LINKING WAGES TO LABOUR PRODUCTIVITY IN COLLECTIVE BARGAINING: THE CASE OF ARGENTINA

ADRIANA GOLDSCHVARTZ (MARSHALL)

Ginebra

Workshop; Collective Bargaining, Wages and Productivity; 2013

Organización Internacional del Trabajo

Associating the evolutions of wages and labour productivity may affect diverse economic processes, income distribution patterns among them. In turn, the effects on income distribution may be examined in terms of the shares of wages and profits, or in terms of the degree of inequality in the distribution of wage income. While in the first case it may be expected that a strong positive association between wage and productivity growth rates would contribute to at least preserve the level of labour´s income share, in relation to the second it is commonly considered that the stronger the association the greater the degree of wage inequality (within or across industries and firms) and of wage dispersion. The concern underlying this paper refers to the first issue. The empirical analysis refers to the case of Argentina, focusing in the 2003-2012 period, characterized by fairly homogeneous economic and labour policies over the years, substantial economic growth until 2011, an improving labour market situation, and the dynamic pace of collective wage bargaining in the context of employment growth and accelerating inflation. The objective of the study is to explore ?wage-productivity? clauses incorporated in collective agreements and their possible effects, taking into account how extended the introduction of such clauses has been, which is their dominant nature, and at what level they had mainly been negotiated. The analysis centers in manufacturing industry, the sector for which there is more information available. The paper is organized as follows. The first two sections describe contextual aspects relevant to the understanding of the dynamics of wage bargaining: economic and labour market trends (section I), and trade union structure and influence (section II). The main features of collective bargaining and their changes over time (bargaining structure, patterns and coverage) are examined in section III. Section IV concentrates in wage bargaining specifically and the structure of pay in collective agreements. After a historical overview of productivity-based wage incentives introduced via collective negotiation (section V), in section VI the characteristics of wage-productivity bargaining in 2003-2012 are analyzed on the basis of a sample of collective agreements signed in manufacturing industries. Finally, in section VII the influence of wage-productivity bargaining on the actual relationship between wage and productivity trends is explored with reference to the manufacturing sector in the same period. Results from the analysis of data at the aggregate level for the 2003-2012 period coincide in suggesting that there is no association at this macro level between the stipulation of wage-productivity clauses and the evolution of wages vis-à-vis that of labour productivity. However, the absence of visible effects of wage-productivity bargaining at the aggregate level does not necessarily imply that collectively agreed productivity-based wage incentives did not have an impact in the enterprises where they are in force. At the aggregate level those effects are masked by more general trends, given that the aggregate data for each industrial activity cover far more activities/enterprises than those where wage-productivity clauses were signed with trade unions. Several factors contribute to explain the absence of visible effects of wage-productivity clauses at the aggregate level. In particular, government periodic adjustment of the general minimum wage, and the reemergence of imitative bargaining in the high inflation context reduced significantly the dispersion of wage trends. Declining unemployment facilitated the transmission, via collective bargaining, of minimum wage increases to all industries, whereas rising inflation led to increasingly similar rates of wage growth across them while, at the same time, labour productivity trends varied substantially across industries. Similarity in wage growth rates leaves little room for gauging the impact of wage-productivity bargaining in those activities where such clauses were negotiated. In any case, the very persistence over time of wage-productivity bargaining in Argentina reveals that collectively agreed wage-productivity clauses succeeded in satisfying labour as well as employers. A relevant number of trade unions, with a tradition in enterprise bargaining, seem to have seen wage-productivity bargaining as an useful instrument, mainly when earnings are tied to collective productivity performance (at the firm level), which in fact is the most common situation. At the same time, and contrary to the imitative pattern present in other types of wage negotiation, wage bargaining based on the performance of labour productivity has shown limited dissemination, at least at the level of formalized negotiations. This  would point to the limitations faced by wage-productivity bargaining in high inflation regimes such as that characteristic of Argentina´s economy, where the increase of the cost of living has systematically been the main argument for claiming wage rises, overriding standards based on performance.