Human resource and industrial relations practices of UK and US multinationals in Germany

Most of the research about HRM and IR practices of MNCs in their host country has been conducted in deregulated countries such as the UK and the US. Host countries with relatively weak institutional arrangements facilitate the transfer of home-country practices. In contrast, those with institutionally strong systems, such as Germany, impose stronger pressures for adaptation. This paper reports research about nine US and four UK subsidiaries operating in Germany. It examines how their HRM and IR practices are shaped by German labour and IR institutions, how they differ from a control group of indigenous firms and what room for manoeuvre is left for the introduction of home-country practices. The main conclusions are that small and medium-sized subsidiaries in particular can to some extent avoid the pressures exerted by German labour and IR institutions. This facilitates the transfer of home-country practices. However, even larger affiliates that comply with the German institutions can transfer practices from their parent company. The highly regulated German system leaves some room for flexibility. Nevertheless, the institutional environment prevents large companies from following a unitarist HRM and IR approach.     

Aligning labour disputes with institutional,cultural and rational approach: evidence from East Asian-invested enterprises in China

This study examines the underlying critical factors, such as the institutional arrangements, working conditions, workforce composition, expatriate managers, and managerial style which influence the labour disputes in the East Asian-invested enterprises (EAIEs) in China. Throughout the process, we can determine which factors should be changed for better human resource management (HRM) practices. This research incorporates the survey data collected from the managers and factory workers working at 30 different firms invested from Taiwan, Korea, Hong Kong and Japan in the coastal cities from 2000 to 2001.

The results or findings demonstrate that the long work hours and less regulative managerial styles have significant and positive effects on the number of the labour disputes in the Hong Kong owned firms. Among the firms owned by Taiwan, the long work hours and their authoritarian managerial style have significant effects on the frequency of the labour disputes, while the lack of unionization has a diminishing effect on the labour disputes. The firms owned by Korea, on the other hand, often encounter frequent collective actions, organized by homogeneous local workforces and supported by the relatively high numbers of trade unions. Responding to the relatively strict enforcement of the labour laws and the institutional arrangements of the local governments in northern China, the firms owned by Korea tend to adopt the less regulative and less authoritarian managerial styles. Lastly, the firms owned by Japan experience the lowest number of the labour disputes when compared to their counterparts. The observance of the legal work hours and the regulative managerial style displays a significantly diminishing effect on the number of the labour disputes, although the higher level of institutionalization of the labour relations such as higher setting-up of trade unions somewhat positively contributes to the frequency of the labour disputes.

From the theoretical perspective, our exploratory model seems to exhibit the stronger explanatory ability when the institutional, cultural, and rational factors are taken into consideration. From the institutional perspective, it is imperative for local governments to reinforce the institutional arrangements through effective supervision and enforcement of the labour regulations and legislation. From the cultural perspective, foreign investors should enhance their inter-cultural understanding and localization to diminish the industrial conflicts in the workplaces in China. From the rational perspective, foreign-investors will face more labour disputes than they had before, if harsh working conditions, such as extension of the working hours, are enforced. It is also imperative for the workers to understand their rights and empower themselves to improve their working conditions.     

International Comparisons of Labour Productivity in Transport and Communications: The US,the UK and Germany

We construct benchmark estimates of labour productivity covering the transport and communications sectors for the US, UK and Germany for 1992 and 1993. The US lead is substantial in rail and trucking, even after adjusting for differences in stage length, but Britain leads in air transport and all three countries have similar productivity levels in local transport. In telecommunications and postal services the US enjoys a large lead over both the UK and Germany. We compare these estimates based on industry data with ones derived from the national accounts and find them similar in communications but not in transport. For 1973–96, and also 1989–96, productivity was growing slower in the US, hence some of the gap has been closed.     

The World Technology Frontier: What Can We Learn from the US States?*

We re‐estimate the world technology frontier non‐parametrically using a dataset covering OECD country‐level data and US state‐level data on GDP per worker and the stocks of physical capital, unskilled labour and skilled labour. The auxiliary use of US state‐level data significantly reduces the upward bias in cross‐country estimates of technical efficiency, and so does allowing for imperfect substitutability between skilled and unskilled labour. We then use our adjusted estimate of the world technology frontier in a series of decompositions of productivity differences and sources of economic growth in the OECD in 1970–2000, including also ‘appropriate technology vs. efficiency’ decompositions.     

