U.S. economist Richard B. Freeman awarded 2007 IZA Prize
- Most important research award in labor economics
- Guest speaker, Federal President Horst Köhler: "People who can shape their work themselves are happier!"
- Freeman: Strengthen role of trade union as social partner
Harvard professor Richard B. Freeman has been awarded this year's IZA Prize in Labor Economics. The Bonn-based Institute for the Study of Labor (IZA) presented Freeman with the award, which carries a cash prize of 50,000 euros, in a ceremony held on Nov. 5 at the Museum for Communication in Berlin. In a speech honoring Freeman's work, IZA Director Prof. Klaus F. Zimmermann paid tribute to the economist's scholarly achievements. The groundbreaking work conducted by Freeman, a professor at Harvard University (Cambridge, Massachusetts) and the London School of Economics, has focused on such areas as social inequality and discrimination, the development of the welfare state and the role of trade unions in the labor market.
"The social state needs autonomy in collective bargaining and therefore trade unions," Dr. Klaus Zumwinkel, the CEO of Deutsche Post and the IZA president, said in his address. "Richard Freeman shows that unions are, and must be, much more than collective bargaining agents. They are social partners, too." In his work, Freeman has supplied the scholarly evidence showing that the animosity-filled attitude between corporate management and workers' representatives has become a thing of the past, Zumwinkel said.
Freeman's research illustrates that responsible trade unions are valuable not only to a number of companies, but also to entire economies. In companies and sectors where management and workers' representatives interact constructively, employee morale increases noticeably and the number of employees who resign from their jobs drops. Stronger employee loyalty helps reduce hiring and training costs, and affects productivity. This is the case because employers relying on workers with longer service at a company are more willing to invest in the continuing education of longtime, loyal employees. "Today more than ever, companies must depend on highly qualified employees to beat competitors in a globalized world. Above all, low worker turnover helps reduce company personnel costs," Zumwinkel said. "In this regard, trade unions play a vital role as social partners and assume a great deal of business responsibility."
Highlighting the importance to society of constructive trade unions, IZA Director Zimmermann said, "The work of IZA award winner Richard Freeman shows the strong impact nondogmatic trade unions can have. Freeman's research serves to both encourage and admonish trade-union leaders to always be aware of the crucial responsibility they have for the economy as a whole."
In his address Federal President Horst Köhler emphasized the influence of work on people's well-being. "Work contributes to social integration and participation in society. It is an essential source of social recognition. New academic findings of the empirical research into happiness confirm: Hardly anything in our lives makes us more unhappy than the fact of being unemployed." Research into happiness also shows that those who can shape their own work independently are happier. In this connection the Federal President pointed to the role of employee representatives: "Works councils contribute in many respects to economic efficiency and a good social climate in the labor market." At the same time Köhler warned against incomes drifting too far apart. This could cause the development of growing problems for social cohesion. Köhler therefore demanded, "that - along with better access to good education for all - we need to think much harder than we have done about the possibilities for greater participation of employees in profit and capital-sharing."
For more than three decades, Freeman has been one of the world's most active, influential labor economists. His thinking has had an impact that extends well beyond academic circles, adding intellectual fuel to both public and political discussions. Freeman has provided economic-policy advice to such institutions as the World Bank, the International Labour Organization (ILO) and the European Union. He also serves as director of the Labor Studies Program at the U.S. National Bureau of Economic Research (NBER).
The award ceremony was held in Berlin's Museum for Communication with representatives from the worlds of politics, business and the media in attendance. The museum is funded by the Foundation for Post and Telecommunications, which was set up in 1995 during Germany postal reform.