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BUS 430 Summer 2013
Dr. Rajiv Krishnan Kozhikode
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Peer evaluation info
Critical reflection report 1
Critical reflection report 2
Different IR Systems
o Significant differences in pay distribution across countries
• Even among advanced industrial economies
o What explains this difference?
o Level at which wages are set differ across these countries
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Individual level
Plant level
Industry level
Entire private sector
o Level of centralization
• Collective bargaining or government involvement
o Union concentration
o Share of labor force covered by collective bargaining institutions
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Centralization of wage setting reduces inequality
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i.e., either through collective bargaining agreements or through government
involvement
Wage-setting at higher level reduces inequality
o i.e., industry wide wage setting is higher level, individual/firm
specific wage setting is at lower level
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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)
o Density and coverage are not the same but are related
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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
o Gini coefficient (ranges from 0 to 1 for low to high wage dispersion)
o Variance of the log of wages in a country.
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National IR systems are viewed as the basis in most crosscultural 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
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Recession in Italy affected both firms
Changes in local situations
o More workers laid off
o Greater resistance from workers
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Responses of unions to these requirements
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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
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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.
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Next session we will look at: Comparative Business Ethics