INDUSTRIAL RELATIONS: DO THEY AFFECT WORKERS’ HAPPINESS?
Master thesis, MscBA, specialization Human Resource Management
University of Groningen, Faculty of Economics and Business
INDUSTRIAL RELATIONS: DO THEY AFFECT WORKERS’ HAPPINESS?
ABSTRACT
INTRODUCTION
Nowadays, large numbers of people spend a considerable part of their lives working for different organizations. Due to centrality of work in people’s lives, the workplace is also a crucial component of people’s happiness (Rego, Souto & Cunha, 2009). This notion is confirmed by numerous studies which point to unemployment as a significant cause of dissatisfaction and unhappiness (Peiro, 2006; Böckerman & Ilmakunnas, 2006; Winkelmann & Winkelmann, 1998). Scholars claim that employment itself cannot make an individual happy, “but a person cannot be genuinely happy if he or she is unhappy at work” (Gavin & Mason, 2004: 381). Economists and organizational scholars have many reasons to be interested in enhancing the body of research on happiness (Judge & Kammeyer-Mueller, 2011). The studies of happiness and happiness-related constructs show that positive attitudes and experiences have beneficial consequences for both employees and organizations (Fisher, 2010). Happier employees turn out to be more physically and mentally healthy, resilient, socially connected and creative (Rego & Cuncha, 2009). These qualities in turn can facilitate positive work outcomes and lead to higher individual’s productivity, efficiency and ultimately better performance (Wright, Cropanzano & Bonett, 2007). Moreover, happy employees appear to be more productive in the long term, producing better goods and delivering more fulfilling services (Gavin & Mason, 2004). Therefore, workers’ happiness is associated with higher organizational performance and better organizational functioning (Fredrickson, 2001; Wright & Cropanzano, 2000, 2004; Wright et al., 2007). A psychologically positive workforce can become a distinct competitive advantage of an organization and, hence, an intrinsic good, which should be actively promoted (Rego & Cuncha, 2009; Rego et al., 2009). For these reasons, more and more researchers in the field of positive organizational scholarship and positive organizational behavior make attempts to identify the antecedents of happiness at work (Rego & Cuncha, 2009).
satisfaction. One of the macro-social institutional dimensions, namely national industrial relations systems, is in the focus of the present study. The research question of this paper is formulated as such:
How do the systems of industrial relations in European countries affect the happiness of their employed population?
The field of the industrial relations looks at the relationships between management and workers within organizational settings and covers all aspects of the employment relationship. Regulation of wages and working conditions, forms of employment, bonuses and allowances by state and social actors through legislation and collective bargaining constitutes the core of industrial relations (Fridenson, 2004). These aspects of employment naturally are crucial for workers and thus the way in which industrial relations are organized should also affect their level of happiness.
Naturally, employees are able to improve the aforementioned terms of employment and overall working conditions by raising their voice via representative organizations. The extent to which workers’ voice is expressed and heard, meaning that it has real power in the industrial relations of the country, can substantially determine the general quality of the working environment for its employed population. Better terms of employment can lead to raising individual welfare and higher quality of life which ultimately should make people happy. Therefore, employee voice is proposed as a mechanism of industrial relation systems through which workers improve their working conditions and as a result become happier.
THEORY Happiness
Being happy is of great importance to most people, and this feeling is fundamental to human experience (Fisher, 2010). Happiness is generally considered an ultimate goal of life and virtually everyone wants to be happy. Therefore happiness is universal and is almost equally valued across different countries (Uchida et al., 2004). The pursuit of both happiness and satisfaction underlies most human actions and creations (Peiro, 2006).
instant evaluation of the events in their life and is reflected in individual’s mood and emotions (Lucas, Diener & Suh, 1996). Affect balance is associated with predominance of positive feelings (pleasant affect) and relatively few negative feelings (unpleasant affect) (Fisher, 2010; Rego & Cuncha, 2009). The cognitive component includes rational and intellectual aspects of SWB and is usually based on judgment of life satisfaction (Lucas et al., 1996). In other words, life satisfaction and affective well-being together form a common SWB construct (Diener, 1994).
Within the organizational science, job satisfaction has been a predominant and one of the oldest operationalizations of the “happiness” at the work place (Wright et al., 2007). Indeed, job satisfaction, defined as “pleasurable or positive emotional state resulting from the appraisal of one’s job and job experiences” (Baptiste, 2008: 292), most closely reflects whether people are happy with their work and larger organizational context or not. According to Warr (2002), job related well-being refers to people’s satisfaction with such job’s facets like colleagues, terms and conditions of employment, training opportunities, involvement and the nature of the work itself.
