RESEARCH INTO COMPANY RECRUITMENT POLICIES
1. The study was undertaken in 11 plants, the
subsidiaries of four multinationals. Four plants were based in
the UK and each had a counterpart belonging to the same multinational
and producing a similar product range, in a continental European
country, and in the US. The companies selected for the study agreed
to make available production worker personnel information, and
all have retained long runs of personnel records, so that data
on hirings was available for the period 1975 to 1994 in most cases.
The plants and their products are given in Table 1, discussed
2. Our 11 plant, five country, two decade
study involves data on about 6,000 individual recruits taken onto
"permanent" contracts. (We define permanent to include
workers hired initially on a temporary basis, so long as they
become permanent after one year with the firm.) The observations
for the hiring standards analysis are formed by averaging information
from individuals recruited to work in each plant for every year.
This plant reduces the data on individuals to 150 to 180 plant-time
datapoints, depending upon missing values. The datapoints thus
represent average behaviour for each plant in each year.
3. The use of matched plants allows us to
standardise for the product and the technology used within each
triplet. Since the product is held constant we can sensibly make
comparisons across countries, for example, regarding labour costs
or recruitment variables such as recruits' previous experience.
Country groupings enable us to investigate whether plants in "unregulated"
UK labour markets behave differently from those in "regulated"
continental Europe. In practice, however, after allowing for plant
fixed effects, we generally find that the same plant hiring standards
equation can be applied to all plants irrespective of country
4. To give a flavour of the analysis, Table
1 shows some data from the plants. The labour cost column shows
wide differences between countries, given the product. The UK
plants tend to have the lowest costs. Furthermore, contrary to
what is usually thought, the US plants are high cost in two cases
out of three, due to factors such as high company pensions and
health insurance. High US labour costs demonstrate that the US
is not as "unregulated" as it sometimes thought to be.
Labour costs are important, because a high cost plant has to be
a high productivity plant, which then cannot take a chance on
unqualified workers, for example, inexperienced workers (including
the unemployed). The second column gives the position regarding
recruits' previous experience in each of the plants. The simple
correlation between the two columns is -0.54 (p <0.1), which
illustrates our point that the high cost plant will recruit fewer
5. The two end columns of Table 1 show recruits'
education and its changes over time. Most plants have experienced
a rise in the education of recruits, as noted above. Apart from
this there might seem to be little pattern. In fact, however,
the simple correlation between education changes and previous
experience (or starting age) changes is quite high, -0.53 (p <0.1),
illustrating the substitutability of education and experience
to which we have already drawn attention. This substitutability
emerges even more strongly when we hold other variables constant
in a multiple regression.
Table 1: Summary Data on Recruitment in
the Study Plants
(Data refers to permanent male production
||Labour Costs, £s
at PPP, mid-1990s
|Recruits: % with|
< 1 year previous experience,
6. As a final exhibit of the data available from the
research, Figure 1 shows trends in the proportion of recruits
hired on a temporary basis. As can be seen, the trend is upwards
in most plants. As noted in the text, the proportion of short-service
workers in a plant's workforce (measuring insider power) is negatively
associated with movements in the temporary proportion.
A fuller description of the research methodology, together with
results based on six plants, is to be found in Siebert (1999). Back