EXIT-VOICE, ABSENTEEISM, AND COLLECTIVE BARGAINING
AT THE FIRM LEVEL*
Carlos García-Serrano (Universidad de Alcalá, Spain)
Miguel Á. Malo (Universidad de Salamanca, Spain) [email protected]
Abstract:
The aim of this paper is to analyse empirically the influence of the existence of a
collective agreement at the firm level on absence rates registered by firms considering
the exit-voice theory. We find a robust positive influence of collective agreements at
firm level on absenteeism. The rationale is that the existence of that sort of agreements
can be considered as a situation where firms enjoy less power than under either higherlevel agreements or no collective bargaining at all. Thus, that positive influence could
be understood as the result of the greater protection of workers’ rights (and workers’
positions or claims against the firm in general) when workers are able to organise
themselves and bargain a collective agreement at the firm level. In addition, we also
find that individuals working in such firms enjoy higher job satisfaction.
JEL Classification: J20, J28, J51, J53
Keywords: exit-voice, absenteeism, collective bargaining, collective agreements, job
satisfaction
Corresponding address:
Miguel A. Malo
Dpto. Economía e Historia Económica
Universidad de Salamanca
Edificio FES – Campus ‘Unamuno’
E-37007 Salamanca (Spain)
Tel.: +34 923 29 45 00 (ext. 3512)
Fax: +34 923 29 46 86
e-mail: [email protected]
*
The data used in this paper were provided by the Social and Labour Statistics Office from the Spanish
Ministry of Employment and Social Affairs. We are indebted to Carmen Salido for her assistance and
patience with our requests.
1. Introduction
This paper is aimed at examining the influence of the existence of a collective
agreement at firm level on the absenteeism level registered by firms considering the
exit-voice theory. The empirical results try to shed light on an area of Labour
Economics and Industrial Relations which has been scarcely travelled in the past.
The exit-voice theory can be applied to other institutional contexts different from
those where unionised workers can obtain exclusive advantages respect to non-union
workers. For instance, in Germany the voice function is implemented not exactly by
unions but by works councils with the known results of decreasing quits and increasing
layoffs (Frick, 1996). In Spain, the voice function is developed through the existence of
collective agreements at firm level, since this sort of agreement can only be bargained
when there is a strong organization of workers at the firm (García-Serrano and Malo,
2002). Trade unions are those who usually provide this sort of organization, but in
certain cases it is achieved thanks to the existence of ‘independent’ workers (Lope and
Alós, 1999).
Therefore, as collective bargaining at firm level is correlated with a stronger
presence of organized labour at the firm level, we should observe the typical effects of
the voice theory in firms with this sort of agreements when compared with other
“higher” (sectoral or national) levels of bargaining. García-Serrano and Malo (2002)
offer results confirming that in Spain collective bargaining at firm level decreases quits
and increases layoffs (and slightly increases job destruction too).
What is the potential effect of trade unions on the absenteeism level? As Allen
(1984) stresses, the exit-voice model provides an ambiguous prediction about its effect
on absenteeism. When unions (or works councils or collective agreements at the firm
level) do not provide a voice for workers to make claims, absenteeism is one of the few
signals of dissatisfaction that workers can use (apart from increasing quits). But the
information content of this behaviour is very ‘noisy’, because managers rarely know
exactly why a worker is absent. The empirical analysis presented by Allen (1984) shows
that union members are at least 29 percent more likely to be absent than non-union
workers (using the first five waves of the Panel Survey of Income Dynamics). Other
authors have come to similar results: Leigh (1981) finds a positive impact of union
2
membership on absence probability, and Chaudhury and Ng (1992) find that
unionisation increases total days lost due to absenteeism.
Here, we postulate that, if this effect is linked to the exit-voice theory, we should
observe the same sort of effect under different institutional contexts with different
channels to provide voice to the workers. In other words, in Germany absenteeism
should be higher in firms with works councils and in Spain absenteeism rates should be
large when a collective agreement at firm level exists.
To contrast the previous hypothesis, in this paper we use a quarterly panel of
Spanish large firms (from 1993:1 to 2001:1). The finding is that firms with “internal”
collective bargaining have effectively higher absenteeism rates. Therefore, our results jointly to those obtained previously by other authors- suggest that larger levels of
absenteeism should be considered as a side effect of voice, something which was not
considered by Freeman (1980) and Freeman and Medoff (1979).
An important novelty of our research is the use of firm-level data for a long time
period. Usually, absenteeism is understood as a labour supply issue: the economic
theoretical literature focuses on workers’ choices about working time (using the
conventional work-leisure model) and empirical research is mainly based on household
or worker surveys1. However, the demand side is relevant to understand whether
absenteeism is an important cost to the firms or not (Allen, 1984; Brown and Sessions,
1996). From an empirical point of view, using firm panel data will allow to control for
individual effects concerning firm specific variables potentially correlated to
absenteeism (the scheduling flexibility of working hours, the workforce characteristics,
the production technology, etc.). With this type of data, our study attempts to contribute
to the existing research on absenteeism trying to identify the causes of interfirm
variation in such variable.
In addition to the investigation on the relationship between the scope of
collective bargaining and absenteeism, we also carried out an analysis of the
relationship between collective bargaining and job satisfaaction. As it is well known,
empirical evidence for the US labour market suggests that unionised workers have
lower job satisfaction that non-unionised workers (Freeman, 1978; Borjas, 1979). In this
3
paper, we also try to detect if this sort of relationship exists in an institutional context as
different as the Spanish. For that, we use individual data coming from a survey on
employees to analyse the impact on job satisfaction of being union member and also of
working in a firm holding a structure to facilitate collective agreements (with personnel
representative, works councils or personnel board). In line with the US results, our
findings suggest that job satisfaction is lower among union members, but we also find
that it is higher for workers in firms with strong presence of organised labour.