Apparently, in the view of research on SWB, happiness, by definition, is a much broader concept than job satisfaction, because it refers to aspects of person’s life both on and off the job. Job satisfaction is targeted specifically at work and working conditions, excluding aspects of life external to the job (Wright et al., 2007).
Despite the variance in the approaches, the common definition of “happiness” has three main characteristics (Diener, 1994). First, happiness is subjective and resides within the experience of the individual. Second, happiness includes both the frequent positive emotional experiences and relatively absent negative emotional experiences (Rego & Cunha, 2008). Third, happiness is a global judgment (Uchida et al., 2004). It refers to individual’s life as a whole and, therefore, is most closely related to the concept of “life satisfaction”. For the purpose of this paper, the author will adhere to the abovementioned definition of “happiness” and will operate the terms “happiness”, “well-being” and “life satisfaction” interchangeably.
Happiness can be decomposed into dimensions just as life satisfaction can be broken down into the categories of satisfaction with various domains of one’s life (Diener, 1994). A number of studies have shown that well-being at work can certainly contribute to people’s overall sense of happiness (Peccei, 2004; Baptiste, 2008; Khattab & Fenton, 2009) and, therefore, the following part of the paper will focus on the happiness within occupational domain. Following the line of organizational research, I am interested in what aspects of the job and the workplace are influential on the state of happiness of the working people.
authority, empowerment, autonomy and responsibility given to employees (Baptiste, 2008). Research provides evidence that organizational features and practices are consistently predictive of positive emotional experiences, however the stable properties of the job appear to have the largest impact on happiness-related attitudes (Fisher, 2010). Hackman & Oldham (1980) argued that individuals are able to obtain personal satisfaction when they successfully perform on the jobs which they perceive as high on skill variety, autonomy, task identity, task significance and feedback. The more of these characteristics a job possess, the more satisfaction a person is likely to feel. Generally, satisfaction is higher when jobs are more complex, interesting, challenging and meaningful to employees (Fisher, 2010). Jobs high in autonomy provide substantial freedom, independence and discretion to individuals in scheduling, organizing and carrying out their work (Hackman & Oldham, 1980). The findings consistently show that when people are able to exercise initiative at their work, they have particularly high levels of job satisfaction. In other words, autonomous employees are personally responsible for their work and tend to feel that they own the outcomes. When employees have personal responsibility for the work results and accomplish something that is both worthwhile and important for them, they tend to feel good about their work and are likely to experience positive emotions (Hackman & Lawler, 1971; Kulik, Oldham & Hackman, 1987).
Kulik, Oldham & Hackman (1987: 281) also highlighted the importance of “a feeling that one is learning and growing personally or professionally at work” called “growth satisfaction” that contributes to the overall satisfaction with one’s job. Indeed, wide possibilities for learning, personal development and training at work allow people to satisfy their needs of personal growth (Rego & Cuncha, 2009). Employees’ perceptions of high opportunities for professional and self-development render the job more meaningful and intrinsically rewarding, and reinforce the senses of enjoyment, thus leading to positive affects and feelings of well-being. Moreover, the lack of learning and developmental opportunities may signal poor job autonomy and have negative implications for one’s satisfaction with job (Rego & Cuncha, 2008).
To summarize, the jobs which provide employees with autonomy to execute and structure their work, broad possibilities to enhance their skills and abilities, and involve doing meaningful tasks of some significance, result in positive attitudes and emotions among employees and are likely to contribute to their sense of happiness. Further, I hypothesize that the presence of employee voice is an important attribute of the job that can enhance positive affects in workers and make them happier, as it represents the effective means to protect their rights and interests, and improve their working conditions and terms of employment.
In general, employee voice covers all forms of opportunities where employees can have a say or exert some influence on their employment relations (Gill, 2009). Several different approaches has been summarized under the label “employee voice” and many terms, such as employee involvement, participation and empowerment, have been used interchangeably with it (Wilkinson & Fay, 2011). Given that the subject of employee voice has received a lot of attention from both academics and practitioners in a variety of disciplines, Dundon, Wilkinson, Marchington & Ackers (2004) proposed a framework to assess the purpose and meaning of the “employee voice” concept. The authors distinguish four interconnected constructs of employee voice:
• voice as an articulation of individual dissatisfaction. The purpose of voice here is to express complaints or address specific problems to management. This situation is usually reflected in established grievance procedures or speak-up programs.
