Do high-involvement work practices affect employee earnings in union and non-union settings in the Irish private sector?

Abstract

Purpose The link between human resource practices and earnings for workers is a notable research lacuna and the purpose of this paper is to address this relationship using a matched data set covering all employees and employers in the Irish private sector. Design/methodology/approach The analysis is based on the National Employment Survey (NES) (2008). The survey provides measures of individual characteristics such as union membership, collective bargaining coverage, sector, occupation, age, sex and educational attainment. It also provides data on individual employee earnings including overtime and shift allowances, together with weekly hours worked. The particular benefit of the NES is that it is a large-scale matched employer-employee survey. Findings The results indicate that extensive use of high-involvement practices measured in this study is positively associated with higher earnings for both lower and higher earning employees. The authors also find that for employees covered by a collective agreement, the positive effects of high-involvement work practices are complementary with a union earnings premium. Research limitations/implications Some caution is required in the interpretation of the results given the cross-sectional nature of the data. With cross-sectional data it is difficult to establish definitive causal and directional linkages between high-involvement measures and levels of earnings and earnings inequality. Practical implications For trade unions and their members, the results imply that the involvement practices as measured in this study are unlikely to substitute for the earnings premium associated with collective bargaining coverage. For human resource, increasing the earnings of low-paid employees may carry relatively marginal costs but the benefits maybe considerable in the form of employee engagement, increased effort levels and productivity gains. Originality/value This study extends the literature on the outcomes of high-involvement practices for employees and firms by addressing their association with employee earnings particularly at the lower end of the wage hierarchy.