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Bargaining for Productivity: Comparative Report

Bargaining for Productivity: Comparative Report

Tomassetti, P., William, L. ORCID: 0000-0002-1985-7640 and Veersma, U. (2017) Bargaining for Productivity: Comparative Report. Project Report. ADAPT Italy.

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Productivity growth was at the heart of the economic development in the Afterwar period – the so called ‘trentes glorieuses’. These years were characterised by a strong coordination of labour markets, collective agreements that were mainly set at the sectoral level and wage constraint. At this time, the most relevant objectives were a strong competitive economy, a hard currency, low inflation and full employment.

It seems that this glorious era has come to an end. Many EU and non-EU countries, such as the UK and the USA, have experienced a labour productivity stagnation or slowdown over the last decade. Academics, policy makers and business leaders are concerned to reverse this trend since “productivity is the ultimate engine of growth in the global economy” (OECD 2015). As the working population is projected to decline with the ageing population, labour productivity growth becomes the sole source for potential average output growth in both the EU and the euro area starting from 2028 (European Commission, 2012). This projection includes both the quantitative and qualitative dimensions of growth.

Directly linked to productivity stagnation is the issue of inequality and, precisely, wage inequality (Keune, Tomassetti 2016). There is mounting evidence that “increasing inequality may be one of the causes of declining growth, as inequality both impedes improvements in productivity and weakens demand. Low growth, in turn, reinforces inequality by intensifying distributional conflict” (Streeck 2014, 37). Inequality is also likely to increase even more in the years ahead as a consequence of the impact of Industry 4.0 and the digital evolution of the economy on labour markets and societies (Blasi et al 2013; Etui 2016).

On the brink of a new extraordinary age of change – i.e. the so-called Fourth Industrial Revolution (Shwab 2016) –, many scholars still disagree over what current technological innovations imply for the future of work and employment relations (Katz et al. 2015). Along with opportunities, new challenges appear in different forms than previous waves of technological change: hybridization between humans and robots; dematerialisation of boundaries between industries; working and doing business anytime, anywhere; labour market polarisation; marginal cost reduction and productivity slowdown. These factors are compounded by an increasingly diverse workforce where tensions exists between inclusion and diversity, impacting on employment relations.

There is consensus that investments in technological innovation, research and skills are key drivers for labour productivity. It is also clear that – beside these factors – work organisation plays an important role in enhancing labour productivity and making growth sustainable. Productivity figures (GDP/GVA per hour worked and GDP/GVA per capita) are linked to the output of production and the input of labour. Collective bargaining and other aspects of labour and employment relations play a major role in these figures.

Dialogue on productivity issues is important both in terms of consensual labour-management cooperation and as a regulator of wages and conditions of work. Coordination of collective bargaining has a positive impact on economic performance, because it impedes wage competition and enforces companies to increase productivity in order to being able to pay the given wages. At the company level, productivity agreements can result in innovation and enhance performance through compensation and benefits, working time flexibility, Work-life Balance, skills improvements and workers involvement. Furthermore, collective bargaining, especially firm-level bargaining, has always been conceived as a means both to facilitate and react to technological changes.

This project is set against a background of institutionalist research which investigates the role of central institutions and actors in the setting and maintenance of employment relations. Drawing on key theories such as regulatory space, varieties of capitalism, regulation theory and coordination theory this research places the productivity bargaining in a theoretical arena to understand the role of productivity bargaining and the coordination of collective bargaining across key European countries.

Against this background, this report aims to shed light on the reasons behind labour productivity slowdown or weak growth in some countries, by focusing on the role that employment relations plays behind such a trend. Our goal is to analyse the potential and effective implication of collective bargaining and employment relations on labour productivity, as well as to analyse public policies and social partners’ attitude towards labour productivity in Germany, Italy, the Netherlands, Poland, Spain and the UK

A note of caution is, however, needed because the relationship between employment relations and the input of labour is at best complex and, if worse, dubious. While the connotation of high productivity and hard work is a very basic one, the actual relationship is likely to be much more complex with influence from smarter working, new technology and research and development investment. Therefore, when comparing figures of productivity GDP growth between countries and sectors, such complexities should be kept in mind. The ‘productivity paradox’ furthermore points to the question to what extent productivity growth gives an accurate figure of productivity as such. The quality of production output may not be taken into account accurately and services that are for free, like some of the services with ICT, do not count to productivity but may still add to prosperity.

Item Type: Monograph (Project Report)
Additional Information: Collective Bargaining and Labour Productivity in Germany, Italy, the Netherlands, Poland, Spain and the UK: A Comparative Analysis to Unravel the “Productivity Puzzle”
Uncontrolled Keywords: Productivity, Comparative Report, Europe, Regulation, Employment Relationship
Faculty / School / Research Centre / Research Group: Faculty of Business
Faculty of Business > Centre for Work and Employment Research (CREW)
Faculty of Business > Centre for Work and Employment Research (CREW) > Work & Employment Research Unit (WERU)
Faculty of Business > Department of Human Resources & Organisational Behaviour
Last Modified: 15 Nov 2019 13:55

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