• voice as the means of collective organization. Here voice serves as a countervailing power to management and is practiced through unionization, collective bargaining and industrial action.
• voice as a contribution to management decision-making process. The aim of the voice here is to introduce improvements in work organization, productivity and general efficiency. This form is exercised through quality circles and team work.
• voice as a demonstration of mutuality and co-operative relationships between employees and management. Here voice strives for long-term viability of organization and is secured by partnership agreements and existence of work councils and joint consultative bodies. The first and the second notion of voice have been traditionally described in literature as direct or alternative form of employee voice, while the third one has been referred to as collective or indirect employee voice mechanism.
More precisely, direct employee voice is defined as “discretionary communication of ideas, suggestions, concerns or opinions, intended to improve organizational or unit functioning” (Morrison, Wheeler-Smth & Kamdar, 2011: 184). Mechanisms of direct employee voice include various types of dispute resolution procedures (of nonunion nature) through which employees can appeal to higher levels of management (Batt, Colvin & Keefe, 2002). In the literature, the concept of direct employee voice has been closely linked to direct workers’ participation and involvement.
managerial sensitivity and responsiveness to employee needs, so that the latter gain more control over their jobs and influence on job rewards (Royer, Waterhouse, Brown & Festing, 2008).
Evidence from research suggests that the direct form of employee voice has grown enormously in terms of coverage over the recent years (Dundon et al., 2004). Although direct voice bears some risk for the individual because speaking-up challenges current procedures, it is considered constructive for the overall unit or organizational functioning (Morrison et al., 2011). Scholars argue that direct participation may lead to improved work relations that are beneficial for both management and workers (Freeman & Medoff, 1984). Specifically, the workers acquire a certain decision-making capacity which in turn increases their discretion, influence and skills. Direct employee voice may alter employees’ actual work by changing the content and complexity of tasks and attaching new responsibilities. This affects employees’ perception of influence and facilitates them to take more initiatives and be more autonomous. Increased workers’ discretion and autonomy can add more meaning to their work and make it more intrinsically rewarding, leading to higher satisfaction with the current occupation (Gonzalez, 2010). Therefore, voice and the right to be heard and have a say over important workplace issues is associated with greater employee satisfaction (Bonner & Gollan, 2005). Employee voice extends to shaping workers’ economic and psychological well-being (Wilkinson & Fay, 2011) and thus, could have a beneficial impact on workers happiness.
Hypothesis 1: Direct employee voice is positively related to workers’ happiness.
Collective Employee Voice and Industrial Relations Systems
Freeman and Medoff (1984) argue that unions are the best vehicle for workers to transmit their voice, because they remain independent of the employer which adds legitimacy to their actions, and virtually equate voice with union presence.
Different mechanisms for employee voice have developed and been prevalent in different countries (Royer et al., 2008). Crouch (1993) argued that every national system of industrial relations is distinctive because specific “state traditions” shape the historical evolution of employment regulation. Nevertheless, it is possible to identify various regional areas with common features. Brewster & Tregaskis (2001) argue that within Europe, countries tend to cluster according to institutional factors, such as trade unionization or unemployment rates rather than overlapping cultural features. Northern and central European countries are viewed by most scholars as exemplifying “corporatist” systems of industrial relations in comparison to southern Europe and the United Kingdom (Wallerstein, Golden & Lange, 1997; Crouch, 1993).
Academics identify two distinct national patterns of industrial relations (Wailes, Bamber & Lansbury, 2011). Research distinguishes among centralized and decentralized negotiation structures, which differ in approaches to employment relationships regulation.
Consequently, voice is a more widely spread option in the institutionally embedded societies where the rights of collective association and expression are strongly protected (Hyman, 2004).
