The annual conference of AASLE (Asian and Australian Society of Labour Economics) was held in Seoul between the 13th and 15th of December. Balázs Reizer, our team member, held a presentation here discussing the characteristics of companies offering flexible wages. Examining the nature of flexible wages is important as lots of workers, at least partly, receive their remuneration this way. Companies often use the construct to incentivise workers. Can flexible wages protect employment from a negative revenue shock?
With linked Hungarian employer-employee microdata Balázs examined the relation between the presence of flexible wages in a company and its characteristics. He also looked at the factors determining whether a firm opts for this form of compensation .
Data shows that firms with flexible wages are larger, more productive, and have a less volatile growth rate than firms not utilising the construct. Further, it also shows that flexible wage components are more reactive to firm-level revenue changes. Unfortunately, thus, when revenue falls sharply, such as during a crisis, these companies react just as other companies do, they let go of their employees.
The presentation can be read here.