The remainder of the article is as follows. In the next section, we review the
literature related to absenteeism and exit-voice theory and provide a discussion of the
potential effects of several firms’ characteristics on absenteeism levels. In the third
section, we present the databases, describe the main variables used later and carry out a
descriptive analysis, providing a summarized picture of the basic relationships between
variables. The fourth section is devoted to the econometric analysis aimed to estimate
the determinants of absenteeism in firms, especially the isolated influence of the
existence of collective agreements at firm level; in addition, estimations on the impact
of firm-level agreements and union membership on workers’ job satisfaction are also
provided. Finally, the last section summarises the main conclusions.
2. Theoretical underpinnings
2.1. Absenteeism and exit-voice in different institutional contexts
Up to our knowledge, there are no previous studies in the international literature
on Labour Economics and Industrial Relations aimed at analysing the influence of
collective agreements on absenteeism. In order to understand such influence it is
important to know previously what is the role played by collective agreements in a
specific institutional framework. As our country of interest is Spain, we are to give a
brief description of the role played by the scope of collective agreements and why those
at firm level can be the institutional channel for the voice effect.
1
Brown and Sessions (1996) provide a thorough survey on economic theories and empirical evidence on
absenteeism.
4
First of all, the Spanish Labour Law states the erga omnes principle; in other
words, collective agreements apply ex-ante the conditions settled by the parties in the
collective bargaining at each level to all workers. For example, in province-sectoral
level an agreement between unions and firms’ representatives will apply to all workers
in every firm from that industry in that province2. Therefore, from a legal point of view,
there are no workers not covered by collective agreements.
However, the scope of the agreement makes a difference. A collective agreement
at firm level must be started by either two type of workers representatives in firms with
50 or more workers: works councils (elected by direct voting of all workers) or ‘union
sections’ (secciones sindicales), which are groups of workers affiliated to a given union.
Therefore, we will observe a collective agreement at firm level only when there is a
strong presence of unions inside the firm or, in general, when collective action of
workers is relevant (when the works councils start the bargaining of a collective
agreement3). Table 1 shows the relative importance of each collective bargaining level
in Spain. In general, the proportion of total wage and salary workers covered by
collective agreements at firm level has maintained below 14 percent, with a decreasing
trend from 1993 to 2002. It is important to address, however, that the vast majority of
Spanish workers are covered by province-sectoral collective agreements.
What is the potential impact of the scope of collective bargaining on economic
variables? García-Serrano and Malo (2002) provide evidence that firms with a
collective agreement at firm level have a lower total turnover, lower quit rates, and
higher layoff rates, exactly as exit-voice theory predicts. This finding agrees with that
obtained by Frick (1996) for Germany: works councils appear to generate decreasing
quits and increasing layoffs.
Regarding absenteeism, previous research on the influence of unions on
absenteeism has focused on the perspective offered by the exit-voice theory. However,
this theory does not provide an unambiguous prediction about the impact of the voice
effect on absenteeism, as Allen (1984) examines deeply.
2
In other European countries, there are some similar legal principles but they usually apply ex-post.
Works councils enjoy an important prestige among workers in Spain since the early 1980s (see Escobar,
1995). Works councils and unions sections can be representatives of the workers in the collective bargaining
at the firm level, although the scarce data available show a greater importance of the former as representatives
(see García-Murcia et al., 1995).
3
5
First, absenteeism does not fit well into the exit-voice model: there are absences
that result from health or family problems rather than from job satisfaction. But, even
when job satisfaction is the reason for absence, should it be considered exit or voice
behaviour?
Second, if voice is effective in eliminating unsatisfactory working conditions,
we should expect lower absenteeism when there is a formal channel for the voice
(unions in the US labour market, works councils in Germany or collective agreements at
firm level as in the Spanish case). However, there is empirical evidence showing that in
the US labour market unionised workers reports lower job satisfaction (Freeman, 1978;
Borjas, 1979). Therefore, it would be difficult to argue that unions reduce absenteeism
rates through improving the working conditions of unionised workers when it is the case
that reported job satisfaction levels are lower among union members than among nonunion workers.
And third, disciplinary procedures can differ in firms with and without workers’
voice. In those with a voice institution, workers may be absent more frequently because
of reduced uncertainty about what excessive absenteeism is. However, when explicit
disciplinary procedures exist (thanks to unions, works councils or collective agreements
at firm level) managers can work together with workers’ representatives in order to
solve conflicts, providing a sort of social control for excessive absenteeism.
The empirical literature for the US labour market (Leigh, 1981; Allen, 1984) has
found out that unionised workers have higher absenteeism rates ceteris paribus
(according to Allen’s results using the PSID, union members are at least 29 percent
more likely to be absent than non-union workers). This result is coherent with the
empirical findings reporting that unionised workers report lower job satisfaction.
Therefore, the positive effect of voice on productivity through decreasing rotation rates
would not be related to better working conditions, but exclusively to higher wage rates
obtained by unionised workers.
