Nathalie Greenan · • Heavy workload [3.5-4.8] ppt of wage premium, bad regulation of hours [0,...

This project has received funding from the European Union’s Seventh Programme for Research, Technological

Development and Demonstration under Grant Agreement No 312691

Quality of working life

and vulnerability in

economics

Nathalie Greenan

InGRID summer school

June 1, 2015

www.inclusivegrowth.be www.inclusivegrowth.be 2

Introduction

• Central gravity of the contributions of social

scientists to the concept of quality of working life :

– social psychology (Davis & Cherns, 1975)

• Relates to

– the work experience an individual has

– how it is shaped by the organisational context

• Meeting of the individual and the structural

• Promotes human values in job design against

– the “machine” approach to human work

– the view of labour as a commodity or a production factor

• Humanisation of work movement in social sciences

Title/date


Introduction

• Leads to a diversity of proposed change in work organisation and job design – targeted in first instance to the factory system

• To secure protection against – Health and safety hazards

• Improve the physical working environment

– Poverty • Secure an adequate or fair standard of living

– Illness and unemployment hazards • Increase job security

– The exercice of arbitrary authority • Increase employee voice

• In order to reduce exposure to risks and vulnerabilities

Title/date


Introduction

• Revitalisation of debates within the social sciences

with four special issues of journals recently

published and devoted to the quality of jobs:

– Journal of Organizational Behavior, 2010

Putting job design in context

– Journal of Industrial Relations, 2011

Job quality matters

– Industrial and Labour Relations Review, 2013

Job quality: what does it mean and how might we think

about it?

– Human Relations, 2013

Understanding job quality

Title/date


Introduction

• This revitalisation is linked…

– …to new social and economic developments shaping

organisations and work

• Move from manufacturing to service economy

• Globalisation , crisis and increased job insecurity

• Pervasive diffusion of ICTs

• Trends in labour force: education, age and gender

– …to the development of statistical surveys, which

allow for international comparisons

• My contribution to the summer school:

– expose what the economic approach brings to the

analysis of quality of working life and vulnerabilities

Title/date


Central questions on QWL and

vulnerabilities

(0) In times of crisis, unemployment is a first central source of vulnerability for workers

• severe consequences on well-being and health

• It hurts first the weakest members of the labour force

• focus on people in employment

(1) Value of working life • How to assess human activities in the context of work?

• What is the value of a job?

• What is a good job ? A bad job ?

(2) Exposure to risks of reduced QWL • How to improve quality of working life?

• How to protect from low or decreasing QWL?

• Issue of employee vulnerability in work, vulnerable work, vulnerable workers

Title/date


Two research avenues to answer

these questions in economics

• Utility frame: – High job quality comes with high job satisfaction: the various

dimensions of working life match with employees’ preferences

– Labour market adjustments play a central role in this matching

– Labour and Happiness economics

• Production frame: – High job quality comes from job design: job characteristics

allow for the growth / development of employees and organisation

– Adjustments within the organisation play a central role in meeting this dual outcome

– Industrial relations / Organisational economics

Title/date


Utility frame • Only individuals themselves can know what is most useful to them and what is not

– the value of a job is its impact on utility

– Utility is a broad concept that refers to a person’s welfare, well-being or happiness

– It is inappropriate, for any authority to stipulate what is needed and what is not needed

• Rational choice model: – assumes that people act rationally in the sense that they do only what serves their own true

goals, motives and desires

• Two ways to approach utility – Revealed preferences (Samuelson, 1938):

• dominates economics

• Two core asumptions: – people are consistent in their behaviour with regard to a preference ordering that represents their tastes,

preferences and motives

– More is better than less

• what they actually do “reveals” what their preferences are

• observe people’s behaviour on the labour market

– Subjective well being (Easterlin, 1974): • Gained popularity over the past decade

• how to approach utility delivered by non-market goods?