Corporatist policies in northern and central Europe have shown substantial positive outcomes, not only for trade union members, but also for society in general, as the goal of the trade unions in the centralized collective bargaining is to improve the welfare of the working people (Ferreiro, 2004). The influence of powerful trade unions extends to productive functions, as they organize cooperation at the workplace, facilitate development of human resources and conclude social pacts. These functions ensure economic growth, employment and welfare for the society in the long term (Esping-Andersen, Gallie, Hemerijck & Myles 2003). Centralized arrangements aim to provide extensive universal welfare systems and to lower income inequality levels, therefore corporatist countries are associated with higher levels of social and employment benefits, lower levels of wage dispersion, greater social cohesion and lower crime rates (Turner, 2006). Thus, it can be assumed that due to the positive developments stemming from centralized industrial relations, countries where this system prevails will also have happier employed population.
decentralization can cause a drop in pay level and income for certain categories of workers (Muir, 1971) and this is likely to have negative impact on their happiness. Unions’ limited participation rights and weak bargaining power, rooted in decentralized system of industrial relations, result in the limited scope and impact on negotiations with employers’ organizations (Doellgast, 2010). To illustrate, the Southern European countries developed multi-level bargaining systems with lower levels of co-ordination than Nordic and Central European countries and thus, experience industrial conflicts more frequently. In these countries employees’ organizations impose their interests and conditions in the negotiation process, but are not strong enough to sustain the social costs of their actions (Esping-Andersen, 2003). It may be suggested, that if unions are weak or non-existent, collective employee voice will be faint or absent, or alternatively workers may exercise voice through the exit option (Bonner & Gollan, 2005).
Hypothesis 2: Collective employee voice is positively related to workers’ happiness.
Hypothesis 2a: In countries with centralized industrial relations, workers are generally happier than in countries with decentralized industrial relations.
Hypothesis 3: In countries where both direct and collective employee voice are strong, workers are most happy.
METHOD Procedure
The empirical analysis will be based on the cross-sectional data from 21 European countries from the first round (2002) of the European Social Survey (ESS). ESS is founded by the European Commission to document the changing social attitudes, beliefs and behavior patterns across Europe. The questionnaire consists of two modules. The “core” module observes standard socio-demographic characteristics, attitudes towards ethnicity, religion, political and media institutions and social and moral values. The “rotating” module includes in-depth questions on specific topics of interest (in the first round it is citizen involvement and immigration) asked on a rotating basis during the regular rounds of the survey. The representative sample includes approximately 2000 people per country per round. All participants are at least 15 year-old residents of each country, regardless of nationality, citizenship or language. Responses are collected via face-to-face interviews of around one hour. Data on the following 21 countries are analyzed: Austria, Belgium, Czech Republiek, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, Netherlands, Norway, Poland, Portugal, Slovenia, Spain, Sweden, Switzerland and the United Kingdom.
A selection of the data was made and only those individuals who were in paid employment at the moment of the survey (E29)1 were included. This number constituted a total of 17680 people.
Measures
Happiness. Two questions in the ESS were utilized to measure the dependent variable of workers’ happiness, namely ‘All things considered, how satisfied are you with your life as a whole nowadays?’ (B29) and ‘Taking all things together, how happy would you say you are?’ (C1). Respondents were asked to answer on the 10-point scale ranging from ‘extremely dissatisfied/unhappy’ (0) to ‘extremely satisfied/happy’ (10). The measure was found to have a reliability of .81.
Direct employee voice. To evaluate the degree to which employed people are able to exercise direct voice at the workplace in their country of origin two questions from ESS were analyzed. Participants had to indicate ‘How much the management at your workplace allows you to influence your environment?’ (E32) and ‘How much the management at your workplace allows you to influence decisions about the general direction of your work?’ (E33). The answers to these
questions varied from ‘I have no influence’ (0) to ‘I have complete control’ (10) and included a ‘don’t know’ (88) option. Cronbach’s alpha reliability of this measure was .81.
Collective employee voice. To estimate the strength of the collective employee voice in each country, two questions from the ESS were used. The questions assess to what degree participants perceive their “voice” as sound: ‘How difficult or easy is it to have a say in the actions taken by the trade union?’ (E38) and ‘How difficult or easy is it for the trade union to influence conditions at your place at work’ (E39). Respondents rank the answers on the 10-point scale ranging from ‘extremely difficult’ (0) to ‘extremely easy’ (10). Coefficient alpha reliability was .64.
The country level measures of direct and collective employee voice were created by averaging the individual level scores within each country. The country level averages of collective voice were used for the missing values of collective employee voice at the individual level.
Centralization. The measure of centralization was obtained from the data contained in ICTWSS database (Visser, 2010) published by Amsterdam Institute for Advanced Labour Studies. The database covers four key elements of modern institutional economies: trade unionism, wage setting, state intervention and social pacts. It observes 34 advanced capitalist countries in the period from 1960 to 2007. The measure of centralization included 3 items: approach to ‘coordination of wage bargaining’, ‘government intervention in wage bargaining’ and ‘the dominant level at which wage bargaining takes place’. For every item each country was assigned a number which represented an average of scores for the years 2000–2004. The internal consistency of items for this measure was estimated to be .83 using Cronbach’s alpha.
