The effect of trade on productivity growth and the demand for skilled workers in Canada

We use an input–output model to examine the effect of trade integration on productivity growth and the demand for skilled workers in Canada for the period 1981–1997. We find that trade integration has a positive effect on both labour productivity and total factor productivity. Labour productivity and total factor productivity grew faster in export and import industries than in the total business sector over this period, and this productivity growth gap has widened over time. Canada is found to have a comparative advantage in capital- and natural-resource-intensive industries, although it has declined over time. We find that trade integration has little effect on the demand for skilled and unskilled workers in Canada.     

Flexibility,labour retention and productivity in the EU

Abstract

This paper examines the relationship between internal flexibility, the employment of fixed-term contract workers and productivity in 27 European Union countries. Drawing on European Company Survey data, the paper assesses whether establishments that employ on a fixed-term basis experience higher productivity than their competitors and stronger labour productivity improvements over time. These issues are of importance, given the recent weakness of productivity growth in many EU member countries, the steps that governments have taken to relax rules relating to the employment of fixed-term workers and the emphasis placed on contractual flexibility within the European Commission’s flexicurity agenda. The paper finds that establishments that do not use fixed-term contracts enjoy productivity advantages over those that do. Establishments that employ on a fixed-term basis but retain workers once their fixed-term contract has expired perform better than those that do not retain workers. The findings also show that establishments that pursue internal flexibility report both higher productivity than competitors and productivity increases over time. In addition, they are more likely to retain workers who have reached the end of a fixed-term contract.     

When Does the Stepping‐Stone Work? Fixed‐Term Contracts Versus Temporary Agency Work in Changing Economic Conditions

This paper emphasizes differences among short‐term contracts in terms of career prospects. Using French data over the 2002–2010 period, we rely on a dynamic model with fixed effects to disentangle state dependence from unobserved heterogeneity. Although fixed‐term contracts may provide a ‘stepping‐stone’ to permanent positions, temporary agency work is hardly better than unemployment in this regard. The Great Recession of 2008 has changed the dynamics on the labor market and amplified the difference between fixed‐term contracts and temporary agency work. For both types of temporary workers, providing overtime work does not significantly increase the transition to permanent employment. Copyright © 2014 John Wiley & Sons, Ltd.     

An ill-informed choice: empirical evidence of the link between employers’ part-time or temporary employment strategies and workplace performance in Canada

Many employers seek flexibility through part-time or temporary employment to achieve improved competitiveness and success. Using strategic choice theory, this study is a longitudinal examination of employers’ strategic decisions of reducing labour costs and using part-time or temporary workers on workplace performance. Workplace performance is measured through profitability, productivity and change in net operating revenue. Statistics Canada’s Workplace and Employee Survey longitudinal workplace data are used for the analysis. Results show that reducing labour costs strategy has no effect on profitability, productivity or change in net operating revenue, and using part-time or temporary workers strategy shows decreased profitability and productivity, and that there is no effect on the change in net operating revenue in Canadian workplaces studied. Based on these findings, we recommend that employers, in Canada and elsewhere, not only carefully weigh reducing labour costs and employing part-time or temporary workers strategies for workplace performance, but also reconsider such strategies and instead seek alternative means of improving workplace performance.     

Individual contracting,collective bargaining and wages in Australia

We examine wages in Australia under federally registered individual contracts and collective agreements (CAs) using unpublished data from a national earnings survey. The distribution of earnings under registered individual contracts was more unequal than under CAs. Average and median earnings under registered individual contracts were lower than under CAs. There was little evidence that individual contracting raised wages through raising productivity. The link between contracting and pay appears contingent, varying between occupations, industries, and firm size bands and dependent upon employees' position in the labour market and employers' use of union avoidance strategies. This has implications for the interpretation of studies of union wage effects.     

Contract employment policy and research productivity of knowledge workers: an analysis of Spanish universities

Abstract

This article investigates how contract employment practices adopted by universities—fixed-term contracts and permanent contracts—impact research productivity measured in terms of publications in scholarly journals. The empirical application considers the Spanish public higher education system for the period 2002–2008. We report an inverse U-shaped relationship between the rate fixed-term contracts and the research productivity of Spanish universities. That is, contract policies based on fixed-term contracts are conducive to research productivity; however, beyond a critical threshold value increases in the proportion of fixed-term contracts are associated with declining research productivity. These findings reveal that contract employment policies shape research productivity, and that flexible and balanced contract practices are critical for enhancing universities’ research productivity. The results suggest that the excessive use of fixed-term contracts might create an unstable working environment that limits the universities’ capacity to capitalize on their knowledge workers. Policy implications and future research avenues are discussed.     

