Title: WageIndicator support for trade union bargaining in Europe -2
Duration: December 2007 - November 2008
Funded by: European Commission - Industrial Relations and Social Dialogue Program - VS/2007/0534.
Partners: University of Amsterdam/AIAS; European Trade Union Organisations: ETUC, EMF
Research centres: Ruskin College (Oxford, UK), WSI - DGB (Duesseldorf, Germany); WageIndicator Foundation
Researchers: Maarten van Klaveren, Nuria Ramos Martin, Kea Tijdens, Barbora Brngálová; Marta Kahancová (CELSI / Bratislava)
Project management: University of Amsterdam/AIAS - Kea Tijdens

From its Social Dialogue Program the European Commission funded the WIBAR-2 project, carried out by the University of Amsterdam/AIAS, in cooperation with trade union organizations ETUC, EMF and WSI-DGB, Ruskin College, and WageIndicator. Based on data derived from the WageIndicator web-survey, WIBAR-2 focused on the effects of foreign direct investment (FDI) on wages and working conditions in 12 EU member states: Belgium, Denmark, Finland, France, Germany, Hungary, Italy, the Netherlands, Poland, Spain, Sweden, and the UK.
Preparatory studies were written for five industries: metal and electronics manufacturing; retail; finance and call centres; information technology, and transport and telecom. They include detailed figures on wages, working conditions and industrial relations, leading to detailed comparisons between seven countries: Belgium, Finland, Germany, the Netherlands, Poland, Spain and the UK, with figures for Hungary and Sweden added occasionally. In October and November 2008, these studies were discussed by audiences of trade union officers and researchers in Brussels (metal and electronics), Oxford (transport and telecom) and Duisburg (retail). The WIBAR-2 project included promoting the web-survey in France, a large and important economy till then without WageIndicator data collection. Moreover, as part of the project the AIAS Multinational Enterprise (MNE) Database was developed for the five industries and 12 countries at stake. Below we highlight conclusions from the eight WIBAR-2 reports.

The WIBAR-2 project is a follow up of the WIBAR(-1) project, carried out by the University of Amsterdam/AIAS in 2006-2007, that resulted in a book: Maarten van Klaveren and Kea Tijdens (eds) (2008) Bargaining issues in Europe: comparing countries and industries. Brussels: ETUI / University of Amsterdam-AIAS / WageIndicator (Available in English, German, Spanish and Hungarian).

WIBAR-2 Report No. 1 (pdf 280 KB), on FDI in Metal and Electronics Manufacturing, depicts a heavily internationalized industry. The MNE Database pointed out that by March 2008 no less than 46% of metal and electronics establishments in the 12 countries were owned by MNEs from outside the EU, of which over half from the USA. In eight countries the shares of workers that indicate in the WageIndicator web-survey to work for an MNEs are the highest of the five industries.
In five of the seven countries for which sufficient wage information was at hand, MNEs pay higher hourly wages than domestic firms, also if differences by establishment size, gender, working hours, education and tenure were taken into account. This is not the case in Belgium and Finland. Promotion opportunities are clearly better in MNEs, but the incidence of reorganizations is higher too. In metal and electronics the working week turns out to be quite long, and even longer in MNEs than in domestic firms. For example, in MNEs in Germany nearly half of all workers usually works over 40 hours per week, and in Poland even over half. The training issue delivers a more positive picture. Both the incidence and the duration of employer-provided are considerably higher in MNEs.

WIBAR-2 Report No. 2 (pdf 230 KB), on FDI in Retail, provides a detailed analysis of internationalization in this industry, showing that here FDI meets quite some hick-ups. Especially in food retailing internationalization is complicated and large firms often retreat from host countries. According to the MNE Database, on average subsidiaries of MNEs in retail are only involved in between two and three countries out of 12: the lowest figure of the five industries. Where MNE establishments show up, their establishments are much larger than those of the domestic firms. Especially in Belgium and Spain the domestic stores are quite small.
Retail is definitely a low-wage industry, with hourly wages in both MNEs and domestic firms the lowest of the five industries. Moreover, the evidence suggests that notably in Belgium, Finland and the UK MNEs with large establishments resort to outright wage pressure, like in Poland MNEs with small stores seem to do. The retail report points out that the incidence of overtime is higher in MNEs, but that they tend to compensate overtime less in pay. This results in smaller differences between MNEs and domestic firms in weekly and monthly wages than measured in hourly wages. With 2%-points the largest difference was found in the Netherlands.

