Wage Settlements Research Articles

A Tale of Two Centuries? Expanding Constitutional Labour Rights in Canada and Their Impact on Legislation, Conflict and Wages

ABSTRACTUsing collective agreement and strike data from the Canadian Federal and provincial jurisdictions for the years 1978–2019, this study examines the effect that various legislative regimes that govern public‐sector bargaining disputes have on the incidence, duration and cost of conflict. This study seeks to replicate and improve previous estimates related to this topic but also extends the analysis to examine changes to the legal environment in Canada in which labour rights have been increasingly enshrined in constitutional law through the Canadian Charter of Rights and Freedoms. This study finds, in contrast to previous studies, that the legislative regime impacts the way agreements are settled when disputes occur but not the likelihood of a directly negotiated agreement prior to impasse. It also highlights some differences in contract and wage settlements prior to and after the constitutionalization of labour rights in Canada.

Manjolai Estate Conflict in Tirunelveli District - A Historical Survey

Abstract: The tea estates of Manjolai, Kakkachi, Nalumukku, Oothu and Kuthiravetti are situated in the hills of Ambasamudram in Tirunelveli District. Middlemen of the employers brought people of Scheduled Caste communities from Tirunelveli and Thoothukudi regions and the Ezhava people from various parts of Kerala to work as labourers in the estates. The labourers are overseen by the Supervisors addressed as ‘Kangani’ who in turn are answerable to field officers called as Ayya, and they work under Estate Managers respectfully called Durai. The Estate Managers are usually from other states such as Karnataka and Punjab, and the Officers are from other districts in the State. In the year 1948, the Tamil Nadu Estates (Abolition and Conversion to Ryotwari) Act was enacted, and consequentially the Singampatti Zamin’s lands too came under the control of the Government. As a result, in the year 1952, BBTC had to renew its lease contract with the then Congress-led government in Tamil Nadu. Even though decades have passed, many of the demands raised by the labourers still remain unfulfilled. In painful contrast to the fresh leaves of tea that they pluck in the scenic hills up in Manjolai, the lives of the Tea Estate labourers remain as barren as a desert. The deceased workers were employed at the Bombay Burma Trading Corporation’s (BBTC) tea estates in Manjolai. Manjolai labourers massacre or Thamirabarani massacre of 23 July 1999 was the death of 17 Dalit labourers, including two women and a two-year- old child, when they got into the river to escape Tamil Nadu Police lathi-charge. Public were going in procession to Tirunelveli Collectorate to submit a memorandum demanding wage settlement for the tea plantation workers of Manjolai estate. An altercation between the police and the marchers resulted in a lathi charge by police. When the marchers ran helter-skelter, many fell into the river and died.Human Rights Watch condemned the brutal police attack and killing of Dalit tea plantation workers

Not a Penny off the Pay, Not a Second on the Day: Long-term Wage Settlement at Hindustan Aeronautics Limited

This case study presents the delicately poised situation of the workers who were on strike, demanding better wages from their employer, during wage negotiations in India. It highlights the dispute resolution mechanisms, the rubric to evaluate the strike as well as whether wages are to be paid for the duration of the strike period within the framework of the Industrial Disputes Act, 1947, of India. This case study is based on the strike, which occurred in September 2019, during the wage settlement at Hindustan Aeronautics Limited (HAL). It is developed completely from secondary and publicly available reports and information. The researchers have used the specific legislative framework of Industrial Disputes Act, 1947, of India to understand certain practical aspects of the applications of the legislation. The major issues highlighted in this specific case study are the process outlined for the workers to go on a strike, rubric to evaluate a strike and whether wages are to be paid for the duration of the strike period. It is also a good case study to explore the strategies for effective collective bargaining when one is at a relative disadvantage as opposed to their opponents.