Control variables. The ESS provides rich data on a standard set of demographic characteristics that can be used as control variables. Empirical research has identified a number of personal and social characteristics associated with happiness and satisfaction. Some of the most important include: ‘gender’ (F2), ‘age’ (F3, calculated), ‘marital status’ (F58), ‘education’ (F6), subjective ‘health’ (C7) and relative ‘income’ (F31) (Peiro, 2006). The last two variables were reversely scored, hence the indexes were re-coded subsequently. To control exclusively for the strength of the collective voice, the ‘trade union at the workplace’ (E37) variable was included. It was a dummy variable coded “0” for the workers at whose workplaces a trade union was present.
Data analyses
Individual and country level variables of employee voice were derived from the same source: individuals’ survey scores. In order to be able to separate the contributions of the individual and country level predictors, group mean centering for the individual level variables was used.
The grouping of workers by country implies two levels of analysis and therefore the dataset has a two-level data structure. A method in which workers are Level 1 units and countries are Level 2 units is a basic two-level model for the analysis of the hierarchical data. Level 1 captures the information of the individuals on both the dependent and independent variables. Level 2 captures the mean and variance by country in the independent variables. Multilevel framework allows for the inclusion of the characteristics of the workers, such as age, marital status and the degree of happiness, as the first level variables, and those of their country of residence, such as the level of the collective voice and the centralization of the industrial relations, as the second level variables. Through employing a multilevel methodology it can be argued that variations in the workers’ happiness are partly attributable to contextual variables associated with their countries’ characteristics.
RESULTS
Results are presented in the order of the undertaken analysis. Intercorrelations among all of the study variables are presented first, followed by the ANOVA test and results of the multilevel analysis.
Table 1 shows means, standard deviations and correlations for unstandardized individual level variables of the study. Both direct (r = .23, p < .01) and collective employee voice (r = .11, p < .01) significantly correlate with happiness at the Level 1. Direct employee voice and collective employee voice also positively correlate with each other (r = .17, p < .01).
TABLE 1
Means, Standard Deviations and Correlations for the Individual Level Variables
Variables M SD 1 2 3 4 5 6 7 8 9 10 1. Gender 1.48 .50 1.00 2. Age 40.15 11.66 -.01 1.00 3. Marital status 2.45 1.81 -.01 -.44** 1.00 4. Health 4.06 .78 -.04** -.17** .07** 1.00 5. Education 2.49 3.17 -.02** .00 -.01 -.02* 1.00 6. Income 3.25 .73 -.03** .05** .00 .18** .11** 1.00
7. Trade union at the workplace .41 .49 .02** -.11** .06** -.01 -.02 -.12** 1.00
8. Direct voice 5.68 2.81 -.01 .06** -.03** .11** .06** .26** -.06** (.81)
9. Collective voice 4.77 1.63 -.01 .03** -.01 .07** -.02** .07** .01 .17** (.64)
10. Happiness 7.46 1.71 .02** -.01 -.06** .30** .03** .37** -.09** .23** .11** (.81) N=15951. Cronbach’s alpha coefficients are in parentheses for multiple-item measures.
TABLE 2
Variations in Employee Voice and Centralization across Countries Country Direct voice Collective voice Centralization
Austria 5.56 4.49 2.80 Belgium 5.75 4.83 3.93 Czech Republic 4.21 4.47 2.33 Denmark 6.95 5.09 2.67 Finland 6.03 4.96 4.00 France 4.77 5.01 2.33 Germany 4.68 4.73 3.07 Greece 4.17 4.61 3.53 Hungary 5.51 4.55 2.33 Ireland 5.65 5.03 4.33 Italy 6.14 5.32 3.13 Luxembourg 5.17 4.41 2.33 Netherlands 6.13 4.88 3.60 Norway 7.16 4.96 3.47 Poland 4.70 4.34 1.53 Portugal 5.29 4.71 2.73 Slovenia 5.23 3.91 4.00 Spain 4.37 4.62 3.20 Sweden 6.51 5.13 2.60 Switzerland 5.82 4.85 2.00 United Kingdom 5.89 4.89 1.17 N=21.
