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Worker participation and job preservation in recessionary conditions

Final Report Summary - WPART2013 (Worker participation and job preservation in recessionary conditions)

The main purpose of this proposal was to study the effects of worker participation on employment stability and the adoption of employment stabiliser mechanisms at the workplace level. The project provided evidence on the effect of employee representation on working time flexibility in private-sector European establishments. A 2002 European Union directive granted information, consultation and representation rights to employees on a range of key business, employment and work organization issues beyond a certain firm size. We exploit the quasiexperimental variation in employee representation introduced by the implementation of the Directive in four countries (Cyprus, Ireland, Poland and the UK) with no previous legislation on the subject. The empirical analysis was based on repeated cross-section establishment-level data from the last three rounds of the European Company Survey. Difference-in-difference estimates suggested that the Directive had a positive and significant effect on both employee representation and the utilisation of flexible working-time arrangements for eligible establishments. The greater use of flexible working-time schemes was driven by establishments in which no local wage-negotiations take place and those with a high proportion of female workers. It has been shown that the utilisation of flexible working time schemes is positively associated with job preservation in certain contexts. The findings have important policy implications, highlighting one channel through which employee voice may favour less dramatic firm-level employment adjustments to negative shocks.


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