Planning of the audit of wage settlements: Methodological aspects

Planning of the audit of wage settlements: Methodological aspects

Opportunistic Proposals by Union Shareholders

Abstract This paper investigates whether labor unions use proposals opportunistically to influence contract negotiations. Our empirical strategy relies on the observation that proposals have higher bargaining-chip value in contract expiration years, when a new contract must be negotiated. We find that in contract expiration years compared with nonexpiration years, unions increase their proposal rate by one-fifth, particularly proposals concerning executive compensation. Union proposals made during expiration years are less likely to be supported by other shareholders or a leading proxy advisor; the market reacts negatively to union proposals in expiration years; and withdrawn union proposals are accompanied by higher wage settlements. Received March 14, 2017; editorial decision July 19, 2018 by Editor Wei Jiang. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online

The Dutch Decentralized Unitary State and Its Effects on Civil Service Systems in the Period of the Night Watch, Welfare and Enabling States 1814–2016

Abstract The central question on our article is: to what extent were the nature and content of merit principles for Dutch civil service systems influenced by the (changing) decentralized unitary state, during the periods of the Night Watch, Welfare and Enabling State between 1814 and 2016? In accordance with the decentralized unitary structure as originally devised by the 19th century Dutch statesman Johan Rudolf Thorbecke, personnel management and regulations were (and are) considered the prime responsibility of each (level of) government. Our article shows how neither in past nor present have there been hierarchical relationships in this area, with the exception of centralized wage settlements after the Second World War until the 1990s. In addition, we argue that civil service requirements have altered due to societal and public sector change. Those changes have become visible in a transition from a Night Watch to a Welfare State and more recently an Enabling State. This transition not only influenced what was expected of the role and position of civil servants at different levels of government in the decentralized unitary state. It also had an effect on what has over time been required of civil servants in terms of knowledge, capabilities, attitude, skills and experience. The article explains how the Thorbeckian decentralized unitary state provided a lasting but flexible format to accommodate these civil service system adjustments.

Downward nominal wage rigidity in Canada: Evidence from micro‐level data

AbstractWe assess the importance of downward nominal wage rigidity (DNWR) in Canada using employer‐level administrative data from the major wage settlements (MWS) and household‐based survey data from the Survey of Labour Income Dynamics (SLID). MWS data cover large unionized firms in Canada, while SLID is a rich rotating panel representative of the employed population in Canada. Combining both sources of information allows for an extensive analysis of DNWR in the Canadian labour market. We find large shares of wage freezes and smaller shares of wage cuts in both MWS and SLID. Shares of freezes are higher at lower CPI inflation rates, based on provincial data. These observations are consistent with the presence of DNWR. DNWR in Canada appears to be larger than in other countries such as the United States, the United Kingdom and European countries. The incidence of DNWR is heterogeneous across firms’ and workers’ characteristics. Wages report less DNWR over longer horizons.

Using the analytical procedures to form audit sampling in the audit of wage settlements

Using the analytical procedures to form audit sampling in the audit of wage settlements

Understanding the public sector pay gap

We uncover the short- and long-run structural determinants of the existing cross-country heterogeneity in public-private pay differentials for a broad set of OECD countries. We explore micro data (EU-SILC, 2004–2012) and macro data (1970–2014). Three results stand out. First, when looking at pay gaps based on individual data, more than half of the cross-sectional variation of the sample can be accounted for by the degree of exposure to international competition, as well as by the size of the public sector labor force and its composition (i.e., the intensity in the provision of pure public goods), while labor market institutions play a very limited role. Second, we find that in some countries, pay gaps have narrowed down significantly during the recent financial crisis, this decrease being explained by the widespread process of fiscal consolidation rather than by changes in the previous factors. Third, we show that in the log run, openness to international trade and improvements in the institutional quality of governments are associated with decreases in the public-private wage gap. Our findings can be rationalized by a body of research stressing noncompetitive wage settlements in the public sector.

Do workers perceive high wage settlements of craft unions as fair?

ABSTRACTIn recent years, Germany has experienced an increasing impact of craft unions that negotiate high wage increases for the occupations they represent. This article analyses under which conditions workers perceive such over-proportional wage increases for occupational groups represented by craft unions as (rather) fair. We use a vignette approach, asking respondents for their fairness perceptions of several hypothetical scenarios. The results show that perceptions depend on the burdens of the occupational group, the size of the wage increase, information policies and potential consequences for other groups. These findings are in line with social and organizational justice theories about equity and informational justice.