Thus, although the theoretical aspects discussed previously do not provide an
unambiguous influence of unions (or “internal”collective bargaining) on absenteeism,
our aim for the next sections is to examine if the empirical findings obtained by other
authors are corroborated in the Spanish context, i.e. if the implications of the exit-voice
6
theory under the Spanish institutional framework make absence rates to be higher when
there is a collective agreement at the firm level, and whether job satisfaction is lower for
individuals who work in firms having a stronger presence of organised labour.
2.2. The potential impact of other variables on absenteeism
As we use firm-level data, our study attempts to identify the causes of interfirm
variation in absenteeism as well as to examine the effect of several firm’s characteristics
on absence rates. Although the availability of variables in the dataset is limited (as we
will see later), we can anyway discuss the potential influence of those characteristics on
the absenteeism experienced by firms.
From a theoretical point of view, our expectation is that absenteeism is
determined basically by the firms’ workforce characteristics, the work-schedule
flexibility and the industrial relations environment.
Variables reflecting the characteristics of the workforce or the interaction
between those characteristics and the work-schedule flexibility are the proportion of
female workers, the proportion of part-time workers and the proportion of temporary
workers. Regarding the former, it is usually found that women are more likely to quit
than men, since their attachment to the labour market is weaker. This result can be
extended to hypothesise that absence rates of female workers will be larger than absence
rates of male workers. In this line, the empirical literature on abseenteeism has found
that the level of absenteeism of women is higher than that of their male co-workers
(Leigh, 1983).
It is expected that a negative relationship between absenteeism and workschedule flexibility exists (see Allen, 1981). One variable that partially captures that
sort of flexiblity is the proportion of part-time workers. Firms with more part-time
employees are expected to experience lower absenteeism rates. There are several
reasons. First, these workers have lower scheduled working hours, deriving less
satisfaction from an additional unit of leisure obtained through absenteeism. Second,
part-time workers enjoy greater work-schedule flexibility, making unnecessary to resort
to absenteeism to achieve leisure. And third, these workers have less job security, facing
7
a greater penalty for not attending work when scheduled. The existence of shift work is
also a proxy of the existence of flexibility. If workers can substitute between shifts to
attend other activities, it would be expected that they would be less likely to resort to
absenteeism. Therefore, firms with shift work are expected to experience less
absenteeism.
The proportion of temporary workers can also affect the absenteeism rates of
firms. We may think that these workers are weaker workers (because they are not
protected by the legal framework as permanent workers). Therefore, following the same
line of reasoning that for part-time workers, they enjoy less job security, so the penalty
for them for not showing up to work would be larger. In this vein, Jimeno and Toharia
(1996) present a simple model on how the type of contract influences on workers’
effort. The main prediction is that temporary workers will develop a greater effort (in
other words, less absenteeism).
The relationship between scheduled working hours and absenteeism is expected
to be positive. The reason is that the longer the working-time the higher the satisfaction
derived from an additional unit of non-work activities. In this context, what is the effect
of overtime on absenteeism? On would expect the existence of two conflicting effects.
On the one hand, as with changes in standard hours of work, overtime would affect
positively absence rates: in firms where overtime is common, employees facing longer
working hours and less work-schedule flexibility will be more likely to experience some
absenteeism (Chaudhury and Ng, 1992). On the other hand, when overtime earns a
wage premium, the two part structure for standard hours and overtime hours provides an
incentive for workers to reduce absenteeism (Kenyon and Dawkins, 1989).
Given that firms will require attendance during scheduled hours, they will
impose a penalty on workers who fail to turn up for work during these hours. This
penalty may take different forms, from monetary fines to endargement of promotional
prospects and ultimately dismissals. Therefore, layoffs may be viewed as a proxy
measuring the penalty for absenteeism: in poor economic times, when layoffs are large,
job security is lower and the penalty for not attending work is high, so it is expected that
absenteeism will be lower.
8
Finally, absenteeism may be influenced by the industrial relations environment.
In this sense, it may be hypothesised that a worsening of that environment may lead
workers to use absenteeism to signal their discontention. Therefore, a expected positive
correlation may exist between absence rates and strike activity, if strike activity is a
proxy of the existence of industrial disputes.
3. Descriptive analysis of the data bases and main variables
3.1. The data bases
The main data source in this paper is a survey of firms (Survey of Economic
Situation or Encuesta de Coyuntura Laboral, ECL). It has been carried out quarterly by the
Spanish Ministry of Labour and Social Affairs since the second quarter of 1990 and the
unit of analysis is the establishment. The data refer mainly to single-establishment firms
and multiple-establishment firms that report separately information for the subordinate
units, but it is possible that some multiple-establishment firms combine all information on
subordinate units into a single entity.
The type of sampling is stratified depending on the number of employees in
establishments, and industry. The ECL considers the following groups of plant size: 1-2, 35, 6-10; 11-25; 26-50; 51-100; 101-250; 251-500; and more than 500. The total sample
consists of about 12,000 establishments. The database covers non-agriculture industries but
excludes Public Administration, Defence and Social Security, diplomatic delegations, and
international and religious organisations from the service sector. An interesting feature of
the data set is that it is a census for units having more than 500 employees, the number of
such large firms being around 1,000.