Table 3 includes means, standard deviations and correlations for three Level 2 variables. Similar to the variables at the Level 1, country level direct (r = .66, p < .01) and collective employee voice (r = .46, p < .05) are positively related to the happiness of the individual workers. At Level 2, correlation between two forms of employee voice is also highly significant (r = .57, p < .01). Centralization shows no substantial correlation with neither happiness (r = .23, p = n.s.), nor direct (r = .13, p = n.s.) or collective employee voice (r = .07, p = n.s.).
TABLE 3
Means, Standard Deviations and Correlations for the Country-Level Variables Variable M SD 1 2 3 4 1. Direct voice 5.51 .84 1.00
2. Collective voice 4.75 .32 .57** 1.00
3. Centralization 2.91 .84 .13 .07 (.83)
4. Happiness 7.33 .64 .66** .46* .23 1.00
N=21. Cronbach’s alpha coefficients are in parentheses for multiple-item measures. ** p < .01
Testing the hypotheses
Hypotheses are tested using linear mixed-effects modeling analysis. Building of the models allows to determine the contribution of different constructs by assessing overall model fit as well as the significance of the model coefficients. The modeling approach is summarized below:
Model 0 – “null” model.
Model 1 – adds control and Level 1 variables.
Model 2 – adds Level 2 direct voice variable to Model 1. Model 3 – adds Level 2 collective voice variable to Model 1. Model 4 – adds all Level 2 variables to Model 1.
Model 5 – adds the effect of Level 2 direct and collective voice variables to Model 1.
Level 2 variables of the direct and collective voice were tested independently, because separately tested Models 2 and 3 demonstrated a better fit in comparison to Model 4 (-2 ll=57562.83 and
-2 ll=57564.97 compared with -2 ll=57561.37).
First, an intercept-only “null model” is created to analyze the variation in worker’s happiness without any explanatory variables (Model 0). Basically, this model is an equivalent of a one-way ANOVA analysis of variance with random effects. The results confirmed that there is significant variance across countries with respect to happiness (F = 2656.12; p < .01).
To test Hypotheses 1 and 2, first, Level 1 variables are included (Model 1) followed by the separately added direct and collective employee voice variables at the Level 2 (Model 2 and 3). Model 1 demonstrates a good fit (-2 ll = 57569.29). The relationship between employee voice and happiness at the individual level is highly significant for both direct (e = .06, p < .001) and collective (e = .04, p < .001) forms of voice. Besides, the parameter estimate of direct voice indicates that at the individual level the effect of direct employee voice on happiness is stronger than the effect of collective employee voice. Model 2 also has a good fit (-2 ll = 57562.83). The effect of direct employee voice on happiness at the country level remains significant (e = .25, p < . 05). The -2 log likelihood shows that Model 3 has a good fit (-2 ll = 57564.97). The effect of collective employee voice on happiness at the country level is significant (e = .60, p < .05).
In summary, Models 1, 2 and 3 provide evidence that both direct and collective forms of employee voice have strong direct effect on the worker’s happiness at the individual, as well as the country level. Therefore, Hypothesis 1 and 2 are confirmed.
happiness did not prove to be significant (e = .07, p = n.s.) Hence, it can be concluded that the between country variance in worker’s happiness cannot be explained by the level of centralization of their industrial relations. Hypothesis 2a is not supported.
Hypothesis 3 stated that countries where both direct and collective employee voice are strong will have most happy workers. Model 5 demonstrates a good fit (-2 ll = 57562.35). The additive effect of direct and collective voice measures is significantly related to the happiness of workers (e = 21, p < 0.01). That means that the variation in the levels of happiness across countries is explained by the amount of direct and collective voice workers possess in those countries. However, the additive effect implies that the influence of employee voice on happiness at the country level is significant regardless of the form of voice being present. That means Hypothesis 3 is partially supported
TABLE 4
Results of the Linear Mixed-Effects Modeling Analysis Predicting Workers’ Happiness¹
Variable Model 1ª Model 2 Model 3 Model 4 Model 5
Direct voice .25* 10. .19 .12
Collective voice .60* .27 .23 .33
Centralization .07 .09
Direct voice + Collective voice .21** .07
2 Log Likelihood 57569.29 57562.83 57564.97 57561.73 57562.35
Degrees of freedom 19 20 20 22 20
Covariance/ Wald statistic
¹N=15951. ª Variables are group mean centered. *** p < .001
** p < .01 * p < .05
DISCUSSION
The current study serves as a first attempt to explore the role of the industrial relations systems in predicting happiness of the working people. Psychology research regarding individual happiness, SWB and life satisfaction does exist, however the specific question about what makes workers happy has hardly been addressed in the literature (Van der Meer & Wielers, 2011). Moreover, the research has primarily focused on the influence of micro-social conditions on person’s happiness, whereas few macro-social antecedents received attention and their effect has been somewhat underestimated (Haller & Hadler, 2006). This study contributes to the existing body of theory through introduction of the novel macro-level contextual factor of industrial relations systems and its relation to happiness, and examining this relationship by means of the complex cross-country analysis.
