Labour Market Regimes and Worker Recruitment and Retention in the European Union: Plant Comparisons
| DOI | http://doi.org/10.1111/1467-8543.00212 |
| Author | Jane Morton,W. S. Siebert |
| Date | 01 December 2001 |
| Published date | 01 December 2001 |
Labour Market Regimes and Worker
Recruitment and Retention in the
European Union: Plant Comparisons
Jane Morton and W. S. Siebert
Abstract
We analyse worker recruitment and retention outcomes, contrasting produc-
tion worker skill profiles in the UK subsidiaries of five multinationals with, in
each case, a matched plant in another EU state. From personnel records we
build up plant distributions of worker pay, age, schooling, prior experience and
tenure. We find evidence of local management discretion, with differences in
unit labour costs and in recruitment/retention outcomes between the matched
subsidiaries. UK plants have a ‘hire and fire’ environment and a less skilled
worker mix. Such outcomes can be linked to the UK’s lower labour costs and
less regulated labour market.
1. Introduction
The paper explores diversity in multinational recruitment/retention prac-
tices, contrasting outcomes in the UK subsidiaries of five multinationals
with, in each case, a matched plant in another EU state. We consider both
the recruitment and the retention of workers, since together these build up
a plant’s work-force and determine its skill profile. We restrict the analysis
to production workers. Our data are gathered primarily from personnel
records, from which we build up plant distributions of pay, age, schooling,
prior experience and tenure. We then contrast the matched plants along
these dimensions.
We pose two questions about production worker recruitment/retention
outcomes. First, we ask whether outcomes are similar across company sub-
sidiaries producing the same product in different countries. In general,
contrasting matched plants will illustrate the extent to which a plant’s
managers can ‘do things their way’, unconstrained by head office policy.
Managers even in sister plants might be quite free regarding recruitment
Jane Morton is at the University of Leicester. W. S. Siebert is at Birmingham University.
British Journal of Industrial Relations
39:4 December 2001 0007–1080 pp. 505–528
#Blackwell Publishers Ltd/London School of Economics 2001. Published by Blackwell Publishers Ltd,
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practices, for example taking ‘a policy of high wages and high skills or one
of short-termism and hire and fire’ (Edwards 1994: 37). Our data can thus
establish to what extent different labour management equilibriums exist.
Second, if there are different outcomes, we ask whether these can be
explained by a conventional neoclassical economic model linking the UK’s
less strict employment protection laws, lower labour taxes and generally
lower unskilled pay with a less skilled worker mix. In particular, employ-
ment protection laws might help the retention of permanently employed
incumbent workers (insiders) and yet harm the recruitment of unemployed
‘outsiders’ (Lindbeck and Snower 1988: 246). Because of the extra costs
of dismissing workers, managers might need to adjust hiring standards so
that those hired for permanent jobs are of demonstrably high quality, for
example more experienced. Most other EU states have more constraining
dismissals legislation than the UK. For example, the OECD’s measure of
strictness of employment protection (1999: table 2.5) gives the UK a value of
only 0.5 compared with around 3 for the other EU states involved in our
study (Belgium, the Netherlands, France and Germany). If plants in these
states follow a high-wage and high-skills policy compared with their UK
counterparts, dismissals legislation could in part explain why. Our data will
therefore also contribute to discussion of the link between labour legislation
and insider power.
1
There is a substantial literature analysing international employment
practices. Foremost are the studies linked with the Industrial Relations
Research Unit at Warwick University (for example Belanger et al. 1994;
Ferner and Edwards 1995; Coller 1996; P. K. Edwards et al. 1996; Ferner
and Quintanilla 1998; Coller and Marginson 1998; T. Edwards et al. 1999).
Also important have been the international labour productivity and training
comparisons of the National Institute of Economic and Social Research (for
example O’Mahoney 1992; Mason et al. 1994). These analysts have gener-
ally used a similar case study approach to ours, contrasting employment and
training practices within plants of a given multinational across countries.
However, a difference is that their material has been based primarily on
interviews, whereas ours is more quantitative, using personnel records. We
also lay more stress on matching the products (as detailed below), so as to
hold constant technological and product quality factors.
The interview method is well suited for analysing management practices.
In particular, in the debate over convergence of employment practices (and
outcomes) where a multinational’s subsidiaries are competing for produc-
tion, the methods used by central management to influence the subsidiaries
have been addressed. Here, for example, it has been shown that the concept
of ‘best proven practice’ is important in diffusing practices across competing
plants, as are managerial networks of training courses and international
meetings of managers (see Coller and Marginson 1998: 13). Circumstances
in which management is successful in bringing about diffusion — sometimes
via ‘coercive comparisons’ — have also been analysed. Important factors
promoting diffusion (T. Edwards et al. 1999: 288 ff.) include whether com-
506 British Journal of Industrial Relations
#Blackwell Publishers Ltd/London School of Economics 2001.
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