In particular, this paper uses quarterly information on these large plants for the
period 1993:1-2002:1. The reason is twofold: in the first quarter of 1997 there was a major
methodological change (which did not affect to establishments with 500 or more workers)
and the Spanish Ministry of Labour and Social Affairs was favourable to provide
longitudinal data only on that size group. Those establishments whose workforce has fallen
below 500 in any of the quarters have been maintained in the sample. In addition,
establishments who have answered the questionnaire in some but no all of the quarters of
9
the period 1993-2002 have also been selected. These characteristics of the sample allow us
to build a non-balanced panel of establishments. The number of units contained in that
panel in a given quarter is on average above 800, representing around 15 percent of total
non-agriculture employment.4 And the proportion of fixed-term workers in the sample is
23 percent.5
The use of a sample on large firms can be important when analysing absenteeism.
As Winkelman (1999) explains, firm size could affect absence rates through the effects of
size on wages in an adjustment-to-equilibrium model, but in a shirking model firm size has
a direct effect on absence rates because the probability of being detected when shirking is
higher in larger firms (given wages). The net effect of both effects is that workers in large
firms (above 200 employees) will be 1.6 days per year more absent than workers in smaller
firms. Anyway, this effect decreases with size (at least above 2,000 employees). As we
have only large firms, we should take into account this characteristic when we comment on
the results.
As for the scope of the collective bargaining, the ECL questionnaire asks the
establishments which type of collective bargaining they have. The possible answers are
as follows: bargaining at a plant or firm level; bargaining at a higher (sectoral or
national) level; other type (mainly, other levels of agreement –local, provincial- or old
labour rules, known as Ordenanzas Laborales, dating back from the Francoist period).
Since the number of observations for the latter is very low, we have decided to exclude
them from the subsequent analysis. As we wil see later, 42 per cent of the sampled
individuals indicate that they are working in firms with firm-level collective
agreements.
The questions on absenteeism are embedded in a section about working time. In
particular, the firm should indicate the number of lost (non-worked) days due to diferent
4
This employment share is consistent with that coming from other sources. For instance, the Structure,
Consciousness and Class Biography Survey (Encuesta de Estructura, Conciencia y Biografía de Clase,
ECBC), carried out in 1991, shows that the employment share of private firms with 1,000 employees or
more was 10 percent. The Working Conditions Survey (Encuesta de Calidad de Vida en el Trabajo, ECVT),
carried out in 2001, indicate that some 21 percent of non-agriculture employment corresponds to firms
with 500 or more workers.
5
The temporary employment share of 23 percent in our sample is similar to the 21.5 percent given by the
Labour Force Survey (1995) for establishments with more than 50 employees (non-agriculture industries).
The ECBC survey also shows that in 1991 less than 20 percent of total employees in public and private large
firms (those with 1,000 employees or more) had temporary contracts. That proportion declined with
increased firm size (for instance, it was above 40 percent for firms with less than 10 employees).
10
reasons. One of these is absenteeism, non-paid permits and temporary inability. For the
purpose of this paper, we consider that, although part of this temporary inability may be
due to common illness and professional disease, other important part may be labeled as
absenteeism, since workers can use the excuse of, for instance, going to the doctor to be
absent from the workplace for a while or they can try to enjoy a larger ‘recovery’ period
form a common illness or professional disease. The information from the survey indicates
that the number of lost days per worker due to this “absenteeism” is less than three days
(2.5) in an average quarter.
For the complementary analysis on job satisfaction, we will use the “Working
Conditions Survey” (Encuesta de Calidad de Vida en el Trabajo, ECVT). The ECVT is a
yearly survey first launched by the Spanish Ministry of Labour and Social Affairs in
1999 (we use the third edition of the survey, that referred to 2001). This is a nationally
representative random sample survey of all employed individuals aged 16 years and
above living in households (Ceuta and Melilla are excluded). Employment means
having been working at least one hour during the reference week (that previous to the
interview week). Sampling design takes into account three variables: autonomous
community (region), municipality size, and number of inhabitants in the census’s
section. Selection of employed individuals within the households (one per household) is
purely random.
The ECVT allows to know whether or not the firm in which the individual is
working holds a structure to facilitate collective agreements, i.e. whether there is
personnel representative, works councils or personnel board. We assume that
individuals answering in the affirmative are indicating that there is a strong presence of
organized labour at the firm level. Nearly half of the sample used in this paper (48 per
cent) indicate that they are working in firms with such presence. In addition, there are
some questions on union membership, so it is possible to know whether the individual is
currently affiliated to a trade union or not: only 11.4 per cent of all sampled individuals
say they are unions’ members.
Information on job satisfaction is available in the survey, since individuals are
required to evaluate it in a scale from 1 (very dissatisfied) to 10 (very satisfied). Less
than 9 per cent indicate that they are dissatisfied (values 1-4), 42 per cent say that their
11
satisfaction is quite good (values 5-7), and nearly half of all individuals recognise that
they are satisfied (values 8-10).
This survey also contains information on two broad sets of variables. On the one
hand, there are workers’ individual and socio-demographic characteristics such as
gender, age, marital status, number of children, and level of education. On the other
hand, individuals also give information on the characteristics of the firm where he/she is
working and the job he/she is performing: sector, industry, occupation, firm size,
working hours, tenure, and type of contract.
3.2. Some descriptives
Table 2 shows the distribution of the sample considering three groups: firms
without absenteeism (11.6 per cent of the total), firms with low absenteeism (below the
average of 2.5 days per quarter and worker) and firms with high absenteeism (above
that average). The last two groups represent 45.3 and 43.1 of the sample, respectively.
We present the variables’ means for the three groups and for the total sample.
Starting with our main variable of interest, the proportion of firms having a firmlevel collective agreement is larger among the group of firms with absenteeism and
increasing with the level of absenteeism: that proportion nearly doubles in the case of
firms with high absenteeism with respect to those without absenteeism.