• people display bounded rationality

• choices do not necessarily reflect their “true” preferences,

• measure people’s perception of their experience rather than expose their preferences

Title/date


Utility frame

• Andrew Clark (2001,2005a&b, 2010)

– supports job satisfaction

• Three ways to define what is a high or low

quality job

– Ask job holders directly

– Analyse what makes them

• satisfied or happy in their jobs

• exit their job or withdraw from their work

Title/date


What do we find when we ask people directly? International Social Survey, 15 countries, 1997 & 2005

Work orientation module

– Job value question: How important is • Job security?

• High income?

• Good opportunities for advancement?

• An interesting job?

• A job that allows someone to work independently?

• A job that allows someone to help other people?

• A job that is useful to society?

• A job that allows someone to decide their times or days of work?

– 5 items scale (very important-not important at all)

– % of very important

10

Utility frame

www.inclusivegrowth.be www.inclusivegrowth.be 11 Title/date


What do we find when we analyse what makes people

satisfied?

• Job satisfaction question: All things considered, how

satisfied are you with your job?”

– Answers 1 to 7

– 7 = “Completely satisfied” , 1 = “Completely

dissatisfied”

13

Utility frame


Utility frame

Title/date

ISSP distribution of Job satisfaction


Utility frame • Relate job satisfaction to job outcomes

– Job outcomes are job characteristics that employees actually experience

– Self reports from individuals

– A set of different questions on these outcomes

• Regression analysis where job satisfaction and job outcomes are explained by – Individual demographic controls

– Country controls: 5 countries or 15 countries, reference, Norway (5) Denmark (15)

– Years dummies: 1997 and 2005, 1989 reference or 1997 and 2005, 1997 reference

Title/date


Overall Job Satisfaction

-0.400

-0.350

-0.300

-0.250

-0.200

-0.150

-0.100

-0.050

0.000

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Year

Reg

ress

ion

Coef

fici

ent

Pooled Panel

Evidence from British Household Panel Survey (BPHS)


Satisfaction: Work Itself

-0.500

-0.450

-0.400

-0.350

-0.300

-0.250

-0.200

-0.150

-0.100

-0.050

0.000

0.050

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Year

Reg

ress

ion

Co

effi

cien

t

Pooled Panel

Evidence from British Household Panel Survey (BPHS)


Utility frame • What do we find when we analyse what makes people

quit their job?

• from seven waves of the BHPS

– Dissatisfied workers are more likely to quit

Title/date


Utility frame

• To sum up Andrew Clark’s findings:

– Job satisfaction gives a good summary of QWL: significant correlation between satisfaction and QWL score aggregating different positive job characteristics

– Job satisfaction is a powerful predictor of separations and quits: confirms the importance of other characteristics than wages and hours worked

– Workers match to jobs which suits them, they tend to be in jobs that exhibit qualities which they think are very important

– Puzzle of declining job satisfaction in the 1990s, falling job quality and value of jobs?

• not related to pay

• nor to hours worked

• nor to job security

Title/date


Deeper in the utility frame • The value of jobs characteristics

– Adam Smith (1776): risky or other wise unpleasant jobs command a compensating wage differential

• utilities of workers are therefore equalised between industries and occupations by means of competition in the labour market.

– It can be measured • Through a revealed preference frame (Rosen, 1986)

– Hedonic wage methodology

– The monetary value of a job characteristics can be estimated as the monetary equivalent of the impact on utility

– Wage differentials between two jobs that are identical expect for a given job characteristic reveal information regarding employees’ willingness to pay for an amenity or to accept a disamenity

• Through a subjective well-being approach (Helliwell and Huang, 2010) – Subjective well-being is treated as a direct measure of utility

– Income equivalents of different job characteristics are calculated by comparing the effect of income and job characteristics on subjective well being

– Happiness becomes a new implicit policy target rather than economic prosperity

Title/date


Deeper in the utility frame • The revealed preference frame has been used to assess

the (negative) value of ‘bad’ job characteristics – Market return to a set of disamenities, for example Villanueva

(2007) • Using the German Socio-Economic Panel (1984-2001)

