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High Wages Does Not Equal Low Company Profit

Friday, August 17, 2007

tiger1.jpgMany like to argue that unions and workers can’t receive high wages, especially in a globalized economy, because it is not cost effective and will stymie company profit. I for one think that argument is bullshit, especially company from UPS which made something around over $40 billion in 2006. High wages and generous compensation packages for CEOs but low wage and part-time jobs for workers? In the words of the so called “journalist” and right-wing noise machine Jon Stossel. “Give me a break.”

In an abstract from a recent article in this quarter’s Industrial Relations, and international journal of labor and management relations as well as other work and industrial related topics from the economy to job protections.

The article was titled “Centralized Wage Bargaining and the “Celtic Tiger” Phenomenon” and was written by Lucio Baaccaro and Marco Simoni. You can probably get the article at your local library’s journal section or through your local library’s and/or university library’s website.

In the abstract the author’s state:

Drawing on a variety of sources and research methods, this article argues that centralized wage bargaining contributed to the “Celtic Tiger” phenomenon by linking wage increases in the dynamic multinational companies sector to wage and productivity increases in the much more sluggish domestic sector of the economy and, in so doing, considerably increased the competitiveness of foreign multinational companies—a key driver of Irish growth. The article also argues that much-received wisdom about the institutional and organizational preconditions for centralized wage regulation needs to be reconsidered in light of the Irish case. Public sector unions played a pivotal role in initiating and sustaining wage centralization, yet their leadership role did not undermine its effectiveness. Likewise, internal democratic procedures and the absence of wage compression policies, rather than centralized organizational structures, facilitated compliance with centralized wage policies.

One of the key roles in the revival of the Irish economy, says the authors, is the presence of strong unions and union and management partnership in making business decisions as well as giving workers progressively better and livable wages as the years went by. Instead of centralized bargaining over wages and company policy hurting the economy, as some neo-liberal economists like to claim, it actually helped.

Image From:
UCD Dublin

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