All those variables related to working time seem to indicate that there are no
differences among the three groups of firms: the average number of annual bargained
hours per worker (around 1,700) and weekly worked hours per worker (38 hours) are
very similar. If any, there is a somewhat positive correlation between bargained hours
and absence rate. In any case, it appears to exist some difference in overtime, which
seems to be higher among firms with absenteeism. However, if we consider the
percentage of workers doing overtime, the differences are really important: the
proportion of workers doing overtime in firms with a low level of absenteeism is more
than twice that proportion in firms without absenteeism, and that difference is even
larger for firms with a high level of absenteeism.
12
Regarding the workforce composition, the proportion of temporary workers and
part-time workers are lower in firms with absenteeism. In these firms, the proportion of
women are also lower, although this relationship is not linear in the level of
absenteeism.
The climate of labour relations proxied by the existence of strike activities
during a given quarter seems to be positively correlated to absenteeism: in the group of
firms without absenteeism, the proportion of firms with strike activity is 1.6 per cent,
while that proportion increases to more than 10 per cent in the group of firms with high
absenteeism levels.
Finally, the variables concerning worker gross flows show that firms without
absenteeism have higher levels of hirings and separations and, consequently, a
substantial higher total worker mobility (44 percent versus 25-30 percent).
Table 3 shows the distribution of all firms across two variables: the amount of
absenteeism and the level of collective agreement. Considering the row percentages, we
see that, while 93 per cent of firms with firm-level bargaining have absenteeism, this
proportion is 85 per cent for firms with higher-level bargaining. In addition, there are
more firms with large absence rates in the group of firm-level agreements (almost 50
percent) in comparison with the group of higher-level agreements. By columns, the
result is that the proportion of firms with firm-level bargaining is increasing in the
amount of absenteeism: 25 percent for those without absenteeism, 41 percent for those
with low absenteeism, and 46 percent for those with high absenteeism.
To sum up, absenteeism is clearly concentrated in firms with internal collective
agreements. We also detect a relationship between absenteeism and other variables:
more overtime, higher proportions of workforce doing overtime, less temporary
workers, less part-time workers, less female workers, and lower gross flows (total,
hirings and separations).
4. Econometric analysis and results
4.1. Results on absenteeism
We have used different econometric specifications in order to examine
empirically the potential influence of collective agreements at firm level on
13
absenteeism. A random effects probit model has been estimated to contrast the influence
of collective agreements at firm level on having or not absenteeism. The rationale
behind this estimation is that, as we have shown in the descriptive analysis, there is a 11
per cent of firms reporting no absenteeism, and maybe the main influence of the scope
of collective bargaining might be more on having absenteeism than on the amount of
absenteeism. Second, we have also estimated other panel data models assuming that our
dependent variable is continuous. Anyway, as we show inmediately, the results for both
kind of models are very similar.
Table 4 shows the estimates results from a random-effects maximum-likelihood
probit model (which commonly assumes that the unobservables are uncorrelated with
the observed individual characteristics) on the probability of having absenteeism. We
estimate this model instead of a pooled probit since firms are observed more than once.6
The coefficient on firm-level collective agreement is positive and statistically
significant, suggesting that this sort of agreement increases such probability, which
confirms the results from the descriptive analysis. This finding is further corroborated
by the random effects GLS estimates provided also in Table 4: the absence rates are
larger for firms having “internal” bargaining when compared with firms having
“external” bargaining. Therefore, we obtain evidence in the line of Allen’s results: the
voice institution (in Allen’s work, union membership; here, collective agreements at the
firm level) increases absenteeism.
For the random-effects probit model, the marginal effect (which have been
obtained following the procedure outlined in Arulampalam, 1999) implies that having
firm-level collective agreements increases the firms’ probability of registering
absenteeism by about 2 percentage points. The random effects model shows the same
effect: those firms with a collective agreement at firm level have 25 more absent days
per 100 workers and per quarter. This finding can be interpreted as a result of the
greater protection of workers’ rights (and workers’ positions or claims against the firm
6
We test the hypothesis of no cross-period correlation (=0) using a classical likelihood ratio test. This
hypothesis is clearly rejected even at high levels of statistical significance. This means that the pooled
probit estimates are biased. The estimated  is 0.70, revealing that the proportion of the total error
variance accounted for by unobservable individual heterogeneity is more than two-thirds.
14
in general) when workers are able to organise themselves and bargain a collective
agreement at firm level.7
We obtain interesting results for other variables too. Overtime increases the
probability of absenteeism, and also having a strike. The marginal effects suggest that
overtime (having a strike) is associated with 10 percentage (6 percentage) points higher
probability of experiencing absenteeism.
We have tried the inclusion of other specifications for the variables measuring
overtime: instead of a dummy variable indicating whether there is overtime in the firm
or not, we have included a continuous variable (overtime per worker and quarter) and
three dummies for the proportion of the workforce doing overtime in the reference
quarter (0 per cent, 1-10 per cent, 11-25 per cent, and >25 per cent). Whatever the
specification considered, the estimations provide the same result, suggesting that in
firms where overtime is common, employees face longer working hours and less workschedule flexibility, so they are more likely to experience some absenteeism. This
finding agrees with that from Chaudhury and Ng (1992), but it is contrary to that
obtained by Kenyon and Dawkins (1998). In any case, it seems that the working
conditions and the climate of labour relations within the firm are relevant to understand
absenteeism.
