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Is the Erosion Thesis Overblown? Evidence from the Orientation of Uncovered Employers

  • Addison, John T.


    (University of South Carolina)

  • Teixeira, Paulino


    (University of Coimbra)

  • Evers, Katalin


    (Institute for Employment Research (IAB), Nuremberg)

  • Bellmann, Lutz


    (Institute for Employment Research (IAB), Nuremberg)

It is sometimes claimed that the coverage of collective bargaining in Germany is considerably understated because of orientation, a process whereby uncovered firms profess to shadow the wages set under sectoral bargaining. Yet importantly, at a time when collective bargaining proper has been in retreat, little is known of corresponding trends in the frequency of indirect coverage, still less of the degree to which wages are aligned in practice. Using nationally representative data for 2000-2010, this paper charts the extent of orientation in the uncovered sector, and tracks average wages across bargaining regimes as well as changes in wages from switches in regime. It is reported that orientation is growing with the decline in sectoral bargaining and that orienting firms do pay higher wages than their counterparts in the collective bargaining free zone. Yet in neither case – frequency nor remuneration – is the degree of 'compensation' recorded other than partial.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6658.

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Length: 33 pages
Date of creation: Jun 2012
Date of revision:
Publication status: forthcoming in revised form as 'Is the Erosion Thesis Overblown? Alignment from Without in Germany' in Industrial Relations
Handle: RePEc:iza:izadps:dp6658
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  1. Virginia Doellgast & Ian Greer, 2007. "Vertical Disintegration and the Disorganization of German Industrial Relations-super-1," British Journal of Industrial Relations, London School of Economics, vol. 45(1), pages 55-76, 03.
  2. Gabriele Fischer & Florian Janik & Dana Müller & Alexandra Schmucker, 2009. "European Data Watch: The IAB Establishment Panel - Things Users Should Know," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 129(1), pages 133-148.
  3. Wolfgang Ochel, 2003. "Decentralising Wage Bargaining in Germany – A Way to Increase Employment?," CESifo Working Paper Series 1069, CESifo Group Munich.
  4. John T. Addison & Alex Bryson & Paulino Teixeira & André Pahnke & Lutz Bellmann, 2011. "The Demise of a Model? The State of Collective Bargaining and Worker Representation in Germany," GEMF Working Papers 2011-09, GEMF - Faculdade de Economia, Universidade de Coimbra.
  5. Haipeter, Thomas & Lehndorff, Steffen, 2009. "Collective bargaining on employment," ILO Working Papers 433128, International Labour Organization.
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