COMPARATIVE PAY LEVELS IN DOMESTICALLY‐OWNED AND FOREIGN‐OWNED MANUFACTURING PLANTS: A COMMENT
| Author | David Blanchflower |
| Date | 01 July 1984 |
| Published date | 01 July 1984 |
| DOI | http://doi.org/10.1111/j.1467-8543.1984.tb00165.x |
COMPARATIVE PAY LEVELS IN DOMESTICALLY-OWNED
AND FOREIGN-OWNED MANUFACTURING PLANTS:
A
COMMENT
DAVID
BLANCHFLOWER*
IN a recent paper in this Journal, Buckley and Enderwick
(1983)
used data from the
1980
Workplace Industrial Relations Survey, to compare pay levels in
domestically-owned and foreign-owned plants in
U.K.
manufacturing. They
concluded that ‘foreign-owned firms do appear to provide higher levels
of
remuneration. The differential is highest in the case
of
semi-skilled manual workers,
where it is some
8
per cent. While still positive the pay differential for skilled manual
workers
is
slightly lower, at
7
per cent. There is no difference in median pay levels for
management employees.’ (p.
397).
They also presented wage distributions of selected
employee groups by industry and noted that there were ‘some inconsistencies in the
view that foreign-owned firms invariably pay higher wages. Exceptions are notable in
Food, drink and tobacco, Textiles, and Bricks, pottery, glass, cement etc.’ (p.
397).
The purpose of this note is to correct a number
of
important errors in the paper by
Buckley and Enderwick.
The
1980
Workplace Industrial Relations Survey used the
1977
Census
of
Employment as its sampling frame, and covered the manufacturing and service sectors
of
civil employment in Great Britain.’ The unit
of
analysis was the establishment,
which is defined as an individual place
of
employment at a single address; all
establishments with
less
than twenty-five employees either at the time
of
the Census
or
the sample itself (Summer
1980)
were excluded. Differential sampling was undertaken
to ensure that there were sufficient larger establishments for satisfactory inter-size
comparisons to be made; hence larger units were sampled with greater frequency than
smaller ones.
To
restore the numbers in each size band to their proper proportions
according to the Census, a series
of
weights must
be
applied. Buckley and Endenvick’s
results do not meet this requirement and their results are therefore in error.*
Table
1
presents wage distributions and median
gross
weekly pay of a ‘typical’
empl~yee,~ in two manual worker groups (semi-skilled and skilled) and two
non-manual groups (clerical and middle-management) using both weighted and
unweighted data. The unweighted results are very similar to those reported by
Buckley and Enderwick for semi-skilled and skilled manuals and clericals in their
Table
1;
their results for middle management, however, are plainly incorrect, and
should be
f140.5
for foreign-owned plants and
f120.6
for domestically-owned plants,
giving a differential of
16.5%
of the former over the latterS4 When weighted data are
used, the differential in median pay between foreign and domestic plants is very small
for both manual groups
(4
per cent for semi-skilled and
1
per cent for skilled manuals).
In the case
of
non-manual workers it appears that foreign-owned plants do pay higher
levels of renumeration than their indigenous competitors; the differential is greater for
middle management
(14.3
per cent) than it is for clerical workers
(10.4
per cent).
Unfortunately, this is not an appropriate method for determining, for example,
whether such higher wages are a result
of
labour quality differences.
Buckley and Enderwick argue that the ‘difficulty with comparisons of this nature is
that they obscure the effect of differences in plant size and industry distribution’
(p.
397)
and hence they provide
a
‘comparative analysis by industry order’. Unfortu-
nately, they have made a crucial error by allocating establishments
to
industries rin the
*
Queen
Mary
College,
University
of
London
265
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