In addition, the composition of the workforce also matters for absenteeism. The
proportion of workers with temporary contracts decreases the probability of
absenteeism, confirming the results obtained by other authors (Jimeno and Toharia,
1996, who used data from the Spanish Labour Force Survey). The proportion of parttime workers has a positive impact on the probability of having absenteeism (it is
significant at 91 per cent), but its influence is negative on the absence rate (as in the
descriptive analysis of the previous section). In general, we find that a higher presence
of atypical workers decreases absenteeism, which is consistent with the results of
Chaudhury and Ng (1992) and Drago and Wooden (1992). As discussed in the
theoretical section, the reason would be that they are weaker workers because
7
We have also performed an estimation of the random-effects model using the GLS estimator for the
period 1993-1996, period for which the database contains a variable on informatised control for the
presence of the workforce on the firm’s premises. This variable reduces absence rates, although it is not
statistically significant. In any case, the result of positive and significant impact of firm-level bargaining
on absence rates remains.
15
(especially temporary workers) they are not protected by the legal framework as
permanent and full-time workers.
The proportion of female workers increases the probability of a firm having
absenteeism. The random-effects GLS regression also suggest that absence rates are
increasing in the proportion of female workers. However, these results are contrary to
what was found in the descriptive section. We have to bear in mind that in the
descriptive analysis the percentage of female workers was mixed with other variables
(as type of contract), which surely drives the result.
Finally, gross workers flows have a negative influence on the probability of
absenteeism, confirming the descriptive analysis (the result is the same for the randomeffects GLS model, although the coefficient is not significant). Total turnover may be
considered a proxy of the firm’s policy on hirings and separations. Therefore, large
turnover rates are associated with low absence rates, thus indicating that penalties for
workers are higher the larger the turnover rate8.
To sum up, working conditions and work-schedule flexibility (proxied by the
variable overtime), the climate of labour relations (proxied by the variable strike) and
the composition of the firm’s workforce (proxied by the proportions of female, parttime and temporary workers) determine the absence rates experienced by firms.
4.2. Results on job satisfaction
The next step is to use the ECVT database to analyse whether collective
agreements decreases job satisfaction or not. As we said previously, the ECVT is a
database containing simultaneously information on workers’ job satisfaction and on a
variable proxying the scope of the collective agreement applied in the workers’ firm (it
also have information on whether the wage and salary workers are currently union
memberships or not).
8
We have tried other specifications with mixed results: the inclusion of either the separation rate or the
layoff rate generates positive coefficients, a result in contradiction with what the theoretical discussion
suggest.
16
The ordinal nature of the dependent variable (it takes values from 1 to 10)
requires the estimation of an ordered logit regression. Table 7 reports the results for two
specifications: one for all individuals and another one for those who are working in
large firms (500 or more workers). This is done in order to use information as
comparable as possible to that from the ECL.
The main finding is that working in a firm holding an structure to facilitate
collective agreements increases job satisfaction.9 However, the dummy variable on
union membership indicates that workers who are affiliated to a trade union are less
satisfied with their jobs than other similar non-affiliated workers, ceteris paribus. This
latter result agrees with the usual US finding that unionised workers are less satisfied
than non-unionised workers (Freeman, 1978; Borjas, 1979). But the former result
suggest that making a distinction between membership and being protected by an
effective action of organised workers is important.
We can interpret these findings in the light of the different institutional context
of some European countries (like Spain) as compared to the US. Then, the positive
effect of working in firms with firm-level collective agreements on job satisfaction
might be a reflect of the capacity of organised labour to achieve better working
conditions and, therefore, higher well-being of workers within the firm. But it might
also be the case that workers consider absenteeism not as a way to express
dissatisfaction but as an additional characteristic of the job: the ability to take time off
from work repeatedly (taking free days without the obligation to recover them, having
the possibility of not attending work some hours during a day, and so on) without being
laid off is a desirable job characteristic.
The influence of firm size on the previous finding is important. When we use the
total sample of workers, we find that those who work in larger firms (500 or more) tend
to exhibit lower job satisfaction, other things being equal. In general, the larger the firm
the lower the job satisfaction. This result fits well with the known finding that there is a
job satisfaction premium from working in small firms (Idson, 1990; Clark, 1997). Once
we focus only on larger firms, the finding that holding an structure to facilitate
collective agreements increases job satisfaction disappears. However, the negative
17
effect of “union membership” on job satisfaction remains. Therefore, it seems that for
large firms having a collective agreement at firm level does not make a difference on
the individual perception about job satisfaction, although the fact of being affiliated to a
union remains important (and negative).
Some control variables used in the estimations turn out to be important
predictors of job satisfaction itself. This is specially true for the job related variables.
Individuals working in non manual, high skilled occupations enjoy more job
satisfaction: it worsens gradually as we move from those occupations to manual and less
skilled occupations10. In addition, workers holding a temporary contract exhibit
significantly lower job satisfaction than similar workers holding permanent contracts.
Job tenure also matters: workers with longer job tenure (more than 42 months) show
lower job satisfaction than those with short job tenure. Furthermore, there is no
evidence that longer hours of work (imperfectly captured by the full-time/part-time
dummy) are associated with lower job satisfaction.
Finally, with regards to the individual characteristics, workers aged 45 or more
are the most satisfied, while job satisfaction seems to be associated negatively with
education, once we discount the effect of the rest of variables (however, these effects
disappear in the estimation which uses the sample of workers in large firms).
