Examining the Relationship between Wage Bargaining and Competitiveness in Ireland

This paper uses data from the 2003 National Employment Survey (NES), a linked employer-employee dataset, to analyse the impact of institutional wage bargaining regimes on levels of average labour costs in private sector companies in Ireland. Average labour costs are taken as a proxy measure for firm-level competitiveness. Such costs can be thought of as a health measure relating to both the firm and wider economy. The results showed that average labour costs were higher in firms implementing individual-level and business-level agreements, and that the National Wage Agreement (NWA) exerted a largely neutral influence on labour costs. The research also indicated that multi-national companies implementing the NWA had average labour costs that fell below those of other multinationals and may indeed have begun to converge with those of indigenous firms. This result suggests that there are potentially large competitiveness gains to multinational companies that choose to locate in countries implementing a centralised bargaining system.