Edited by John T. Addison and Claus Schnabel
Chapter 5: Unions and Productivity, Financial Performance and Investment: International Evidence
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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