5. Conclusions
This paper has tried to shed some light on the impact of the existence of a
collective agreement at firm level on the absenteeism level registered by firms. For that,
we have based our analysis on the exit-voice theory. Thus, we have tried to interpret
what effects might be associated with a collective agreement at firm level that are not
present in other collective agreements (at industry, regional or national levels). Since we
The estimation of an ordered logit regression on an indicator of individuals’ working conditions
generates the same sort of results that those obtained for job satisfaction: levels of working life quality are
higher for individuals working in firms with an structure to make collective agreements easier.
10
Occupations have been grouped into four categories according to the type of tasks and qualifications
the job requires to properly perform it: white collar high skilled workers (professionals, technicians and
managers); white collar low skilled workers (clerks and commerce, sales and services workers); blue
collar high skilled workers (agriculture, construction and industry specialized workers); and blue collar
low skilled workers (labourers).
9
18
expect that such effects depend crucially on the institutional framework of the collective
bargaining, we have made a reasoning linked to the role played by collective
agreements at firm level in Spain, where our data come from. However, our analysis go
beyond the interest of a national labour market, since it provides results that could be
present in collective agreements at firm level in other countries.
In fact, our findings suggest that the impact of this sort of collective agreements
on absenteeism is not associated with the role played by these agreements as
institutional channels for the voice effect (which is a distinctive feature of the Spanish
labour market). We find a robust positive influence of collective agreements at firm
level on absenteeism. The existence of a collective agreement at firm level can be
considered as a situation where firms enjoy less power than under either agreements at
higher level. Therefore, the positive influence could be understood as a result of the
greater protection of workers’ rights (and workers’ positions or claims against the firm
in general), when workers are able to organise themselves and bargain a collective
agreement at firm level.
In addition, individuals working in such firms report higher levels of job
satisfaction. Again, it might be understood as a reflect of the capacity of organised
labour to achieve better working conditions and, therefore, higher well-being of workers
within the firm. Or alternative, it could be reflecting the fact that workers consider
absenteeism not as a way to express dissatisfaction but as an additional characteristic of
the job: the ability of not turning up for work repeatedly without being laid off is a
desirable job characteristic.
We cannot finish without noting that the results obtained in this paper are subject
to a number of limitations mainly related to the data employed in the empirical section.
First, they have been derived from a database containing information on large firms
only, so a bias may thus be present. And second, the absenteeism data are based upon
self-reports by the firms, so it is possible that data provided are personal estimates of
absenteeism rather than actual attendance records.
Finally, some words for the future. Usually, absenteeism is understood
exclusively as a labour supply issue. The theoretical literature focuses on workers’
choices about working time and empirical research is mainly based on household or
19
workers surveys. However, the demand side is important to understand whether
absenteeism is a relevant cost to the firms or not. Therefore, the theory of absence
should take into account the interaction of supply and demand. Similarly, large-scale
and representative firm-based datasets would be helpful to cope with the empirical work
to be done.
20
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22
Table 1. Number of collective agreements and workers covered (in thousands), by
level. Spain (1993-2002).
Year
Firm level
Higher level
% Workers covered by
Agreements Workers(000s) Agreements Workers(000s) agreement at firm level
1993
3,374
1,046
1,375
6,692
13.5
1994
3,235
1,023
1,346
6,479
13.6
1995
3,461
1,044
1,366
6,561
13.7
1996
3,661
1,062
1,367
7,067
13.1
1997
3,669
998
1,371
7,367
11.9
1998
3,690
1,022
1,401
7,729
11.7
1999
3,704
1,064
1,406
7,944
11.8
2000
3,849
1,083
1,403
8,147
11.7
2001
4,021
1,040
1,400
8,457
11.0
2002
3,961
994
1,345
8,573
10.4
Source: Collective Agreements Statistics (Spanish Ministry of Employment and Social Affairs). Data are
freely downloadable: http://www.mtas.es/
23
Table 2. Absenteeism and firms’ characteristics (means of quarterly data). ECL
(1993:1/2002:1).
Absenteeism (days per worker
and quarter)
Size
Annual bargained hours
Weekly worked hours
Firm-level bargaining
Overtime (average hours)
%Workers doing overtime
%Temporary workers
%Part-time workers
%Female workers
Strike
Industry
Construction
Mining and energy
Chemicals, rubber and plastic
Machinery and equipment
Food, textiles and wood
Traditional services
Productive services
Social services
Personal services
Public services
Gross flows (% total workers)
Total worker mobility
Hirings
Separations
Distribution
Observations
No
0.0
Yes, low
1.4
Yes, high
4.2
All
2.5
1,302
1,696
38.3
25.0
21.7
24.8
36.5
10.9
44.8
1.6
1,177
1,723
38.6
41.1
24.5
56.8
28.6
8.5
33.9
6.0
1,292
1,708
38.3
46.4
22.4
61.6
21.2
7.0
40.8
10.5
1,241
1,714
38.4
41.5
23.4
55.0
26.3
8.2
38.1
7.5
0.7
0.6
2.7
5.2
2.3
15.2
36.0
34.5
1.9
1.0
2.9
3.0
8.5
11.6
6.8
17.2
31.3
16.3
2.0
0.4
1.8
5.6
7.5
8.5
8.3
17.4
14.4
30.9
1.7
4.0
2.2
3.8
7.4
9.5
6.9
17.0
24.6
24.7
1.8
2.0
44.0
22.8
21.2
29.8
15.8
14.0
25.4
12.7
12.7
29.5
15.3
14.3
11.6
3,999
45.3
15,572
43.1
14,808
100.0
34,379
24
Table 3. Absenteeism and level of the collective agreement (means of the quarterly
data). ECL (1993:1/2002:1).
