Flexible pay systems and labour productivity: Evidence from Emilia-Romagna manufacturing firms

Davide Antonioli, Paolo Pini and Roberto Antonietti

No 2014143, Working Papers from University of Ferrara, Department of Economics

Abstract: The aim of this paper is to analyse the link between flexible pay systems (FPS) and labour productivity, with a close look at wage premium determinants as elements disclosing specific managerial strategies. The analysis was conducted on a sample of more than 500 manufacturing firms located in the Emilia-Romagna region, Italy. Results show that the adoption of flexible pay schemes is linked to union involvement and organizational changes within the firm, supporting the idea that flexible wages do not constitute merely an economic premium, but a more complex strategy aimed at increasing employees' flexibility and autonomy. Notwithstanding the positive effects on productivity, the relation with economic performance does not emerge as extremely innovative. On the one hand, it is driven by a traditional form of premiums (PRP) targeted to individual employees and linked to a simple "effort improvement and control" motivation and "ability to pay" of the firm. On the other, it is driven by premiums (PFP) provided ex-ante and aimed at developing employees' participation and competencies.

Keywords: performance related pay; pay for participation; organizational innovation; industrial relations; labour productivity (search for similar items in EconPapers)
JEL-codes: J24 J33 J51 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2014-09-19
New Economics Papers: this item is included in nep-bec, nep-eff, nep-eur, nep-hrm, nep-lab and nep-lma
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Citations: View citations in EconPapers (2)

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