Employee workplace representation in Belgium: effects on firm performance

Annette van den Berg · Arjen C. van Witteloostuijn · Olivier Van der Brempt

7 citations0/0 files storedInternational Journal of Manpower

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Labor Movements and Unions Employment, Labor, and Gender Studies Legal and Labor Studies

Abstract

Purpose The purpose of this paper is to examine whether works councils (WCs) in Belgium have a positive effect on firm performance, notably productivity and profitability, while taking the role of trade unions into account. Design/methodology/approach The authors first introduce the typical Belgian industrial relations system, discussing the similarities and differences with neighboring countries. This is followed by a brief overview of the relevant literature. Subsequently, the impact of Belgian employee representation on firm performance is estimated by means of OLS, using a newly developed questionnaire administered among Belgian CEOs. Special attention is given to moderating and mediating effects. Findings The authors find that Belgian WCs have a small (direct) significantly positive effect on labor productivity, but not on profitability. The additional results of the mediation test show tentatively that WCs might affect profitability indirectly, through their impact on productivity. Despite trade unions’ dominance in practice, the findings reveal that their impact is insignificant. Research limitations/implications Although nationwide, rich and representative, as well as statistically valid, the data set is rather small (196 usable observations). The data set offers ample opportunities to further explore what makes effective Belgian WCs different from their non-effective counterparts. Originality/value The data set is unique, and combines subjective CEO with objective performance data. The data offer the opportunity to do a first study into the special case of Belgium, which has a distinct union-dominated IR regime. In this study, the focus is furthermore on the rarely studied WC-trade union interaction. In addition, subtle moderation and mediation effects are estimated.

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References

1970Exit, Voice and Loyalty: Responses to Decline in Firms, Organizations, and States.2001An Introduction to Varieties of Capitalism 1984What do unions do 1999Institutional and Rational Determinants of Organizational Practices: Human Resource Management in European Firms 2001Works councils in Germany: their effects on establishment performance 2006Linking HRM and Small Business Performance: An Examination of the Impact of HRM Intensity on the Productivity and Financial Performance of Small Businesses 2011Benchmarking Working Europe 2011 1994An Economic Analysis of Works Councils

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2020Works councils and organizational gender policies in Germany 2024The European Participation Index (EPI) and inequality: a multi-dimensional cross-national comparative measure of worker participation

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