% Row
Firm-level bargaining
Higher-level bargaining
All
No
7.0
14.9
11.6
Yes, low
44.9
45.6
45.3
Yes, high
48.2
39.5
43.1
All
100.0
100.0
100.0
% Column
Firm-level bargaining
Higher-level bargaining
All
No
25.0
75.0
100.0
Yes, low
41.1
58.9
100.0
Yes, high
46.4
53.6
100.0
All
41.5
58.5
100.0
25
Table 4. Estimates of the random effects probit model and the random effects (GLS
estimator) model for absence rates.
Constant
Collective bargaining
Firm/plant level
Size/100
(Size/100)2
Overtime (Yes)
%Fixed-term/Permanent
%Part-time workers
%Female workers
Strike (Yes)
Industry
Construction
Mining and energy
Chemicals, rubber & plastic
Machinery and equipment
Food, textiles and wood
Productive services
Social services
Personal services
Public services
Total worker turnover
GDP change
Quarters
First
Second
Third
Observations
Wald 2 // F(n,N-n-k)
Probability(F<f)
Random-effects
probit model
Coeff.
Sig. t-stat.
1.327
***
6.8
Random effect model
(GLS estimator)
Coeff.
Sig. t-stat.
255.065
***
23.3
0.164
0.014
-0.011
0.964
-0.001
0.003
0.008
0.578
***
***
***
***
***
*
***
***
3.3
4.0
5.4
22.1
6.9
1.7
4.7
6.7
25.392
1.249
-0.486
15.822
-0.041
-0.690
0.820
0.125
***
***
**
***
***
***
***
8.5
4.0
2.0
6.2
10.8
6.4
7.4
0.0
0.977
1.013
0.126
0.612
0.108
0.174
-0.435
-0.219
-0.535
-0.001
0.034
***
***
3.1
4.3
0.6
2.9
0.5
0.9
2.4
1.1
2.3
2.8
1.1
-48.417
21.307
-53.470
-69.287
-40.866
-79.844
-97.707
-23.427
-94.193
-0.019
-12.542
***
***
3.3
1.2
4.2
5.7
3.1
7.2
11.1
2.1
6.6
1.1
8.4
-0.137
-0.173
-0.012
***
4.2
0.3
6.8
22.327
4.258
-22.150
***
**
***
11.0
2.1
10.7
***
**
**
***
***
34,379
1,130.97
0.00
***
***
***
***
***
**
***
34,379
39.49
0.00
Notes:
- Asterisks indicate significance at, respectively, 10 percent (*), 5 percent (**) and 1 percent (***).
- Base categories are as follows: “National/sectoral/regional agreement”, “No strike”, “No overtime”,
“Traditional services”, and “4th quarter”.
- For the random effects probit, the statisitic is the Wald 2 ; for the random effect model, n is the number
of units, N is the number of observations (n times the number of periods actually observed), and k is the
number of regressors (excluding the constant).
26
Table 5. Estimates of the ordered logit regressions on satisfaction (ECVT-2001).
Collective bargaining
Firm-level
Union membership
Yes
Firm size
50-249 workers
250-499 workers
>500 workers
Occupation
White collar low skilled
Blue collar high skilled
Blue collar low skilled
Tenure with the employer
18-42 months
>42 months
Type of contract
Temporary
Working Hours
Part-time
Gender
Woman
Age
25-34
35-44
45-54
>55
Marital status
Married
Other
Schooling level
Primary
Compulsory Secondary
Post-compulsory Secondary
Vocational Training
University degree
Log Likelihood
Observations
Workers in all firms
Coeff.
Sig.
z-stat.
Workers in large firms
Coeff.
Sig.
z-stat.
0.155
**
2.3
0.161
-0.246
***
2.6
-0.786
-0.081
-0.063
-0.206
**
1.0
0.5
2.4
-
-0.415
-0.305
-0.653
***
***
***
4.4
2.8
6.1
-0.564
0.044
-0.258
-0.184
-0.357
*
***
1.9
4.0
-0.308
-0.799
***
1.1
2.9
-0.400
***
4.9
-0.423
***
2.9
-0.112
1.1
-0.209
0.7
0.029
0.4
-0.072
0.5
0.8
0.6
0.1
1.4
-0.242
-0.244
-0.194
0.063
**
**
2.3
2.1
1.5
0.4
-0.246
-0.217
-0.030
0.568
0.187
0.097
***
2.6
0.8
0.469
0.329
1.6
2.2
3.7
3.3
4.1
-0.667
0.016
0.067
-0.098
0.005
-0.262
-0.362
-0.661
-0.568
-0.743
**
***
***
***
-7,874.10
4,039
0.9
***
2.9
***
3.0
0.2
1.0
***
2.7
1.1
1.1
0.0
0.1
0.2
0.0
-1,510.28
809
Notes:
- Asterisks indicate significance at, respectively, 10 percent (*), 5 percent (**) and 1 percent (***).
- Regression also controls for industry, institutional sector and region.
- Base categories are as follows: “No firm-level bargaining”, “No union membership”, “1-49 workers”,
“White collar high skilled occupation”, “Tenure <18 months”, “Permanent contract”, “Working fulltime”, “Man”, “16-24 years-old”, “Single”, and “No studies”.
27