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Different IR Systems. BUS 430 Summer 2013 Dr. Rajiv Krishnan Kozhikode. Agenda. Peer evaluation info Critical reflection report 1 Critical reflection report 2 Different IR Systems. Wage-setting institutions and pay inequality. Significant differences in pay distribution across countries

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different ir systems

Different IR Systems

BUS 430 Summer 2013

Dr. Rajiv Krishnan Kozhikode

  • Peer evaluation info
  • Critical reflection report 1
  • Critical reflection report 2
  • Different IR Systems
wage setting institutions and pay inequality
Wage-setting institutions and pay inequality
  • Significant differences in pay distribution across countries
    • Even among advanced industrial economies
  • What explains this difference?
  • Level at which wages are set differ across these countries
    • Individual level
    • Plant level
    • Industry level
    • Entire private sector
  • Level of centralization
    • Collective bargaining or government involvement
  • Union concentration
  • Share of labor force covered by collective bargaining institutions
so what does the re
So what does the re?
  • Centralization of wage setting reduces inequality
      • i.e., either through collective bargaining agreements or through government involvement
  • Wage-setting at higher level reduces inequality
    • i.e., industry wide wage setting is higher level, individual/firm specific wage setting is at lower level
  • Union concentration (few unions) reduces inequality
  • Union density (unionized workers to un-unionized workers) reduces inequality
  • Union coverage (percent of work-force covered by collective bargaining agreements)
    • Density and coverage are not the same but are related
how is pay inequality measured
How is pay inequality measured?
  • Ratio of wages received by the worker at the 90th percentile, to the wage received by the worker in the 10th percentile.
  • There could be other means as well such as
    • Gini coefficient (ranges from 0 to 1 for low to high wage dispersion)
    • Variance of the log of wages in a country.
demise of national union in italy
Demise of national union in Italy
  • National IR systems are viewed as the basis in most cross-cultural examinations
  • But there could be sub-national differences in IR systems
  • Local realities dictate union activities and outcomes
  • In Italy, national unions rose to prominence but later lost prominence due to local changes
  • Fiat vs Alfa Romeo
  • Both were union heavy auto makers
  • Fiat got rid of union involvement in wage setting
  • Alfa Romeo continued to work with unions
demise of unions in fiat
Demise of Unions in Fiat
  • Recession in Italy affected both firms
  • Changes in local situations
    • More workers laid off
    • Greater resistance from workers
  • Responses of unions to these requirements
      • i.e., shifting responsibility from national to local union structures
  • Fiat held a strong stance against unions
  • In Fiat, local unions were unable to help the workers
  • They had to give up their prominence after a losing battle with Fiat management
  • Workers held the local unions responsible for their poor bargaining position with the firm
union resilience in alfa
Union resilience in Alfa
  • Similar situation in Alfa Romeo
  • But Alfa worked with local unions
  • Increased productivity through cooperation
  • Employees were allowed to up skill and make themselves more relevant again
  • Alfa was later acquired by Fiat but the union-firm relationship still persists.
that s it for today
That’s it for today
  • Next session we will look at: Comparative Business Ethics