Impact of China's currency valuation and labour cost on the US in a trade and exchange rate model

Ricardian dynamic general equilibrium analyses show that under free trade arrangements a low income country with lower wage cost and large endowment of labour has comparative advantage in trade. Efficiency gains from this enhance economic growth and welfare of households simultaneously in both low income and advanced economies. Theoretical predictions are empirically validated here with structural VAR analysis based on quarterly data over the time period 1995:1 to 2009:1 on China's relative wage cost, interest rate differential, real effective exchange rate (REER), relative GDP and the US current account balance. It is shown how the relative prices of labour, capital and the currency affect the economic activity in China and current account balance in the US. With free capital inflows and outflows and restrictions on labour mobility, comparative advantage of China and the trade deficit of the US will both be minimised if China allows real appreciation of the Yuan and complete adjustment in prices. Higher production cost and prices in China could reduce welfare of Chinese households and the trade imbalance of the US, while higher relative GDP of China lowers the current account balance for the US.     

Still a distinctive southern European employment model?

Current similarities among the four southern European EU Member States—Greece, Italy, Portugal and Spain—with respect not only to labour market characteristics but also to the institutional arrangements that influence labour supply, utilisation and demand corroborate the concept of a distinctive southern European employment model. Its origins go back to common features in the pattern of socio‐economic development and the political history of these countries. In the past 20 years or so, national differences in the pace and content of institutional change have increased diversity within the model and eroded some of its components. They have not, however, destroyed its unity and distinctiveness.     

From London to Los Angeles: a comparison of local labour market processes in the US and UK film industries

Addressing the issue of the embeddedness of labour markets, this paper compares the processes of finding employment in the film industry within two local labour markets. Drawing on studies of freelance film crews in London (UK) and Los Angeles (US), the paper concludes that the importance of social networks in job mobility in both contexts is a consequence of common production structures. However, common labour market practice varies in each geographical space as industry processes and structures are mediated by local institutional contexts.     

Market Services: Productivity Benchmarks for the UK

This paper presents comparisons of labour productivity (value added per hour worked) in market services for the UK, the US, France and Germany in 1993. Market services, defined as (1) Distribution, Hotels and Catering, (2) Transport and Communications and (3) Finance, Insurance and Real Estate, make up 34–43 percent of total employment in the four countries. For productivity in market services overall, the US led the UK by 35 percent in 1993, Germany led the UK by 34 percent and France led the UK by 36 percent. The UK productivity shortfall vis-à-vis Germany and France was wider in market services than in manufacturing.     

Informal employment and the earnings of home-based home care workers in the United States

Informal employment continues to exist in parallel with formal employment among the US home-based home care workers and undermines the workers' economic security. This study examines the extent to which the earnings of the US home-based home care workers are affected by informal employment arrangements and state labour policies designed to benefit low-wage home care workers. Using a sample of 1,318 home-based home care workers from the 2017 and 2018 Annual Social and Economic Supplement of the Current Population Survey, this study found that (i) informally employed home-based home care workers had a 9% reduction in annual earnings and that (ii) their earnings were not improved by generous state minimum wages and Domestic Workers' Bill of Rights while the earnings of agency employees were. The findings highlight the importance of strong enforcement of labour standards for informally employed home care workers in the United States.     

INSTITUTIONS AND PERFORMANCE IN EUROPEAN LABOUR MARKETS: TAKING A FRESH LOOK AT EVIDENCE

Abstract This paper presents a selective survey of the recent literature on labour market institutions and offers new empirical EU‐based evidence on the impact of labour market reforms on employment and labour market adjustment. Although the literature traditionally treats labour market institutions as exogenous, attention shifted recently towards understanding the underlying causes of specific institutional arrangements. As a consequence, the literature highlights the great importance of an efficient policy design exploiting these interactions wisely and identifies general principles for achieving an efficient policy design at both macro and micro levels. Although empirical evidence does not show a major change in terms of intensity of labour market reform after the setting of the Economic and Monetary Union and the creation of the euro, the reforms aiming at strengthening the labour market attachment of vulnerable groups tend to have been successful both in raising their employment and increasing labour market adjustment.     

