Trade unions and the economic performance of Brazilian establishments

Abstract

This paper examines, for the first time in the literature, the impact of trade unions on various performance indicators of Brazilian establishments. A unionism retrospective survey was carried out among 1,000 establishments in the manufacturing sector and its results were matched to performance indicators available from the Brazilian Industrial Surveys between 1990 and 2000. The results using the pooled data indicate that the relationship between unionism and some performance indicators, such as average wages, employment and productivity is non-linear (concave), so that a rise in unionism from low levels is associated with higher performance, but at a decreasing rate. Unions also reduce profitability. Establishments that introduced profit-sharing schemes increased their productivity and profitability overall and paid higher wages in more unionized plants.