The first two hypotheses of the study proposed that direct and collective forms of employee voice are directly and positively related to workers’ happiness. For both hypotheses it was confirmed that strong presence of direct and/or collective voice channels at the workplace generally results in happier employees. Hence, the findings of the study contribute to the research on the effects of employee voice on positive individual workers’ outcomes, as happiness can be seen as an ultimately desired outcome. The result that both direct and collective voices are related to happiness of working individuals is very logical. Serving the same goal of making workers’ “voice” heard and achieving some sort of improvement, each channel of voice is efficient and thus superior to the other on different subjects and at different levels (Gonzalez, 2009). More specifically, two forms employ different styles of dispute resolution. Direct voice is a preventative approach, with greater potential to reach consensus and offer a solution that will satisfy each of the parties’ interests, whereas collective voice is a more reactive approach to dispute resolutions with less potential in this regard (Luchak, 2003). In that sense, direct and collective voices simply represent different pathways to happiness.
Firstly, direct voice is a better instrument for tackling workers’ specific problems at the workplace. Direct voice is valued by employees because it is seen as procedurally just and allows them to gain more control over employers’ decisions, thereby increasing the likelihood of receiving a favorable outcome (McFarlin & Sweeney, 1996). To put it simply, by exercising direct voice, workers have a greater chance to get what they want for their day-to-day operations, which naturally should make them feel happier about their job and daily life. Secondly, the followers of the Hirschmans’s (1970) exit-voice-loyalty theoretical framework argue that affectively committed employees, who are loyal and emotionally bound with their organization, more frequently adopt direct rather than collective voice, because it is likely to be viewed by the organization as having greater potential for problem solving, more supportive and less confrontational (McFarlin & Sweeney, 1996).
On the other hand, the reason why direct voice has greater effect on individual happiness can be attributed to the drawbacks of collective voice institutions. Instead of effectively communicating workers’ opinions and concerns, workers’ representation via a third party actually might create a barrier between management and workers (Bryson, 2004). For instance, unions may be associated with a number of issues on which employees are not involved due to politics and cat-and-mouse game between union and management (Wood & Fenton-O’Creevy, 2005).
Contrary to the central hypotheses of the study, high level of centralization of the industrial relations in the countries was not associated with higher workers’ happiness. This outcome was expected from the beginning of the analysis when results of the correlation between centralization and collective voice appeared to be insignificant.
One possible reason that this relationship does not hold stems from the problems associated with the operationalization of the centralization concept. For the purpose of the current study, centralized industrial relations referred to the systems where state provides support for union organization, unions have large membership, resources and power resulting in strong collective workers’ voice. However different perspectives on the concept of centralization exist. For instance, Calmfors and Driffill (1988: 17) define centralization as “the extent of inter-union and inter-employer cooperation in wage bargaining with the other side”. This problem results in difficulties with measuring this construct.
therefore, the discussion of the employers’ organizations and their role in the centralized systems of industrial relations was omitted. However, it can be speculated that in the countries with centralized industrial relations, the level of employers’ cooperation is also high, resulting in powerful employers’ organizations. These organizations influence the course of the industrial relations, and that should have certain implications for the working class, and consequently its happiness.
Yet another factor contributing to this result might be the choice of the research design. In the current study a linear mixed-effects modeling analysis was employed for testing the hypotheses. In the meanwhile, Calmfors and Driffill (1988) examined the effect of centralization on macro-economic performance of the countries and suggested that this relationship is curvilinear, rather than linear. The authors argued that both heavy centralization and far-reaching decentralization are able to stimulate macro-economic performance, whereas intermediate degrees of centralization are harmful. For future research it might be interesting to take this notion into account and test the relationship between centralization and happiness on the curvilinearity.
And lastly, the reason why Hypothesis 2a was not supported might be a small sample size of the countries included in the study. To confirm theoretical assumptions at the level of macro-institutions, analysis of a larger number of countries is required.