WIBAR-2 Report No. 3 (pdf 224 KB), on FDI in Finance and Call Centres, documents the strong positions that by March 2008 UK finance MNEs had taken in most of the 12 countries, but also notes that all this happened before the financial turmoil appeared.
Concerning wages, it is striking that in all countries the averages in this industry were higher than the median values, for example in Spain even 50%. This indicates a long tail towards the top of the wage distribution. In finance and call centres the gender pay gap turns out to be quite high, not only in MNEs but in four of seven countries even more in domestic firms. In all seven countries MNEs appear as offering better career opportunities than their domestic competitors, which at least partly may have to do with their much larger establishment size. The same result shows up for training opportunities. Unlike other industries, differences in union density between MNEs and domestic firms are small in finance and call centres; in both union membership is comparatively low.

WIBAR-2 Report No. 4 (pdf 212 KB), on FDI in Information Technology, shows the internationalization in the IT business is more limited than many may have expected, except for the large MNEs. Of the world’s 20 largest IT firms, 13 are represented in the 12 EU countries under study. Large, internationalized IT firms seem to have gained strong positions especially in Denmark, Finland and Poland. Their establishments are also consistently larger than those of domestic firms. Yet, except in Germany and Poland large IT establishments of MNEs do not pay considerable higher hourly wages. Compared to the other industries, IT jobs show a good match between job and educational levels, but this holds for both MNEs and domestic firms. This result fits with the fact that job satisfaction scores in IT are the highest of the five industries. Obviously the length of the working week, on average longer in MNEs, is not of much influence here. Striking again is the working week in German MNEs: nearly three of five IT employees works over 40 hours.

WIBAR-2 Report No. 5 (pdf 268 KB), on FDI in Transport and Telecom, shows that concerning internationalization this industry seems to take a middle position. Telecom companies dominate in the rankings of world’s largest, but it is also argued that notably in transport international subcontracting is widespread and remains outside FDI statistics.
Transport and telecom comes second to retail as a low-wage industry. Though less than retail containing pockets of low-wage work performed by women and young workers, there is evidence that transport MNEs active in a number of countries have taken resort to outright wage pressure. The industry shows the highest perceived incidence of dangerous work of all five, though working conditions seems more dangerous in domestic firms than in MNEs. And whereas hardly any differences could be traced in work-stress levels, except for Finland promotion opportunities are better in MNEs. Like in the other industries, the incidence of employer-provided training is higher in MNEs. The same holds for its duration.

WIBAR-2 Report No. 6 (pdf 148 KB), is the Comparative Report on the Social Effects of the FDI in five industries and seven EU countries. It systematically sets out comparisons between the outcomes for MNEs and non-MNEs (domestic firms) for establishment size; ownership of the firm; wages; job quality and working conditions; working hours; raining, and industrial relations. The most striking results have been highlighted above. It may be added that the share of respondents working for MNEs proves to be on average 41%, varying from 36% in Finland and Spain to 48% in Belgium – like in other rankings popping up here as a heavily “globalized” country. As for industries, with 52% respondents in MNEs, metal and electronics indeed is most internationalized, and with 29% retail least.

WIBAR-2 Report No. 7 (pdf 240 KB) documents the AIAS Multinational Enterprise Database. It first treats its aim, design and contents, before presenting an analysis of data derived from it. An overview of the 4,204 MNE establishments in the Database for all five industries shows that MNEs based in four home countries represent 56% of establishments. Here the USA ranks first (18%), followed by Germany (14.5%), France (13%) and the UK (10.5%). The report shows the underlying and varying patterns of internationalization and diversification of MNEs per industry. Shares of the largest, most internationalized firms in the FDI totals by country and by industry provide indications of concentration within the ranks of the MNEs. It reveals also something about national market structures. Two countries, Hungary and Poland, consistently show above-average shares of establishments of the largest MNEs.

WIBAR-2 Report No. 8 (pdf 220 KB), is the Analytical Report on the Social Effects of FDI in five industries and seven EU countries, focusing on wages. The report confronts the WIBAR-2 evidence with evidence of others from the rapidly growing strand of literature on wage differentials between MNEs and domestic firms, or the “MNE wage premium”. It relates this joint evidence to the debate on the causes of wage differentials, mostly grouped in advantages of MNEs concerning productivity; technology; size, and human capital. The report returns to the evidence presented in the Reports 1 to 5, notably to the outcomes of the regression analyses. These show that, controlled for establishment size, gender, working hours, education and tenure, MNEs still pay substantially higher hourly wages than domestic firms in Germany, Poland and Spain, and do so to a lesser extent also in the UK and the Netherlands. Yet, in Belgium and Finland MNE wage premia are small or even negative. These outcomes are partly in line with the evidence from the literature, partly they are not. The researchers argue that additional explanations may well be found in differences in national industry structures as well as industrial relations developing at national and EU levels.
The report ends with an extensive thematic list containing all publications used in the course of the WIBAR-2 project.