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International Handbook of Trade Unions

Edited by John T. Addison and Claus Schnabel

This Handbook is an authoritative and invaluable reference tool, uniquely analysing the forces governing unionism, union behaviour and union impact from a variety of perspectives, both theoretical and empirical. The 14 chapters are written in an accessible style by acknowledged leading specialists from the fields of economics and industrial relations. They offer a truly international perspective on this important subject.
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Chapter 5: Unions and Productivity, Financial Performance and Investment: International Evidence

David Metcalf


5 Unions and productivity, financial 5 performance and investment: 5 international evidence David Metcalf 1. Introduction: the issues and the countries If the presence of a union in a workplace or firm boosts pay, financial performance is likely to be worse unless there is a roughly equivalent union effect on productivity. Any such impact on profitability may lead to higher consumer prices and is likely to cause lower investment rates, contributing to economic senescence, although when the product market is monopolistic it might under some circumstances be benign – a simple transfer from capital to labour – with no efficiency implications. Productivity matters a lot: increased productivity is the source of higher living standards for employees, more profits for capitalists and lower prices for consumers. Similarly investment in physical and human capital is a crucial source of economic dynamism at the level of the firm as well as for the aggregate economy. Therefore the manner in which industrial relations institutions in general, and unions in particular, affect productivity, financial performance and investment is keenly important. This chapter distils evidence on such effects from six countries: USA and Canada from North America, UK and Germany from Europe and Japan and Australia from Australasia. Most of the evidence comes from cross sections of workplaces or firms because there are rather few good recent case studies. This is a pity because case studies of aircraft production (Kleiner et al., 2002) and tyre manufacturing (Krueger and Mas, 2002), which combine...

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