980 show some variability in the strength of the variables' effects.     

Determinants of Decertification Activity: An Interstate Analysis

In this paper, a model of union decertification activity in the U.S. is estimated for 1960, 1970, 1975, and 1980. Cross-state data permit the use of regressors capturing the effects of demographic, political, and organizational factors not included in previous research on decertification. The estimated results confirm these effects. Tests for stability over the pooled sample periods 1960–1970 and 1975–1980 show some variability in the strength of the variables' effects.     

The Productivity Effects of Participatory Employment Practices: Evidence from New Japanese Panel Data

We report the first results for Japanese firms on the effects of clusters of participatory employment practices (or participation/employee involvement at the top level as well as at the grassroots level, and financial participation) by estimating production functions using new panel data. We find that the introduction of a group of complementary practices will lead to a significant 8–9 percent increase in productivity. However, the full productivity effect is felt only after a long developmental period.     

The productivity and wage effects of foreign acquisition in the United Kingdom

This paper provides a systematic empirical analysis of the impact of foreign ownership on productivity and wages in the United Kingdom. Using a specially constructed database for the period 1989–1994, it uses ownership change (acquisition) to control for unobserved differences between plants. It finds that foreign firms pay equivalent employees 3.4% more than domestic firms, though this is wholly attributable to their higher levels of productivity. Firms which are acquired by foreign companies exhibit an increase in labour productivity of 13%.     

Firm Investment Behavior and Collective Bargaining Strategy

Using survey data on labor union coverage at the firm level, this paper examines union-nonunion differences in investment activity among 706 U.S. companies during the 1970s. Consistent with a model of union rent seeking, firm-level collective bargaining is associated with significantly lower physical capital and R&D investment, even after controlling for firm and industry characteristics. Deleterious union effects on investment are considerable throughout the 1972–80 period, but they vary across industries. Without significant changes in collective bargaining power or strategies, diminished investment activity by unionized companies is likely to exacerbate the already considerable decline in U.S. union coverage     

Productivity Levels & Productivity Change Under Unionism

This paper examines how unions affect the rate of productivity change. The direction of union impact cannot be predicted from economic theory. Firms may select either more productive technologies to offset higher union wages or less productive technologies to keep union wage demands in line. Evidence from manufacturing indicates that unions have not affected productivity growth; in construction, productivity growth has been much slower where there is a high initial level of unionization or where unionization is growing.     

Union Voice Effects in Mexico

This paper utilizes establishment survey data from Mexico to explore the impact of union voice on fringe benefits, turnover, job training and productivity. Mexican unions have a significant effect on these outcome measures for workers and firms. Unions increase both the value of fringe benefits per worker and the ratio of fringe benefits to total compensation, increase job training and raise productivity per worker. However, contrary to the broader literature on union voice effects, unionized establishments in Mexico appear to possess greater worker turnover.     

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

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.     

Market Structure, Strike Activity, and Union Wage Settlements

We attempt a synthesis of the industrial relations market structure hypothesis with the modern asymmetric information theory of wage and strike outcomes. The industrial relations literature contains arguments indicating that wage settlements should be positively related to the degree of product market sales concentration and the degree of product market coverage by the union. In our empirical analysis of the periods 1970–1980 (strikes) and 1976–1980 (wages), we find that the relation between trade-adjusted sales concentration and wage settlements is positive at low and intermediate levels of concentration but negative at the highest levels of concentration. The relation is always negative for strike probabilities. We also find that the trade-adjusted per cent of the product market covered by the same union and the percentage covered by other unions are positively related to both wage settlements and strike probabilities.     

The effects of divestiture,privatization, and competition on productivity in U.S. and U.K. telecommunications

The telecommunications industries in the United States and the United Kingdom have undergone massive changes during the 1980s. This paper decomposes the total factor productivity growth of AT&T and British Telecom into their various components. It finds that while a great deal of the productivity increases apparently resulted from continuing scale economies, competition for AT&T and privatization of BT have been responsible for 17 percent and 25 percent of their respective gains in recent years. Among other variables, divestiture appears to have initially depressed AT&T's productivity growth, and competition for BT is too insignificant to yet have an impact.