Employee Representation and Flexible Working Time

38 Pages Posted: 27 Dec 2016

See all articles by Gabriel Burdin

Gabriel Burdin

University of Leeds - Faculty of Business; IZA Institute of Labor Economics

Virginie Pérotin



This paper provides evidence on the effect of employee representation on working time flexibility in private-sector European establishments. A 2002 European Union directive granted information, consultation and representation rights to employees on a range of key business, employment and work organization issues beyond a certain firm size. We exploit the quasi-experimental variation in employee representation introduced by the implementation of the Directive in four countries (Cyprus, Ireland, Poland and the UK) with no previous legislation on the subject. The empirical analysis is based on repeated cross-section establishment-level data from the last three rounds of the European Company Survey. Difference-in-difference estimates suggest that the Directive had a positive and significant effect on both employee representation and the utilisation of flexible working-time arrangements for eligible establishments. The greater use of flexible working-time schemes is driven by establishments in which no local wage-negotiations take place and those with a high proportion of female workers. Our results are consistent with the idea that employee representation provides an endogenous rule-enforcement mechanism in second-best scenarios in which incomplete contracting problems are pervasive and third-party arbitration is unfeasible. Quite paradoxically, the relaxation of shareholders' property rights and the limits imposed on managerial discretion as a result of the operation of employee representation seem necessary to achieve certain valuable forms of organizational flexibility in market economies.

Keywords: employment, flexible working time, employee representation

JEL Classification: D23, J22, J50

Suggested Citation

Burdin, Gabriel and Pérotin, Virginie, Employee Representation and Flexible Working Time. IZA Discussion Paper No. 10437, Available at SSRN: https://ssrn.com/abstract=2889683 or http://dx.doi.org/10.2139/ssrn.2889683

Gabriel Burdin (Contact Author)

University of Leeds - Faculty of Business ( email )

Leeds LS2 9JT
United Kingdom

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072

Virginie Pérotin


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