Labour Demand,Flexible Contracts and Financial Factors: Firm‐Level Evidence from Spain*

We estimate models of labour demand for a panel of 3,400 Spanish manufacturing firms over the period 1985–2001. We examine the roles of fixed‐term contracts, financial factors and a policy reform in 1997 affecting permanent contracts by lowering payroll taxes and dismissal costs. Compared with permanent employment, the demand for flexible labour displays: (i) greater sensitivity to financial factors; (ii) greater cyclical sensitivity; (iii) a larger average wage elasticity; and (iv) less inertia. Our analysis of the 1997 policy reform suggests that a 5 percentage point reduction in the payroll tax is associated with an 8% increase in permanent labour demand.     

Labour productivity and employment in Australian manufacturing SMEs

This paper examines the relationship between labour productivity and employment in Australian manufacturing small and medium enterprises (SMEs). The results indicate that labour productivity of SMEs varies substantially between industries within the manufacturing sector, but on average labour productivity for manufacturing SMEs increased at a faster rate than that of large manufacturing enterprises across all industries. All manufacturing industries except one recorded employment growth during the period under study. However like labour productivity growth, employment growth also varies across industries within the manufacturing sector. Yet the study could not establish any definite relationship between labour productivity growth and employment. This finding is consistent with some previous studies.     

Focus: Productivity in UK Manufacturing Industry

Manufacturing industry has been the major casualty of the recession, recording a total fall in output of about 20 per cent. It is unusual for productivity to rise when output is falling, yet in the last two years output per person employed in manufacturing has risen by 15 per cent. As a result, and in spite of earnings growth of over 25 per cent between 1980 and 1982, the increase in unit labour costs was held to under 15 per cent in the same two-year period. In this Focus we examine how and why these developments have taken place. Our general conclusion is that, with a recovery now under way, normal pro-cyclical productivity gains are reinforcing the abnormal achievements of the last two years and that, in consequence, industrial costs and profits are improving sharply.     

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.

     

The impact of Greek labour market regulation on temporary employment – evidence from a survey in Thessaly,Greece

This paper uses an original data-set for 186 workplaces in Thessaly (central Greece), to study consequences of Greece's strict employment protection law (EPL) and national minimum wage for temporary employment. We find higher temporary work contract rates among workplaces that pay low wages close to the minimum. We also find that EPL ‘matters’, in particular, managers who prefer temporary contracts because temporary workers are less protected definitely employ more. Our findings thus support the view that a firm's HRM decisions regarding internal versus external allocation of tasks are influenced by labour regulation.     

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.     

The German temporary staffing industry: growth,development, scandal and resistance

In Germany the size of the temporary agency workforce has almost doubled between 2002 and 2012 prompted by deregulation and expansion of temporary staffing agency networks. This article examines the growth of the temporary staffing industry in Germany revealing important milestones in the regulatory framework transformation. The article then explores the role of key actors in the development of temporary staffing industry in the Germany labour market, in particular the shifting positions of trade unions in relation to temporary agency work, as well as intervention from the state with re‐regulation in order to mitigate for exploitative affecting temporary agency workers. The findings highlight that while the growth of the German temporary staffing industry has been substantial, and that the state has been an active agent, it has not been without its controversies and challenges, and that features of the industry remain potential barriers for its future development. © 2016 John Wiley & Sons Ltd     

Productivity, convergence and policy: a study of OECD countries and industries

This paper analyses trends in labour productivity and its underlying determinants in a panel of OECD countries from 1979 to 2002. Data Envelopment Analysis (DEA) is used to estimate a Malmquist measure of multifactor productivity (MFP) change. We decompose the growth in labour productivity into (i) net technological change (ii) input biased technical change (IBTC) (iii) efficiency change and (iv) capital accumulation. We analyse the effect of each of these factors in the transition towards the equilibrium growth paths of both labour productivity and per capita GDP for the OECD countries, controlling for the effects of different policies and institutions. The results indicate that on average gaps in productivity or income levels are narrowing down although there is no evidence to suggest that the entire OECD area comprises a single convergence “club”. Using kernel estimation methods we find that that labour productivity and per capita GDP are settling toward a twin peak (bimodal) distribution. Panel unit root tests over an extended (1960–2001) period provide general support for the convergence hypothesis. Analysis of the contributions of productivity growth within industries and sectoral composition changes show that aggregate productivity change is predominantly driven by ‘net’ within sector effects with very little contribution emerging from sectoral shifts (the ‘in-between’ static or dynamic effects resulting from higher or above average productivity industries gaining employment shares or low productivity industries losing shares).     

