Productivity and trade unions in British manufacturing industry 1973-85

This paper uses panel data on british manufacturing industries between 1973 and 1985 to examine the relationship between productivity and labour organization. It is shown that the relationship between unions and productivity levels is sensitive to the econometric specification. The evidence points to there being no relationship in the 1970s when unions were more popular and a negative relationship from 1979 onwards. We also find evidence that industrial concentration is associated with higher levels of productivity and this accounts for more of the productivity recovery after the recession in the early 1980s than the impact of trade unions. The recession itself is shown to have had an impact on subsequent productivity growth. We also suggest that the long run gains in productivity caused by the shakeout of 1980-81 may not have compensated for the loss in output at the time.