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Redundancy Pay, Unions and Employment

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  • Alison L. Booth
  • Andrew McCulloch

Abstract

In this paper we estimate the determinants of bargaining over redundancy pay, and its impact on employment variation and financial performance, using the 1990 Workplace Industrial Relations Survey. The estimates indicate that bargaining over redundancy pay is more prevalent in plants with a strong union presence. However, voluntary negotiation of redundancy pay does not appear to reduce employment variability in the face of small demand shocks. Bargaining over manual redundancy pay has an insignificant impact on plants’ financial performance, while bargaining over non‐manual redundancy pay has a large significant positive effect. Our findings may explain the positive attitudes to redundancy pay reported by some employers, and reinforce the general conclusion of cross‐country studies that firing constraints in Britain may be relatively unimportant in preventing labour market flexibility.

Suggested Citation

  • Alison L. Booth & Andrew McCulloch, 1999. "Redundancy Pay, Unions and Employment," Manchester School, University of Manchester, vol. 67(3), pages 346-366, June.
    • Handle: RePEc:bla:manchs:v:67:y:1999:i:3:p:346-366
    DOI: 10.1111/1467-9957.00151
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    Cited by:

    1. Brändle, Tobias & Goerke, Laszlo, 2018. "The One Constant: A Causal Effect of Collective Bargaining on Employment Growth?," IZA Discussion Papers 11518, Institute of Labor Economics (IZA).
    2. E. Galdon-Sanchez, Jose & Guell, Maia, 2003. "Dismissal conflicts and unemployment," European Economic Review, Elsevier, vol. 47(2), pages 323-335, April.
    3. Addison, John T. & Teixeira, Paulino, 2004. "The Effect of Worker Representation on Employment Behavior in Germany: Another Case of -2.5%," IZA Discussion Papers 1188, Institute of Labor Economics (IZA).
    4. White, Michael & Bryson, Alex, 2006. "Unions, job reductions and job security guarantees: the experience of British employees," LSE Research Online Documents on Economics 19841, London School of Economics and Political Science, LSE Library.
    5. Tobias Brändle & Laszlo Goerke, 2018. "The one constant: a causal effect of collective bargaining on employment growth? Evidence from German linked‐employer‐employee data," Scottish Journal of Political Economy, Scottish Economic Society, vol. 65(5), pages 445-478, November.
    6. John T. Addison & Paulino Teixeira, 2005. "The Effect of Works Councils on Employment Change," GEMF Working Papers 2005-06, GEMF, Faculty of Economics, University of Coimbra.
    7. Alex Bryson, 2004. "Unions And Employment Growth In British Workplaces During The 1990s: A Panel Analysis," Scottish Journal of Political Economy, Scottish Economic Society, vol. 51(4), pages 477-506, September.
    8. Addison, John T. & Belfield, Clive R., 2002. "Unions and Employment Growth: The One Constant?," IZA Discussion Papers 479, Institute of Labor Economics (IZA).
    9. Bryson, Alex & White, Michael, 2006. "Unions, within-workplace job cuts and job security guarantees," LSE Research Online Documents on Economics 19849, London School of Economics and Political Science, LSE Library.
    10. Laszlo Goerke, 2002. "Redundancy Pay and Collective Dismissals," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 59(1), pages 68-90, February.
    11. Addison, John T. & Siebert, W. Stanley, 2002. "Changes in Collective Bargaining in the U.K," IZA Discussion Papers 562, Institute of Labor Economics (IZA).
    12. Addison, John T. & Belfield, Clive R., 2002. "Unions and Establishment Performance: Evidence from the British Workplace Industrial/Employee Relations Surveys," IZA Discussion Papers 455, Institute of Labor Economics (IZA).
    13. John T. Addison & John S. Heywood & Xiangdong Wei, 2003. "New Evidence on Unions and Plant Closings: Britain in the 1990s," Southern Economic Journal, John Wiley & Sons, vol. 69(4), pages 822-841, April.

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