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The Perceived Fairness of Layoffs in Germany: Participation, Compensation, or Avoidance?

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Author Info
Christian Pfeifer ()

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Abstract

This study analyses to what extend and under what circumstances layoffs are accepted in Germany. Principles of distributive justice and rules of procedural justice form the theoretical framework of the analysis. Based on this, hypotheses are generated, which are tested empirically in a telephone survey conducted between East and West Germans in 2004 (n = 3036). The empirical analysis accounts for the different points of views of implicated stakeholders and impartial spectators. Key findings are: (1) The management of a company can increase the acceptance of layoffs if the employees get some participation rights. (2) For impartial spectators generous compensation for those made redundant leads to a higher degree of perceived fairness. But job alliances are not even preferred to layoffs without measures to soften the blow of job loss. (3) Implicated stakeholders accept job alliances and perceive wage cuts as more fair than layoffs. However, compensation does not have the expected impact. Copyright Springer Science+Business Media, Inc. 2007

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File URL: http://hdl.handle.net/10.1007/s10551-006-9217-z
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Publisher Info
Article provided by Springer in its journal Journal of Business Ethics.

Volume (Year): 74 (2007)
Issue (Month): 1 (August)
Pages: 25-36
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Handle: RePEc:kap:jbuset:v:74:y:2007:i:1:p:25-36

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Web page: http://www.springerlink.com/link.asp?id=100281

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Related research
Keywords: distributive justice; downsizing; fairness; job alliance; layoffs; procedural justice; severance pay; works councils; D63; J63; M12; M51;

References listed on IDEAS
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  1. Bergemann, Annette & Mertens, Antje, 2004. "Job Stability Trends, Layoffs, and Transitions to Unemployment: An Empirical Analysis for West Germany," IZA Discussion Papers 1368, Institute for the Study of Labor (IZA). [Downloadable!]
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  2. Akerlof, George A, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, MIT Press, vol. 97(4), pages 543-69, November. [Downloadable!] (restricted)
  3. Konow, James, 2001. "Fair and square: the four sides of distributive justice," Journal of Economic Behavior & Organization, Elsevier, vol. 46(2), pages 137-164, October. [Downloadable!] (restricted)
  4. Pfeifer, Christian, 2005. "Fairness and the labour market; A theoretical and empirical analysis of layoffs in Germany," Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Universität Hannover dp-328, Universität Hannover, Wirtschaftswissenschaftliche Fakultät. [Downloadable!]
  5. Matthew Rabin, 1998. "Psychology and Economics," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 11-46, March. [Downloadable!] (restricted)
  6. Gary Charness & David I. Levine, 2000. "When are layoffs acceptable? Evidence from a quasi-experiment," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 53(3), pages 381-400, April.
    Other versions:
  7. Chaness, G. & Levine, D.I., 1999. "Changes in the Employment Contract? Evidence from a Quasi-Experiment," Papers 70, California Berkeley - Institute of Industrial Relations.
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  8. James Konow, 2003. "Which Is the Fairest One of All? A Positive Analysis of Justice Theories," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1188-1239, December.
  9. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-41, September. [Downloadable!] (restricted)
  10. Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, vol. 83(5), pages 1281-1302, December. [Downloadable!] (restricted)
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