Decentralised bargaining and performance-related pay

Purpose - The purpose of this paper is to examine the extent to which performance-related pay (PRP) has been negotiated through decentralised bargaining in Italy. Design/methodology/approach - The paper provides estimates aimed at identifying the main factors that have favoured agreements on PRP, on the basis of a nationally representative sample of Italian manufacturing and service companies. Findings - The paper shows that collective bargaining on PRP in Italy is positively associated with the presence of unions. The estimates also suggest that in unionised firms, workers have more access to returns from training in the form of PRP schemes. Finally, the paper finds that firm performance is positively associated with the adoption of PRP. Research limitations/implications - Further research based on additional data should enable the authors to identify causal effects. Practical implications - Partial fiscal exemptions for the wage component linked to enterprise results might increase the number of firms adopting PRP. In addition, the presence of unions may discourage the diffusion of "cosmetic" schemes that are adopted merely to secure benefits for the firm. Unions may also increase the returns of training and diffusion of PRP. Originality/value - This paper utilises a unique database containing recent information from a nationwide sample of Italian firms. It includes a whole set of information, including unionisation at the firm level, which allows the authors to address a critical issue, i.e., the strategic role of unions in adopting (or impeding) the adoption of PRP.