Optimal exchange rate flexibility with large labor unions

We study the optimal volatility of the exchange rate in a two-country model with sectoral non-atomistic wage setters, non-traded goods, nominal rigidities and alternative pricing assumptions – producer or local currency pricing. Labor unions internalize the sectoral impact of their wage settlements through firms' labor demand. With local currency pricing, exchange rate depreciation raises sales revenue, which in turn boosts domestic consumption and labor demand. Unions anticipate this effect and set higher wages accordingly. With small unions and low wage markup, optimal monetary policy enhances exchange rate movements to improve its terms of trade. With large unions and high wage markup, optimal monetary policy curbs exchange rate movements to restrain inflationary wage demands and to stabilize employment.

Value for Money? Teacher Compensation and Student Outcomes in Canada's Six Largest Provinces

Teacher salaries must be attractive enough to draw proficient persons into the profession that deliver positive results in classrooms. But how much do teachers in publicly funded school systems earn relative to the overall population? And do provinces that pay their teachers more achieve better student results? This paper compares teacher salaries in Canada’s six largest provinces to wages of other similar workers. Manitoba and Ontario pay the most relative to other similar workers in the province, while British Columbia teacher wages are usually the lowest. Relative salaries in Alberta and Saskatchewan are closer to those in British Columbia than those in Ontario or Manitoba. Pension benefits are also generally most generous in Manitoba and Ontario and least generous in British Columbia. The study finds no clear relationship between province-wide student assessment results and relative teacher compensation. So despite considerably lower levels of overall relative compensation, British Columbia and the other three provinces with similar relative compensation levels attract teachers who produce comparable outcomes. Provinces that desire to limit growth in overall public expenditures, and that are home to relatively well-compensated teachers, appear to have negotiating room to limit the growth of teacher compensation relative to other occupations. It is unrealistic to expect that such a compensation change could occur quickly. Relative salaries could be reduced gradually by having a series of wage settlements where increases are less than the rate of inflation. To emulate the pension rules in British Columbia, pension generosity in other provinces could also be adjusted gradually. The evidence suggests that even at British Columbia’s levels of relative salaries and pensions, proficient persons are attracted to the profession.

Constraints on public sector bargaining in Canada

This article examines public sector bargaining in Canada during the consolidation period (1998–2013). The period was associated with economic turbulence (sustained economic growth followed by the global economic crisis), support for neoliberal policies across the entire political spectrum (the adoption of free market policies and austerity budgets) and extensive litigation challenging the constitutionality of legislation restricting collective bargaining rights. To assess the impact of these environmental pressures on relative bargaining power, the study examined selected collective bargaining indicators – union membership, wage settlements and strike activity. Our results indicate that the relative bargaining power of public sector unions was eroded during this period. The article concludes that a period of highly constrained public sector collective bargaining will continue in the future.

Collective Bargaining in theCanadian Public Sector, 1978–2008: The Consequences of Restraint and Structural Change

AbstractWe study public‐sector bargaining and contract outcomes usingCanadian data from 1978 to 2008. We have a number of interesting results, but our principal findings are from our analysis of wage settlements. We find that the essential services designation, which only allows non‐essential members of a bargain unit to strike, is associated with decreases in wages. Our estimates also suggest that there is an arbitration wage premium and that making adjustments to the ability to pay criterion used by arbitrators to determine awards does not affect this premium. We also discuss the implications of our estimates.

The Impact of Collective Bargaining Legislation on Strike Activity and Wage Settlements

We examine the effects of collective bargaining legislation, such as (among others) bans on replacement workers and reinstatement rights, on private sector strike activity and wage settlements using Canadian data from 1978 to 2008. Our estimates indicate that this legislation does not have a statistically significant effect on the incidence of strikes. However, we do find that some of the policy variables have a statistically significant effect on strike duration and wage settlements.

Global Economic Prospects: The Recession May be Over but Where Next?