• From the observation of average wage changes for voluntary moves between jobs

• Heavy workload [3.5-4.8] ppt of wage premium, bad regulation of hours [0, 5.1], skill mismatch [0, 6.1], Job insecurity [0,0]

– to compute the value of statistical life (VSL) or the value of job injuries (Viscusy, 1993, Viscusy and Aldy, 2003)

• from on the job fatalities: mortality or injury

• use industry-specific or occupation-specific risk measures reflecting an average of at least several years of observations for fatalities, which tend to be relatively rare events

• Input in benefit-cost analysis for occupational health and safety policies and regulations

– Method to value the benefit of reduced risks of death or of injury

Title/date


Deeper in the utility frame • The subjective well being approach has been used to

assess the value of ‘good’ job characteristics – It is computed in terms of equivalent income conditional on

subjective well being impacts

– High compensating differential for positive non-financial job characteristics (Helliwell and Huang, 2010)

• Use of life satisfaction and job satisfaction

• Workplace trust (34.5% EI increase for 10% increase)

• Variety of tasks (21.7%), required skills (20.4%), having enough time (11.2%)

– Correlations between measures of life satisfaction and various objective physiological and medical criteria (Kahneman and Krueger, 2006)

– Debate between hedonic and eudaimonic traditions for measuring subjective well being while at work: satisfaction of desires and preferences vs human flourishing or substantive freedom (Nussbaum and Sen 1993)

Title/date


Utility frame: conclusion • If there is a way to value good and bad job characteristics, then this

assessment can be used to value the quality of a job – Opens discussions around consequences of different assumptions on

implicit utility functions (Schokkaert, Van Ootegen & Elsy, 2009)

• In all cases, labour market outcomes play a role in this assessment – Opens discussion on consequences of labour market imperfections (Lang

and Majumdar, 2004)

– Role of collective bargaining and how it impacts labour market outcomes

– By lowering the bargaining power of employees, the present crisis increases vulnerability for the unemployed and for the employed

• Stresses the importance of individual preferences in the assessment of quality of working life – Employee vulnerability in this frame is approached by exposure to

undesirable working conditions and low or decreasing quality of working life • Vulnerability is defined at the individual level, not at the job level

• Emphasis on bad work experience in the labour market

– Focus on the supply side of the labour market • Allows to explore issues related to labour market frictions (imperfect information, search

and matching costs) and failures (monopsony power of employers)

• Need to consider the demand side of the labour market: production frame

25


Production frame • Employees can assess quality of their working life

according to their preferences or goals but…

• …the labour contract is incomplete and work content is determined by the subordination relationship between the employer and the employee, not just by individual preferences – The labour contract determines the characteristics of the

employment relationship: • Time horizon of employment

• Wage

• Hours worked

• Job description

– The work relationship is not specified by contract, in particular

• The employee’s level of effort

• Monitoring intensity

• Job related risks

26


Production frame • The incompleteness of the labour contract implies that

– Employees may find themselves in forms of work that fail to meet their preference

– Employers have some scope for different job design strategies

– There is a psychological contract: system of mutual beliefs and perceptions on the relationship between the employer and the employee

• In the work relationship, there is room for adjustments and trade-offs between employers and employees which determine – Job engagement

– Organisational commitment

– Performance

– Subjective well being

• The bargaining power of employees is important – At the individual level, bargain over idiosyncratic deals to obtain a

better adjustments of working conditions to individual needs and preferences

– Role of collective bargaining?

27


Production frame • New workplace data collection devices allow to assess

quantitatively employers influence on quality of working life – Linked employer-employee surveys of workplaces

• WERS (UK), REPONSE (France): surveys on work and employment relations, dual voice : employer and employee representative + employee survey

• WES (Canada): Workplace and Employee survey

• COI, conditions de travail, DIFES, famille / employeur: over the past 20 years, development of linked employer employee surveys in France

• Meadow surveys: linked in Denmark, Finland, Luxemburg

• Quality of worling life or working conditions surveys matched with linked employer employee registers

– Insider econometrics • Data collected through fielwork

• Random experiments

• Specificity of economic research in the production frame: – relate quality of working life and economic performance measured

at the workplace or firm level

Title/date


Production frame • Main research question:

Structural relationship: When employers maximise profit, do they also take into account the well-being of their employee? – How do employee quality of working life (subjective well-being

or objective characteristics) relate with organisational performance?

