Did partnership in Ireland deliver for all workers? Unions and earnings

Abstract

Purpose After 20 years of social partnership in Ireland the purpose of this paper is to use a national survey of firms and employees to examine the extent of the wage gap between union and non-union workers in the private sector and compare the degree of wage inequality in union and non-union firms and among union and non-union employees. Design/methodology/approach The analysis in the paper is based on the National Employment Survey carried out by the Central Statistics Office in October 2008. Approximately 9,000 enterprises were sampled and almost 5,000 enterprises responded – a response rate of over 50 per cent while almost 100,000 employees were sampled and 65,535 completed the questionnaire – a response rate of over 60 per cent. In total 22 per cent (14,619) of respondents worked in the public sector and 78 per cent (50,916) in the private sector. Findings It appears that over time the earnings premium enjoyed by unionised workers has declined. This may reflect a long term decline in union bargaining power in the private sector as union density levels have declined. Even so unionised employees enjoy a wage premium over non-union employees and collective coverage appears to reduce levels of income inequality. However, the overall union wage gap is relatively modest – being generally below 10 per cent possibly due to the harmonising effects associated with the period of social partnership supported by government trade unions and employers. Research limitations/implications The cross-sectional nature of the data means that the factors associated with variations in employee earnings over time cannot be identified. Practical implications There is substantial evidence of a considerable spill-over effect as nationally agreed rates of pay percolated from the union to the non-union sector. It may also be the case that social partnership has acted to reduce wage inequality in non-union as well as union establishments. It appears that partnership type arrangements have the capacity to deliver for all workers in the private sector. Originality/value A unique aspect of the national survey data used here is the availability of employer/employee matched data from a robust national level survey with measures of union membership, earnings, individual and employment characteristics.