State substitution for the trade union good : the case of paid holiday entitlements

Purpose: The literature on the union wage premium is among the most extensive in labour economics but unions’ effects on other aspects of the wage-effort bargain have received much less attention. The purpose of this paper is to contribute to the literature through a study of the union premium in paid holiday entitlements. Design/methodology/approach: The authors examine the size of the union premium on paid holidays over time, with a particular focus on how the premium was affected by the introduction of a statutory right to paid holidays. The data come from nationally representative surveys of employees and workplaces. Findings: The authors find that the union premium on paid holidays is substantially larger than the union premium on wages. However, the premium fell with the introduction of a statutory minimum entitlement to paid leave. Originality/value: This is the first study to examine explicitly the interaction between union representation and the law in this setting. The findings indicate the difficulties that unions have faced in protecting the most vulnerable employees in the UK labour market. The authors argue that the supplanting of voluntary joint regulation with statutory regulation is symptomatic of a wider decrease in the regulatory role of unions in the UK.