Who Gains From Organizational Flexibility? Flexible Organizational Practices and Wage Inequality

Abstract

This study explores the implications of flexible management practices for organizational wage gaps. It argues that the implementation of high-performance and non-standard employment practices is not only skill but also class-biased, favouring workers in supervisory positions. This argument is examined using matched employer–employee data from the 2011 British Workplace Employment Relations Study (WERS) survey, which uniquely includes detailed information on flexible management practices. Findings from fixed-effects models support the argument. Wage gaps are more pronounced between supervisors and rank-and-file workers in organizations implementing high-performance or non-standard employment practices, compared to those without such practices. Notably, heightened education-based wage gaps are observed in organizations adopting only non-standard practices. The results suggest that purportedly efficiency-oriented changes in organizational practices are not wage-neutral but tend to favour already well-compensated workers.