• Bartel & al., 2011 (US Bank industry)

• Böckerman and Ilmakunnas, 2012 (Finland ECHP, matched)

• Bryson, Forth and Stokes, 2014 (UK, WERS)

• Oswald, Proto and Sgroi, 2014 (experiments)

– How do employer management practices relate to quality of working life? HPWP, HIWP

• Mohr et Zoghi, 2006 ( Canada, WES)

• Kalmi & Kauhanen, 2008 (Finland, QWLS, matched)

• Böckerman, Bryson & Ilmakunnas, 2012 (Finland, QWLS, matched)

• Artz, Goodall & Oswald, 2014 (UK, NLSY)

Title/date


Production frame • Main research question:

Dynamic relationship: workers creativity is a source of innovation, but innovation and change are likely to disrupt work and employment relationships. How do employers manage employees’ participation constraint to innovation and change?

– How do organisational change impact de quality of working life?

• Härenstam, Bejerot, Leijon, Scheele & Walderström, 2004 (Sweden, field)

• Baillien & Witte, 2009 (Flanders, field)

• Bigi , Greenan, Hamon-Cholet, Lanfranchi, 2013 (France, COI)

• Bryson, Barth & Dale-Olsen, 2013 (UK, WERS)

• Gillet, Greenan & Le Gall, 2015 (call center, experiment)

– What are the organisational forms that allow for workplace innovation, ie innovation and good quality of working life?

• Lorenz & Greenan, 2010 (EWCS)

• Oeij, Dhondt, Kraan, Vergeer & Pot, 2012 (Netherlands, News)

• Ramstad, 2014 (Finland, HIIP survey)

Title/date


Conclusion

– Unemployment and organisational changes lowering the

value of jobs because of added disamenities or loss of

amenities increase employee’s vulnerability

– A lower exposure to job related risks (including loss of

good job characteristics) or a higher bargaining power

within the organisation reduce employee’s vulnerability

– Economic development has an impact on how

employees value different job characteristics

• the higher the level of development, the higher the value of those

job characteristics that are not contractible

• some signs of negative evolution over the past fifteen years for

good job characteristics like autonomy or learning new things

which need further investigation

Title/date

TÁRKI Social Research Institute Inc. (HU)

Amsterdam Institute for Advanced labour Studies, Universiteit van Amsterdam (NL)

The Swedish Institute for Social Research, Stockholms Universitet (SE)

Fachbereich IV, Wirtschafts- und Sozialstatistik, Universität Trier (DE)

Centre d’Etudis Demogràfics, Campus de la Universitat Autònoma de Barcelona (ES)

Centre d’Etudes de Population, de Pauvreté et de Politiques Socio-Economiques (LU)

Centre for Social Policy, Universiteit Antwerpen (BE)

Institute for Social & Economic Research, University of Essex (UK)

Bremen International Graduate School of Social Sciences, Universität Bremen (DE)

Department of Dynamics of Organisations of Work, Centre d’Etudes de l’Emploi (FR)

The Centre for European Policy Studies (BE)

Dipartimento di Economica e Menagement, Università di Pisa (IT)

Social Statistics Division, University of Southampton (UK)

Luxembourg Income Study, asbl (LU)

WageIndicator Foundation (NL)

School of Social Sciences, The University of Manchester (UK)

Partners

Co-ordinator

Inclusive Growth Research

Infrastructure Diffusion

Contract No 312691

For further information about the

InGRID project, please contact

[email protected]

www.inclusivegrowth.be

p/a HIVA – Research Institute

for Work and Society

Parkstraat 47 box 5300

3000 Leuven

Belgium

Guy Van Gyes

Monique Ramioul

InGRID

Nathalie Greenan · • Heavy workload [3.5-4.8] ppt of wage premium, bad regulation of hours [0,...

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