Technological Innovation and Inclusive Growth in Germany. Bertelsmann Stiftung Inclusive Growth for Germany|18

Economic growth in Germany is no longer as inclusive as it used to be. Between 1990 and 2010 all measures of income and wealth inequality rose considerably,1 which even led the media to portray Germany as a ‘divided nation’.2 Income inequality was relatively low before 1990, and even declined over much of the 20th century, but changed direction after German unification. The rise in income inequality from 1990 onwards is depicted in Figure 1 through various inequality indicators and the ‘at-risk-of-poverty rate’. It can be seen that all measures of income inequality (before and after tax) increased markedly after 1990 along with the ‘at-risk-ofpoverty rate’.3 Felbermayr et al. (2014) furthermore document that the rise in wage inequality was faster in Germany than in the United States, the United Kingdom, and Canada between the mid-1990s and 2010. This rise in income and wage inequality has been accompanied, and to a certain extent occasioned, by a simultaneous increase in wealth inequality. Using data from the Socio-Economic Panel (SOEP), Frick and Grabka (2009) show, that the Gini coefficient for wealth increased from 0.77 to 0.80 during this period, and wealth grew particularly strongly at the top 1 percent of the wealth distribution

The net benefits to employers’ investments in apprenticeships : case study evidence from the UK

In a flexible labour market where people can move relatively easily between jobs and employers, there can be disincentives to train. Employers will be reluctant to train if they are, other things being equal, unsure about the extent to which they will be able to recoup their training costs. In the UK, public policy is committed to increasing the number of people completing apprenticeships in recognition of the benefits this form of training confers on both employers and individual apprentices. Considerable efforts are being made by the public agencies responsible for apprenticeships to persuade employers to participate in this form of training by persuading them of the benefits of doing so. Based on a limited number of employer case studies, this paper outlines the net costs borne by employers in training apprentices and the period over which these costs are recouped by the employer. It demonstrates that employers are able to recoup their costs over one to two years in many instances

The Economic Costs and Benefits of Self-Managed Teams Among Skilled Technicians

This paper estimates the economic costs and benefits of implementing teams among highly-skilled technicians in a large regional telecommunications company. It matches individual survey and objective performance data for 230 employees in matched pairs of traditionally-supervised and self-managed groups. Multivariate regressions with appropriate controls show that teams do the work of supervisors in 60-70% less time, reducing indirect labor costs by 75 percent per team. Objective measures of quality and labor productivity are unaffected. Team members receive additional overtime pay that represents a 4-5 percent annual wage premium, which may be viewed alternatively as a share in the productivity gains associated with innovation or as a premium for learning skills

The role of high-performance people management practices in Industry 4.0: The case of medium-sized Spanish firms

Purpose: This paper wants to build the case for the key role of high-performance people management practices in the development of I4.0 in SMEs. The research upon which this paper is based wants to prove that the consolidation of those practices should be a priority for any company willing to embark in this journey. The paper deals specifically with medium-sized Spanish firms which, on top, are already having significant issues with digitization. Design/methodology: The paper starts by digging into the literature to see how past technologies have impacted productivity, followed by a review of the material available on digitization and Industry 4.0. It moves on to explore the relationship between people management practices, productivity and innovation. Finally, the focus is placed on Spanish medium-sized companies, understanding their current levels of consolidation of high-performance people management practices as well as digitization. With all this information, several propositions are posited for validation using the Delphi methodology. Findings: I4.0 is, at its core, about productivity improvements through business process and business model innovation. People management practices are found to be strongly correlated with both productivity and innovation. It has also been found that Spanish medium-sized firms already have a significant initial gap compared to those of other OECD countries not only in productivity, but also people management practices and digitization. The experts seem to agree on the key role of people management practices and that they should be a high priority for any firm seriously thinking about industry 4.0. This is not to say that strategy or leadership will not play a paramount role in any digital transformation, but to emphasize the fact that the normally-forgotten people management practices will be important enablers in this process. Originality/value: It is believed that this is a topic that has been mostly neglected in the I4.0 literature. In that sense, the findings of this paper could be relevant for small and medium-sized businesses embarking on the industry 4.0 journey. This will entail a significant investment of time and money and, if the key role of people management practices is not on the radar screen, it may have significant implications for the success of those ventures.Peer ReviewedPostprint (published version

Creating competitive advantage : policy lessons from history

This paper reviews selected aspects of the history of UK supply-side policy in terms of their productivity implications. An important change after the 1970s which improved productivity performance was the adoption of policies to end protectionism and strengthen competition. A review of horizontal industrial policies shows weaknesses in education, infrastructure, taxation and, especially, land-use planning but, on the positive side, a regulatory stance conducive to the rapid adoption of ICT. A big implication is that any return to a more active industrial policy should be designed to minimize adverse effects on competition

Equilibrium Exchange Rates in Southeastern Europe, Russia, Ukraine and Turkey: Healthy or (Dutch) Diseased?

This paper investigates the equilibrium exchange rates of three Southeastern European countries (Bulgaria, Croatia and Romania), of two CIS economies (Russia and Ukraine) and of Turkey. A systematic approach in terms of different time horizons at which the equilibrium exchange rate is assessed is conducted, combined with a careful analysis of country-specific factors. For Russia, a first look is taken at the Dutch Disease phenomenon as a possible driving force behind equilibrium exchange rates. A unified framework including productivity and net foreign assets completed with a set control variables such as openness, public debt and public expenditures is used to compute total real misalignment bands.http://deepblue.lib.umich.edu/bitstream/2027.42/40156/3/wp770.pd

The Effect of Employee Involvment on Firm Performance: Evidence from an Econometric Case Study

We provide some of the most reliable evidence to date on the direct impact of employee involvement through participatory arrangements such as teams on business performance. The data we use are extraordinary --daily data for rejection, production and downtime rates for all operators in a single plant during a 35 month period, almost 53,000 observations. Our key findings are that: (i) membership in offline teams initially enhances individual productivity by about 3% and reduces rejection rates by more than 25%; (ii) these improvements are dissipated, typically at a rate of 10 to 16% per 100 working days; (iii) the introduction of teams is initially accompanied by increased rates of downtime and these costs diminish over time. In addition: (iv) the performance-enhancing effects of team membership are greater and more long-lasting for team members who are solicited by management to join teams; similar relationships exist for more educated team members. These findings, which are best interpreted as lower bound estimates of the effects of teams, are consistent with the diverse hypotheses including propositions that: (i) employee involvement will produce improved enterprise performance through diverse channels including enhanced discretionary effort by employees; (ii) various kinds of complementarities accompany many changes in organizational design (such as between teams and formal education); (iii) the introduction of high performance workplace practices are best viewed as investments, though there are significant learning effects; (iv) differences in performance for team members solicited by mangers compared to those who volunteer are consistent with various hypotheses including management signaling and opportunistic behavior by employees, but inconsistent with hypotheses based on Hawthorne effectshttp://deepblue.lib.umich.edu/bitstream/2027.42/39998/2/wp612.pd

Work Organisation and Innovation in Ireland

[Excerpt] Innovations in work organisation have the potential to optimise production processes in companies and improve employees’ overall experience of work. This report explores the links between innovations in work organisation – under the broader label of high performance work practices (HPWPs) – and the potential benefits for both employees and organisations. It draws on empirical evidence from three case studies carried out in the Republic of Ireland, where workplace innovations have resulted in positive outcomes and where social partners played a significant role in their design and development