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Original Articles

The Regional Dimension of Collective Wage Bargaining: The Case of Belgium

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Pages 301-317 | Published online: 13 Dec 2011
 

Abstract

Rusinek M. and Tojerow I. The regional dimension of collective wage bargaining: the case of Belgium, Regional Studies. The potential failure of national industry agreements to take into account productivity levels in the least productive regions has been considered as one of the causes of regional unemployment in European countries. This paper investigates the role of the collective bargaining structure in the relationship between regional wage and productivity differentials. Using a rich Belgian-linked employer–employee dataset, it is found that the more an industry is decentralized in terms of wage setting, the more regional differences in productivity are reflected in wages. It is concluded that the current Belgian wage-setting system already includes mechanisms that allow regional productivity to be taken into account.

Rusinek M. and Tojerow I. 集体工资谈判的区域尺度:比利时案例,区域研究。在生产力水平较低的区域考核生产力水平这一国家产业协议中可能的失误被认为是导致欧洲国家区域性失业的原因之一。本文考察了集体谈判结构在区域工资与生产力差异相互关系中所起到的作用。基于比利时雇佣双方的数据库,本文发现,产业工资设定的非中心化程度越高,工资中所体现出的区域生产力差异也越显著。本文总结到,当前比利时工资设定系统已经包括了某些将区域生产力纳入考量的机制。

Rusinek M. et Tojerow I. Les aspects régionaux de la négociation collective des salaires: étude de cas de la Belgique, Regional Studies. On a estimé que les accords nationaux professionnels risquent de ne pas tenir compte des niveaux de productivité dans les régions les moins productives, ce qui constitue une des causes du chômage régional dans les pays européens. Cet article cherche à examiner le rôle de la structure de la négociation collective des salaires quant aux écarts des salaires régionaux par rapport aux écarts de productivité. A partir d'un riche ensemble de données employeur–employés auprès de la Belgique, il s'avère que plus une industrie est décentralisée quant à la détermination des salaires, plus les salaires reflètent les écarts de productivité régionaux. On conclut que le système de fixation des salaires en Belgique inclut déjà des mécanismes qui permettent de tenir compte de la productivité régionale.

Rusinek M. und Tojerow I. Die regionale Dimension von kollektiven Tarifverhandlungen: der Fall Belgien, Regional Studies. Die Tatsache, dass das Produktivitätsniveau der am wenigsten produktiven Regionen in den nationalen Branchentarifvereinbarungen potenziell nicht berücksichtigt wird, gilt als eine der Ursachen für die regionale Arbeitslosigkeit in europäischen Ländern. In diesem Beitrag wird untersucht, welche Rolle die Struktur der kollektiven Tarifverhandlungen in der Beziehung zwischen den regionalen Lohn- und Produktivitätsdifferentialen spielt. Anhand eines erweiterten Datensatzes von Arbeitgebern und Arbeitnehmern mit belgischen Beziehungen stellen wir fest, dass sich die regionalen Unterschiede bei der Produktivität umso stärker in den Löhnen widerspiegeln, je dezentralisierter eine Branche hinsichtlich ihrer Lohnvereinbarungen ausfällt. Wir ziehen den Schluss, dass das derzeitige belgische System für Lohnvereinbarungen bereits Mechanismen zur Berücksichtigung der regionalen Produktivität enthält.

Rusinek M. y Tojerow I. La dimensión regional de la negociación colectiva de salarios: el caso de Bélgica, Regional Studies. Se considera que el hecho de que no se tengan en cuenta los niveles de productividad en las regiones menos productivas en los acuerdos nacionales de la industria es una de las causas del desempleo regional en los países europeos. En este artículo analizamos cuál es el papel de la estructura de negociación colectiva en la relación entre el salario regional y los diferenciales de productividad. Con ayuda de un abundante grupo de datos sobre empleadores y empleados relacionados con Bélgica, observamos que cuanto más descentralizada está una industria en términos de fijación de salarios, más se reflejan las diferencias regionales de productividad en los salarios. Concluimos que en el actual sistema belga de fijación de salarios ya se incluyen mecanismos que permiten tener en cuenta la productividad regional.

JEL classifications:

Acknowledgements

Some of the work for this paper was conducted while Ilan Tojerow was visiting the Center of Labor Economics at the University of California – Berkeley. The authors thank Sylvia Allegretto, Massimiliano Bratti, Raffaello Bronzini, David Card, Gustavo Gonzaga, Robert Plasman, and François Rycx for very helpful discussions and comments. They would also like to thank Statistics Belgium for giving access to the data. The opinions expressed in this article do not necessarily reflect the views of the institutes to which the authors are affiliated. Any remaining errors are those of the authors alone.

Notes

1. Otherwise, Overman and Puga Citation(2002) put forward the existence of a neighbour effect within and across borders in explaining regional unemployment disparities. Marston Citation(1985) associated high unemployment regions with attractive climates and better amenities. Elhorst Citation(2003) provided an extensive theoretical and empirical review of the determinants of regional unemployment differentials. These authors notably referred to differences in economic development, labour qualification and the lack of geographic mobility as potential causes of differences in unemployment between regions.