The test of Hypothesis 3 produced the most interesting outcome of the study. It confirmed that strength of direct and collective employee voice vary across countries and that countries with strong presence of employee voice generally have happier workforce, than countries where employee voice is weak Results also indicate that for the workers’ happiness at the country level the form in which voice is present does not make a difference. This means that as long as at least one form of voice in the country is strong, this country’s index of happiness is high. This outcome gives rise to a number of interpretations.
accountable. Further thorough investigation into the role of these contextual factors is required to better understand how the relationship between happiness and employee voice works at the macro-level.
Second, it might also be concluded that in countries where the level of happiness is high, strength of employee voice and its positive outcomes for workers are secondary, and the fact that workers’ voice is actually being “heard” by other parties of industrial relations comes first. Therefore future research could explore why some countries demonstrate high responsiveness to the voice of their workforce and national governments and employers’ organizations are more sensitive to it, and why in other countries this is not the case.
Third, the fact that at the national level, employee voice influences happiness regardless of its type can possibly be explained by the different levels at which two forms exist (Gonzalez, 2009). It can be speculated that in countries with strong direct voice the changes begin at the bottom company level and it takes time for them to become an ordinary part of employment relationships. Companies’ management teams and employees are main initiators of improvements in this case. And in antithesis - in countries where collective unionized workers’ voice prevails the changes are imposed top-down by social partners or government under the pressure of trade unions. But both roads ultimately lead to the same results and continuous improvements beneficial to the workforce occur, making it generally more satisfied and happy.
The main goal of this study was to examine how the systems of industrial relations in European countries affect happiness of their employed population. According to the results, industrial relations systems do not affect worker’s happiness in terms of centralized versus decentralized approach. However, the study delivers evidence that industrial relations do affect overall level of happiness in terms of collective employee representation. European countries, where collective employee voice is strong and consequently collective employee representation is powerful, tend to have happier workers than countries where collective voice is weak. The same holds true for the individual direct voice, which is an attribute of employment relations that are a lower level of the industrial relations (Edwards, 2004).
Practical implications
between management and employees (Baptiste, 2008). Therefore, HR managers pursuing these goals should pay more attention to the employee voice and ensure that stable multiple channels of voice are established in the organization, and that employees are not reluctant to use them. This is also in line with the notion of Wood and Fenton-O’Creevy (2005) which states that the reliance on direct employee voice mechanisms will result in a greater use of high involvement practices. It can be assumed, that adherence to these practices will help to make employees not only committed but also generally happy.
Keeping in mind that in a broad sense direct voice means communication of opinions and ideas intended to improve the current state of affairs at the workplace and organization in general, employers need to realize that provision of the bottom-up channels of communication is not only important for the workers, but it can also yield long-term benefits for the organization by making the latter happier. In that sense, collective representation at the workplace becomes somewhat secondary as long as stable and trusted channels for direct employee voice exist in the organization.
Labour and employment policy makers, as well as the leaders of employees’ and employers’ organizations represent another category, for which the current findings might be useful. The fact that the national index of happiness is related to collective employee representation or wide direct involvement at the local level signifies responsibility attributed to the decisions these people make. More specifically, as the populations’ well-being is a primary concern for every state, legislators in the countries where the index of happiness is low should treat it as a signal for taking action. Enforcing new regulations and making the rights of collective representation and workers direct involvement and consultation statutory obligatory might be a solution to address concerns of the working class and ultimately make it happier. In many advanced industrialized countries the principles of voice are by now heavily entrenched in the labour market policies (Luchak, 2003), while for the countries where recognition of employees’ representative bodies is on voluntary bases or widely resisted, and voice is suppressed, this might be of the crucial importance. Keeping in mind that, the form in which voice is present does not matter as long as it is strong, state legislators can make strategic choices and develop their own “pathways to happiness”.
Limitations and future research directions
As with any research, this study is not without limitations.
study. In future, examination of a larger number of countries is required to confirm the findings of the current research.
Another potential limitation lies in the measure of centralized systems of industrial relations. Firstly, in comparison to other variables, the measure of centralization was drawn from a different source and that could have affected the produced results. Moreover, the aforementioned problems associated with the operationalization of the centralization concept lead to difficulties in measuring this construct. Although the reliability of the measure was high, two out of the three items referred to the levels of wage bargaining, emphasizing that the measure is not consistent with the definition used in the study. A more precise alternative measure of centralization has to be developed by future scholars.
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