PRODUCT AND LABOUR MARKETS IN WAGE DETERMINATION: SOME AUSTRALIAN EVIDENCE
| Author | John Haylest,William Brown,Lyndon Rowe,Barry Hughest |
| DOI | http://doi.org/10.1111/j.1467-8543.1984.tb00160.x |
| Date | 01 July 1984 |
| Published date | 01 July 1984 |
PRODUCT AND LABOUR MARKETS
IN
WAGE
DETERMINATION:
SOME AUSTRALIAN EVIDENCE
WILLIAM BROWN*,
JOHN
HAYLESt,
BARRY
HUGHES?
AND
LYNDON
RowEtl’
ABSTRAC~
The study
is
concerned with the extent
to
which workplace wage drift is influenced by
establishment-specific
or
occupation-specific factors. It demonstrates, by analysis
of
variance of pay data from a survey
of
44 occupations in 198 workplaces, that the sources
of
variation are predominantly establishment-specific. There is evidence
of
a link
between the amount
of
discretion an employer exercises in the labour market and the
degree of concentration in his product market. It is argued that discussions
of
pay
determination have been unduly preoccupied with labour market processes and have
neglected the variation in employer behaviour arising from differences in product
market.
INTRODUCTION
There is growing dissatisfaction in labour economics with the heavy emphasis that
discussions
of
wage determination place
on
supply-side factors. to the relative neglect
of
those on the demand side. Unfortunately, empirical evidence on the relative
importance of these forms
of
explanation is scarce. This is partly because
of
the great
difficulty of securing earnings data disaggregated below the industry level and also the
lack
of
such data over periods of time. In this paper we use large-scale survey data
at
establishment level. We are able
to
exploit a peculiar characteristic of Australian wage
fixing arrangements whereby ‘wage drift’ occurring at the place
of
work to supplement
the quasi-judicially determined industry-wide ’award rates’
is
accumulated into clearly
defined ‘overaward payments’.
The data came from a representative survey
of
the local labour market of Adelaide.
a city
of
almost one million inhabitants.
It
was carried
out
in the middle of 1974.
shortly before the accelerating pace
of
overaward bargaining was to be curtailed
abruptly by the introduction of national wage indexation in a time
of
economic
recession. As a proportion
of
total earnings. overaward payments were of greater
significance in 1974 than in any year before
or
after (Brown, 1984). The data portray
the accreted result
of
many years of wage drift, and the fact that our survey measured
them at their zenith provides us with a unique opportunity
to
explore the forces behind
that wage drift.
Although some overaward payments are specific to individual employees.
a
special
survey of the metal industry conducted in 1975 by the Australian Bureau
of
Statistics
showed that the great majority take the form
of
a uniform payment
to
everyone
of
a
given occupational grade within a given establishment (Brown, 1984). The central
concern
of
this study is whether, and under what circumstances, the magnitude
of
a
E.S.R.C. Industrial Relations Research Unit. University
of
Warwick
i-
The Flindcrs University
of
South Australia.
tt
The Confederation of Western Australia Industry.
I69
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