Tighter labour markets to finally lift global wages

• Wage growth has been relatively slow since 2007 in advanced economies, but an upturn may be in sight. Slow productivity growth remains an issue but tighter labour markets make a positive response by wages to rising inflation more likely and there are signs that compositional and crisis‐related effects that dragged wage growth down are fading – though Japan may be an exception.
• Overall, our forecasts are for a moderate improvement in wage growth in the major economies in 2017–18, with the pace of growth rising by 0.5–1% per year relative to its 2016 level by 2018 – enough to keep consumer spending reasonably solid.
• Few countries have maintained their pre‐crisis pace of wage growth since 2007. In part this reflects a mixture of low inflation and weak productivity growth, but other factors have also been in play: in the US and Japan wage growth has run as much as 0.5–1% per year lower than conventional models would suggest.
• The link with productivity seems to have weakened since 2007 and Phillips curves – which relate wages to unemployment – have become flatter. A notable exception is Germany, where the labour market has behaved in a much more ‘normal’ fashion over recent years with wage growth responding to diminishing slack.
• ‘Compositional’ factors related to shifts in the structure of the workforce may have had an important influence in holding down wage growth, cutting it by as much as 2% per year in the US and 1% per year in the UK. There are some signs that the impact of these effects in the UK and US are fading, but not in Japan.
• The forecast rise in inflation over the next year as energy price base effects turn positive is a potential risk to real wages. But the decline in measures of labour market slack in the US, UK and Germany suggests wages are more likely to move up with inflation than was the case in 2010–11 when oil prices spiked and real wages fell.

     

Embodying Embodiment in a Structural,Macroeconomic Input-Output Model

In this paper, I develop a regression-based system of labour productivity equations that account for capital-embodied technological change and I incorporate this system into IDLIFT, a structural, macroeconomic input-output model of the US economy. Builders of regression-based forecasting models have long had difficulty finding labour productivity equations that exhibit the "Solowian' property that movements in investment should cause accompanying movements in labour productivity. The production theory developed by Solow and others dictates that this causation is driven by the effect of traditional capital deepening as well as technological change embodied in capital. Lack of measurement of the latter has hampered the ability of researchers to estimate properly the productivity-investment relationship. Recent research by Wilson (2001) has alleviated this difficulty by estimating industry-level embodied technological change. In this paper, I utilize those estimates to construct capital stocks adjusted for technological change and then use these adjusted stocks to estimate Solow-type labour productivity equations. It is shown that replacing IDLIFT's former productivity equations, based on changes in output and time trends, with the new equations, results in a convergence between the dynamic behaviour of the model and that predicted by traditional (Solowian) production theory.     

The Productivity Slowdown, Sectoral Reallocations and the Growth of Atypical Employment Arrangements

This paper explores the recent shifts in employment arrangements away from long-term employment contracts and internal labor markets towards outside contracting of labor in OECD countries. It examines the driving forces behind this phenomenon, focusing on the relationship with another important trend of the last few decades, namely the labor productivity slowdown. A comparison of U.S. and European institutional arrangements shows how very different labor markets have recently displayed similar patterns in the use of contracted out labor. This paper explains these similarities and reconciles them with very different patterns in hiring, firing, and quitting behavior observed in the two regions.     

Monopsonistic competition for the “best” workers

In this paper we analyse an economy where firms use labour as the only production factor, with constant return to scale. We suppose that jobs differ in their non-wage characteristics so each firm has monopsonistic power. In particular, we suppose that workers are heterogeneous with respect to their productivity. Then, each firm has incentives to offer higher wages in order to recruit the most productive workers. Competition among firms leads to a symmetric equilibrium wage, which is higher than the reservation wage, and to involuntary unemployment for the less productive workers, who are willing to work at the current wage but are not hired because their productivity is lower than the wage level. If firms have no institutional constraint on paying lower wages for the same job, an endogenous labour market segmentation emerges.     

