Major changes in work practices - sometimes referred to as high performance or high commitment practices - have been adopted by companies trying to meet the new standards of competition. For instance research conducted by American researches clearly shows that, in particular in manufacturing, high performance work systems, in which workers share decision making responsibility with managers, really do deliver improved performance for the plants that adopt them. According to the findings they also pay off for workers in terms of more interesting work, greater employment security, and a high trust environment that results in greater job satisfaction. And worker surveys show that over 70 percent of American workers want a direct voice at work. Thus for some workers, information technology and the changes in work organization that it has motivated have improved the quality of jobs. (1)

Similar findings are provided by a series of NBER working papers. They reveal that firms that re-engineer their workplaces to incorporate more high performance practices experience higher productivity. Moreover, they find that employee voice has a larger positive effect on productivity when it is done in the context of unionised establishments. (2) Another study, rather sceptical about the effect of high performance work systems, finds that work practices that transfer power to employees do not harm the competitiveness of firms. (3)

Yet many manufacturing firms still follow the low road approach because managers are reluctant to share power with workers. Instead they are intensifying work, speeding up the line, and attempting to compete on price alone. However, their efforts are not sustainable; a narrow focus on shareholder value often means many managers won't invest in retraining their workers and reorganizing their workplaces, simply because it costs money up front and takes time to yield results. 

Many employers and managers too believe that workers participation and in particular works councils, a "governance system" under which employees and their representatives are allocated some control over managerial decisions and corporate assets by law, are hindering innovation and organisational change and thus undermining competitiveness. However, no one of the studies available are suggesting that firms are putting their productivity and competitiveness at risk if they choose to create more co-operative labour relations. On the contrary, anecdotal as well as empirical evidence shows that workers provide more accurate information to employers about preferences and corporate issues when workers or their representatives (like works councils) have some say over how that information is used. Moreover, under the framework of co-operative labour relations the communication from employers to workers produces also worker concessions in bad times that would not occur without this practice. 

What is of high importance, however, is how new work practices are actually implemented within companies. Empirical evidence suggests that unionised establishments that have adopted what have been called new or transformed' industrial relations practices that promote joint decision making have higher productivity than other similar non-union plants. The latter maintain more traditional labour management relations at the expenses of lower productivity. (4)

It is against this background and goes without saying that TUAC supports the conclusion of the growth project that social partners and government need to work together to ensure that the virtuous circle of new work practices, new technology and productivity is set in motion. As it is stated in the draft ministerial paper, "this crucially depends on workers being given a sufficient "voice" in the firm." This is a prerequisite to accomplish a climate that facilitates change.

1) See, for example, Eileen Appelbaum, Thomas Bailey, Peter Berg, and Arne L. Kalleberg, Manufacturing Advantage: Why High Performance Work Systems Pay Off, Ithaca, NY: Cornell U. Press, 2000; Erik Brynjolfsson and Lorin M. Hitt, "Beyond Computerization: Information Technology, Organizational Transformation and Business Performance," Journal of Economic Perspectives, Vol. 14, no.4, 2000, pp. 23-40. 

2)  See Sandra E. Black, Lisa M. Lynch What's Driving the New Economy: The Benefits of Workplace Innovation; NBER Working Paper No. W7479 Issued in January 2000

3)  David Neumark, Peter Cappelli: Do "High Performance" Work Practices Improve Establishment-Level Outcomes? NBER Working Paper No. W7374, Issued in October 1999

4) Sandra E. Black, Lisa M. Lynch, How to Compete: The Impact of Workplace Practices and Information Technology on Productivity, NBER Working Paper No. W6120, Issued in August 1997