Abstract The global economy suffers from a demand gap in large part because of sustained declines in the share of labour income in most major economies. So far the deflationary threat posed by underconsumption has been averted thanks to debt-driven consumption and property investment in the US and several European economies. This has, however, resulted in growing global trade imbalances and financial fragility which has culminated in a global crisis. A return to the pre-crisis pattern of growth could prove to be even more damaging. A US–China rebalancing is necessary but not sufficient to restore stability and growth in the world economy. The two major mature surplus economies, Japan and particularly Germany, which have been siphoning global demand without adding to global growth, will also need to reduce their reliance on exports and add to global demand. Policy Implications • All major economies should pursue full employment policies and higher wage settlements in order to avoid underconsumption crises and sluggish growth. • The US should not allow its economy to be driven by speculative asset and credit cycles. It should live within its means and shift to export-led growth. • China should shift to consumption-led growth by significantly increasing the share of household in GDP through faster wage growth and greater government transfers and by raising public spending on social services. • Germany should stop competitive disinflation and accelerate growth based on domestic consumption.

The Revenge of Baumol’s Cost Disease?: Monetary Union and the Rise of Public Sector Wage Inflation

Many political scientists and economists have addressed the implications of the public sector’s sheltered status on their unions’ wage strategies vis-a-vis the government. Since the public sector is a monopoly provider of necessary and price inelastic services, conventional wisdom suggests that public sector unions’ push for wage increases which their productivity does not merit, exacerbating inflation and fiscal deficits. The argument in this paper challenges this conventional view, and maintains that the recent, puzzling rise in public sector wage inflation, relative to that in manufacturing, in Euro-zone countries is an unintended result of the institutional shift towards European Economic and Monetary Union (EMU). During the 1980s and 1990s, differences in wage inflation between the manufacturing and public sector within most EMU candidate-countries were low. After 1999, these differences significantly worsened; wage moderation continued in the manufacturing sector while wage inflation arose in the public sector. It is argued here that monetary union’s predecessors, the European Monetary System and Maastricht regimes, imposed two important constraints on public employers, which enhanced their ability to enforce wage moderation: the commitment to a hard currency policy via participation in the Exchange Rate Mechanism, adopted by some earlier than others and, the Maastricht criteria. Monetary union’s removal of these two constraints weakened public employers’ capability to deny inflationary wage settlements to public sector unions. Panel regressions results outline a statistically significant relationship between monetary union and higher levels of wage inflation in the public sector, relative to manufacturing. The paper concludes with a brief discussion of the implications of monetary union for inter-sectoral dynamics.

‘Nurses receiving a better wage settlement than rest of economy’

‘Nurses receiving a better wage settlement than rest of economy’

Initial offers and outcomes in wage bargaining: who wins?

The initial works council’s wage claim, and the initial firm’s (counter)offer, as well as the fraction of the disputed wages the works council is able to capture conditional on initial disagreement, are analyzed using Spanish data on wage settlements. After a given initial wage claim, the rules of the system force the firm either to accept it or to make a counteroffer prior to a fixed and short deadline. In this context, signaling models predict that the wage claim should try to screen the firm’s level of profitability, while the (most likely forced) offer is expected to reveal little information. Both hypotheses are tested and neither one is rejected. The analysis of the fraction of the disputed wages the workers get after initial disagreement, as well as the length of the negotiation period, provide further evidence in favor of signaling models, since we find they are related to both observed and private information. Moreover, conditional on covariates, for a number of sectors, we cannot reject that the parties “split the difference” between both initial offers. This solution coincides with Rubinstein’s (Econometrica 50:97–109, 1982) wage, the solution for the complete information game.

Investment, expropriation, and unionization

In this paper, I examine an economy where output is produced from labor, capital and public services, and where firms and labor unions bargain over labor conditions and lobby the government over union bargaining power and public services. I compare three institutional cases: (a) competitive wage settlement, (b) bargaining over wages and employment, and (c) bargaining over wages only. I show that in cases (a) and (b) the government expropriates investment rents, but right-to-manage bargaining (c) protects investors from this expropriation.