Output and productivity growth in the education sector: comparisons for the US and UK

This paper considers the measurement of performance in public service provision in an international context by examining outcome-based measures for the education sector. It first sets out the measurement issues in general terms. The paper then applies these methods to comparing the UK experience with that in the US over the period 1979–2002. The results show higher labour productivity growth in the UK education sector than in the US over this time period, so that the UK eliminated the productivity gap with the US by the end of the Century.

Population,pensions, and endogenous economic growth

We study the effect of a declining labor force on the incentives to engage in labor-saving technical change and ask how this effect is influenced by institutional characteristics of the pension scheme. When labor is scarcer it becomes more expensive and innovation investments that increase labor productivity are more profitable. We incorporate this channel in a new dynamic general equilibrium model with endogenous economic growth and heterogeneous overlapping generations. We calibrate the model for the US economy and obtain the following results. First, the effect of a decline in population growth on labor productivity growth is positive and quantitatively significant. In our benchmark, it is predicted to increase from an average annual growth rate of 1.74% over 1990–2000 to 2.41% in 2100. Second, institutional characteristics of the pension system matter both for the growth performance and for individual welfare. Third, the assessment of pension reform proposals may depend on whether economic growth is endogenous or exogenous.     

Total Labour Requirements and Value Added Productivity of Labour in the Process of Economic Development

When the inverse of the value added productivity of labour is regressed on total labour requirements (which is equivalent to labour values), a significant relationship is obtained. This indicates that the value added productivity of labour can be explained by total labour requirements (labour values). The mean value of the regression coefficients is about 1.7. The regression coefficients have a tendency to increase during the process of rapid economic development and to decrease afterwards. Such movements are explained by value added linkages. This study is based on input–output analysis, where total labour requirements per monetary unit of output and the value added productivity of labour are calculated for each of 24 industries in Japan, Korea and USA, every 5 years between 1960 to 1985.     

Reconciling Domestication Techniques,the Notion of Re-exports and Some Comments on Regional Accounting

Recent work by Jackson (1998) subtly pointed out a means of forming direct input coefficient matrices from national technology that is different from that published elsewhere. In this paper, I rationalize his approach and also point out that prior approaches may still be useful in certain applications where the phenomenon of re-exports (imports that satisfy exports) are explicit in exports accounts. In the second half of this paper, I show some means of developing regional accounts, currently being used in the US, that are more elaborate than those Jackson discussed. For example, I substitute regional shares of employment with earnings shares to obtain productivity adjusted regional output. I also suggest using available regional value added and regional labour income when producing regional Use matrices.     

Productivity change in a multisectoral economic system

We estimate productivity growth without recourse to data on factor input shares or prices. In the proposed model, the economy is represented by the Leontief input–output model, which is extended by the constraints of primary inputs. A Luenberger productivity indicator is proposed to estimate productivity change; this is then decomposed in a way that enables us to examine the contributions of individual production factors and individual commodities to productivity change. The results allow for the identification of inputs or outputs that are the drivers of the overall productivity change. Their contributions are then decomposed into efficiency change and technical change components. Using input–output tables of the US economy for the period 1977–2006, we show that technical progress has been the main source of productivity change. Technical progress was mostly driven by capital, whereas low-skilled labour contributed negatively.     

Assessing the long‐run economic impact of labour law systems: a theoretical reappraisal and analysis of new time series data

Standard economic theory sees labour law as an exogenous interference with market relations and predicts mostly negative impacts on employment and productivity. We argue for a more nuanced theoretical position: labour law is, at least in part, endogenous, with both the production and the application of labour law norms influenced by national and sectoral contexts, and by complementarities between the institutions of the labour market and those of corporate governance and financial markets. Legal origin may also operate as a force shaping the content of the law and its economic impact. Time‐series analysis using a new data set on legal change from the 1970s to the mid‐2000s shows evidence of positive correlations between regulation and growth in employment and productivity, at least for France and Germany. No relationship, either positive or negative, is found for the UK and, although the United States shows a weak negative relationship between regulation and employment growth, this is offset by productivity gains.