2. For Italy, see EIRO Citation(1998). For Belgium, see Deschamps Citation(2003).

3. In this paper, the term ‘region’ is broadly defined and can refer to different levels of aggregation depending on the country. For Belgium, it corresponds to level 1 of the Nomenclature des Unités Territoriales Statistiques (NUTS). For Spain, bargaining takes place at the NUTS-3 (provincial) level, although most studies cited here use data on NUTS-2 (regions). For Germany, the bargaining regions are specific and do not exactly reflect the Länders (NUTS-1), but usually smaller territorial units.

4. Expressed by the OECD index which indicates the formal or informal coordination across bargaining levels and/or bargaining units at the same level.

5. These data are extracted from the Belgian Labor Force Survey; they represent the situation in 2003, the year covered by the micro-dataset used in the empirical section.

6. Notably the Flemish Christian Democratic Party (CDNV), the Flemish Nationalist Part (NVA) and the Flemish Liberal Party (VLD).

7. Inter-professional agreement, followed by industry agreements, and eventually followed by firm-level agreements.

8. Joint Committees are permanent bodies at the industry level in which employers' associations and trade unions are represented. Their main task is to oversee the conclusion of industry-wide collective bargaining agreements by the organizations represented. For a complete description of the Belgian collective bargaining system, see the second section.

9. There is a scope for industry agreements to be set at the regional level. In practice, this is not common. Only three Joint Committees are in this situation in the present sample.

10. These figures are extracted from the SES-SBS (for a complete description of the data, see below).

11. In the remainder of the paper, the term ‘industry’ refers to all firms covered by the same Joint Committee.

12. Interestingly, their typology, which is based on interviews with union and employer representatives, matches the percentage of workers covered by a firm-collective agreement as measured by the SES-SBS. The same indicator is used below in the empirical strategy to measure the degree of centralization of the different industries.

13. That some workers are covered by a firm agreement in those industries is probably related to the fact that those firm agreements may concern working time and not wages.

14. The fact that it is not 100% may be explained by the presence of individual bargaining at the firm level.

15. The SES is conducted on the basis of a two-stage random sampling approach of enterprises or local units (first stage) and employees (second stage). The establishments, randomly chosen from the population, report data on a random sample of their workforce. The SES is thus a stratified sample. The stratification criteria refer to the region where the local unit is located (NUTS categories), the principal economic activity (NACE groups; Nomenclature Statistique des activités économiques dans les Communautés Européennes), and the size of the local unit (this size is determined by data collected from the Social Security Organisation). Sampling percentages of local units depend positively on the size of the unit. Within a local unit, the number of workers to be considered also depends on size, but negatively. Because of this sampling strategy, weights have to be used to extrapolate employees and local units in the sample to the entire stratum. For more details, see Demunter Citation(2000).

16. The datasets are merged at the establishment level.

17. They are not covered by collective agreements.

18. A local unit corresponds to all the establishments of a company situated in the same county and coming from the same sector of activity.

19. This corresponds approximately to 40% of the entire labour force. The focus on firms with more than twenty workers and the absence of the banking, the electricity, the non-profit, and the whole public sectors largely explains the difference. On average, workers including these sectors are more educated, work more often in highly qualified occupations and are more often men. The data on the entire labour force are extracted from the 2003 Belgian Labor Force Survey.

20. For a description of the Joint Committees analysed, see Appendix A.

21. Gross hourly wage includes overtime paid, premiums for shift, night and/or weekend work, and regular bonuses.

22. These factors include the number of the Joint Committee, occupation, prior experience, seniority in the company, type of contract, part/full-time job, working in a team, or during the night or weekend hours.

23. For the results from the wage regressions, see Appendix A.

24. These differentials are equivalents to those based on the statistics descriptive presented in .

25. For results from the wage regressions, see Appendix A.

26. The fact that some regional wage differentials remain after the inclusion of the firm's productivity and the other variables included in the equation means that other factors, not observed, contribute to differences in wages between regions (for a discussion of the potential influences of regional differences in prices and unemployment, see the fourth section). Nevertheless, as shown by R2, the present model already explains 57% of the variance of wages.

27. Put another way, one cannot exclude the hypothesis in which the differentials of the two models are identical.

28. Detailed results of all wage regressions are available from the authors upon request.

29. Complete wage equations are available from the authors on request.

30. 1 SD below the mean.

31. 1 SD above the mean.

32. As a robustness check, the same regressions were also run without the Joint Committees considered as outliers (that is, 111, 124 and 200). The results, available from the authors upon request, are qualitatively identical to all those presented in .

33. The impact of differences in revenues on migrations has been documented, for example, in Italy (Piras, Citation2010).

34. Social security contributions are part of the labour costs (25% on average). Furthermore, reductions of social security contributions are policy measures frequently used to reduce the costs of labour in Belgium, notably to improve employment of specific groups (that is, younger, older, less educated, etc.). If it is argued that wages must be regionalized to reflect labour market specificities, it can be argued that reductions in social security contributions should also be regionalized.

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