Dilemmas in the management of temporary work agency staff

Temporary jobs account for an increasing proportion of new engagements in the UK labour market, with temporary work agencies or 'labour market intermediaries' occupying a central role in the regulation of entry into some organisations. Such evolving arrangements have been found to have their contradictions, even for the host organisation. This article explores the internal and external pressures to use a temporary work agency as a means of recruiting labour at host organisations. It considers some of the HRM issues that stem from the use of such workers, including the tendency to devolve HRM to the managers of such agencies operating within the host organisation. Central to this article is a consideration of the potential sustainability of organisations' use of temporary agency workers, engaging with this concern from the perspective of organisational cost‐effectiveness.     

The myths and realities of structural change in the UK labour market

Recent discussion of developments within the UK labour market has highlighted the growth of more 'flexible' types of employment: part-time work, temporary jobs, and self-employment. The structure of employment has also been shifting – away from manufacturing and manual employment and towards the service sector and non-manual employment. In this article, Peter Robinson argues that these are not new developments and in some respects the pace of structural change in the labour market has slowed down. Together with evidence that the labour market is now adapting successfully to earlier structural changes, this bodes well for the prospect of further gradual reductions in unemployment.     

The Performance of Service Industries in Canada: A Real Value Analysis

The performance of service industries in Canada has been lower than that of good industries over the last four decades, with noticeable exceptions such as for railways and telecommunication carriers. Service industries were less economically (and technically) efficient in that they generated less output value (quantity) per hour worked (level and growth) or per combined unit of labour and capital (multifactor productivity growth) than good industries. The relative output price of services declined slightly over time compared with goods. At the disaggregated level, changing relative output prices were substantial and proved to be an important factor explaining the relative satisfactory economic performance of many service industries despite their low technical performance. Nevertheless, the output share of service industries increased over that period, sustained, mainly, by the growing recourse of all firms to outsourcing of services.     

Certified and uncertified skills and productivity growth performance: Cross-country evidence at industry level

We analyse the relationship between human capital and productivity growth using a five-country multi-industry dataset together with a measure of human capital which accounts for both certified skills (educational qualifications) and uncertified skills acquired through on-the-job training and experience. We find evidence of positive human capital effects on growth in average labour productivity, particularly when using our composite human capital measure. We also find some tentative evidence that multi-factor productivity (MFP) growth is positively related to the use of high-skilled labour. However, externalities of this kind are largely confined to industries which make intensive use of university graduates.     

Technology catching-up and regulation in European regions

This paper analyses the effects of the intensity of regulations in the product and labour markets on the growth of total factor productivity (TFP) for 121 European regions. A technological catch-up model is estimated for the period 1995–2007. We use the spatial lag of X (SLX) model to capture possible spatial interactions across spatial units. Our empirical findings show that lower levels of regulation are associated with higher TFP growth. Lower barriers to entrepreneurship and lower bureaucratic costs have a positive effect on productivity growth. Corruption raises operational costs, distorts the allocation of resources and negatively affects innovation activities, thereby reducing TFP growth. Further liberalization in the labour market (in terms of hiring and firing regulation, working hours regulation and employment protection legislation) has a significant positive effect on the growth of TFP. In addition, both regional technological and regional human capital have a positive impact on the TFP growth in European regional economies.     

Contingent work in the UK and Sweden: evidence from the construction industry

This article explores the use of contingent forms of employment in two diverse country contexts—the UK and Sweden—and investigates the influence of changing regulatory and economic conditions over a period that covers the current economic downturn. Drawing on quantitative and qualitative data for the construction sector, the article addresses three questions. How do employers balance their flexibility preferences in the context of regulatory constraints? How has the global recession influenced employer behaviour? And to what extent can the Swedish experience be explained by convergence on other country models? While the UK employment model encourages employers to externalise the risk of unpredictable market conditions through the use of contingent contracts, the more supportive welfare regime in Sweden underpins a resilient preference of employers for open‐ended employment contracts. Ongoing changes in labour market regulation pose challenges to the strongly regulated Swedish model, yet we find only a shared direction of travel with the UK rather than convergence in the use of contingent employment.