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Helena Bach / Carolin Denise Fulda IW-Trends No. 3 23. September 2024 Collectively Agreed Wages as an Instrument for Recruiting Skilled Labour?: Results of a Selection Experiment Examining how Job Applicants Decide

Companies are increasingly focussing their attention on the recruitment of skilled workers and thus facing the growing challenge of making their job advertisements as attractive as possible.

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Results of a Selection Experiment Examining how Job Applicants Decide
Helena Bach / Carolin Denise Fulda IW-Trends No. 3 23. September 2024

Collectively Agreed Wages as an Instrument for Recruiting Skilled Labour?: Results of a Selection Experiment Examining how Job Applicants Decide

German Economic Institute (IW) German Economic Institute (IW)

Companies are increasingly focussing their attention on the recruitment of skilled workers and thus facing the growing challenge of making their job advertisements as attractive as possible.

Since the public debate often links collective bargaining agreements with good working conditions, it is natural to ask whether enterprises bound by collective agreements can use the resulting pay levels as an advertising advantage. To answer this question, the authors investigated whether a reference to collectively agreed wages could be used in job advertisements to persuade potential employees to apply. Based on a survey and an integrated selection experiment with 2,114 participants, the study particularly examines the influence of collectively agreed wages on the decision to respond to a job advertisement. The results show that despite the predominantly positive associations between collective bargaining agreements and an employer's salary structure, potential applicants are no more motivated by collectively agreed wages than by fair market wages or performance-based wages. Only a reference to pay above the collectively agreed sectoral standard can make a job advertisement stand out. Moreover, the study makes clear that, in addition to salary, other factors such as arrangements for working from home and fixed-term contracts can determine whether or not an application is sent.

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Results of a Selection Experiment Examining how Job Applicants Decide
Helena Bach / Carolin Denise Fulda IW-Trends No. 3 23. September 2024

Collectively Agreed Wages as an Instrument for Recruiting Skilled Labour?: Results of a Selection Experiment Examining how Job Applicants Decide

German Economic Institute (IW) German Economic Institute (IW)

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Hagen Lesch IW-Trends No. 2 18. April 2024

German Wage Policy between Inflation and Stagnation: Are Conflicts with the Aims of Monetary Policy Looming?

After the economic and financial crisis of 2008/9, the German labour market soon began to recover, creating scope for a comparatively expansive wage policy.

IW

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Helena Bach / Carolin Fulda / Sandra Vogel IW-Trends No. 1 12. March 2024

The Pros and Cons of Trade Union Membership

The decline in collective bargaining coverage in Germany is often attributed to the reluctance of companies to join an employers' association which negotiates collective agreements.

IW

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