 BUS 430 Summer 2013 Dr. Rajiv Krishnan Kozhikode

 Peer evaluation info  Critical reflection report 1  Critical reflection report 2  Different IR Systems

o Significant differences in pay distribution across countries Even among advanced industrial economies o What explains this difference? o Level at which wages are set differ across these countries Individual level Plant level Industry level Entire private sector o Level of centralization Collective bargaining or government involvement o Union concentration o Share of labor force covered by collective bargaining institutions

 Centralization of wage setting reduces inequality  i.e., either through collective bargaining agreements or through government involvement  Wage-setting at higher level reduces inequality o i.e., industry wide wage setting is higher level, individual/firm specific wage setting is at lower level  Union concentration (few unions) reduces inequality  Union density (unionized workers to un-unionized workers) reduces inequality  Union coverage (percent of work-force covered by collective bargaining agreements) o Density and coverage are not the same but are related

 Ratio of wages received by the worker at the 90 th percentile, to the wage received by the worker in the 10 th percentile.  There could be other means as well such as o Gini coefficient (ranges from 0 to 1 for low to high wage dispersion) o Variance of the log of wages in a country.

 National IR systems are viewed as the basis in most cross- cultural examinations  But there could be sub-national differences in IR systems  Local realities dictate union activities and outcomes  In Italy, national unions rose to prominence but later lost prominence due to local changes  Fiat vs Alfa Romeo  Both were union heavy auto makers  Fiat got rid of union involvement in wage setting  Alfa Romeo continued to work with unions

 Recession in Italy affected both firms  Changes in local situations o More workers laid off o Greater resistance from workers  Responses of unions to these requirements  i.e., shifting responsibility from national to local union structures  Fiat held a strong stance against unions  In Fiat, local unions were unable to help the workers  They had to give up their prominence after a losing battle with Fiat management  Workers held the local unions responsible for their poor bargaining position with the firm

 Similar situation in Alfa Romeo  But Alfa worked with local unions  Increased productivity through cooperation  Employees were allowed to up skill and make themselves more relevant again  Alfa was later acquired by Fiat but the union-firm relationship still persists.

 Next session we will look at: Comparative Business Ethics