> Doug:
>> I'm always skeptical of these higher wages = higher productivity
>> arguments.
>
>
> Would not that depend on the type of work? In a taylorized workplace
> productivity is mainly a function of technology rather than the skill or
> motivation of human operators - so motivating labor force with pay
> incentives has little effect on productivity.
>
> But in a non-taylorized environment, especially one that requires
> cognitive
> skills, it is a different story. If employees do not have the required
> skills, paying them more will probably have little effect on increasing
> productivity. However, lower wages may provide disincentive to people
> with
> skills, so they can actually lower productivity by negative selection of
> the
> workforce.
>
> Wojtek
--------------------------------------
I'm also skeptical of the higher wages equals higher productivity argument,
even at the administrative, technical and professional levels. For one
thing, unlike the goods-producing sector, it's almost impossible to measure
productivity among so-called "cognitive" or knowledge workers. When I was
negotiating collective agreements in the public service, we used to use 2%
as a proxy for "improved productivity" - one of the elements, along with
inflation, catch-up, and external and internal pay comparisons, we'd use in
"justifying" a wage proposal to our members and management. It was the
hardest number to support because it largely floated on air.
The fact is that when labour markets were tight, the employer would need to try harder to recruit and retain qualified employees, and our members would be more confident about their bargaining power, so their wages and benefits would tend to rise. Conversely, when economic growth lagged and labour markets went slack, the opposite was true: the employer had a surplus of labour, and pay would stagnate, with the members more interested in "defensive" demands like no-layoff clauses and better severance arrangments.
You could almost argue, then, that these latter periods of stagnant or falling wages resulted in higher productivity, when the employer would cut staff and force the remaining work force to "do more with less" - what we call speedup. I wouldn't argue either side of the coin, though, because, as I said, I was never able to identify any relationship between pay and productivity - at least in the public sector. Overall, didn't the 90's and the immediate aftermath of the 2001-02 mini-recession see the largest measurable productivity jumps - a period of stagnant wages and, coming out of the recent downturn, unusually limited hiring by employers?
In general, my impression was and is that people don't slack off when their pay goes down, especially when they typically are in a surplus labour situation with very little job security. By the same token, I don't think they produce more when their pay goes up. I think other so-called "psychic" factors are involved - a tough admission for a materialist to make :) - notably how interesting the work is, the respect (or lack of same) shown to the employee by their supervisor (the most frequent cause of grievance, in my experience), and how she or he perceives being classified, paid, and promoted in relation to others doing similar work. It seems to me these can either energize or demoralize workers more than their weekly or bi-weekly pay stub.
Obviously, the above remarks don't apply in times of economic crisis, when wholesale and abrupt pay and benefit cuts and mass layoffs become the norm, concern about them becomes paramount, and collective solutions are sought.
MG