Wages and jobs in the Portuguese air transport industry

BTPS Brazilian Transportation Planning Society Journal of Transport Literature Vol. 7, n. 3, pp. 8-33, Sep. 2013 Research Directory JTL|RELIT www.transport-literature.org ISSN 2238-1031 Wages and jobs in the Portuguese air transport industry [Salários e empregos na indústria do transporte aéreo portuguesa] Cristina Barbot, Pilar González, Luís Delfim Santos* University of Porto - Portugal Submitted 23 Sep 2012; received in revised form 8 Oct 2012; accepted 10 Oct 2012 Abstract Using a large matched employer-employee data set with information at both the worker and the company level we characterise the Portuguese airlines’ employment structure and, by comparing it with the general structure of the Portuguese labour force, we stress the particularities of the sector. Based on the Heckman selection model, we develop an analysis of the variables that influence wages in this sector and which contribute to its differentiation from the general labour market. Particular attention is paid to the disparity among different types of jobs in the air transportation sector, namely amongst flight crews and land personnel. We also analyse the differences between regular and non-regular sub-sectors. Our main findings indicate that the aviation sector labour force is clearly specific regarding gender distribution and human capital accumulated by its workers. Moreover, some professions, pilots in particular, have important specificities compared to other jobs even within the sector. We also find that wages are strongly influenced by levels of education, tenure and experience as well as professional categories, which appears as an important specificity of this sector. Key words: labour, airlines, wages, human capital. Resumo Usando uma grande base de dados com correspondência empregador-empregado com informações tanto ao nível do trabalhador quanto da empresa, caracterizamos a estrutura de emprego das companhias aéreas portuguesas e, por meio de comparação com a estrutura geral da força de trabalho portuguesa, destacamos as particularidades do setor. Com base no modelo de seleção de Heckman, desenvolvemos uma análise das variáveis que influenciam os salários neste setor e que contribuem para a sua diferenciação do mercado de trabalho em geral. É dada atençao especial para a disparidade entre os diferentes tipos de empregos no setor de transporte aéreo, ou seja, entre os tripulantes e o pessoal de terra. Analisamos também as diferenças entre os subsetores de aviação regular e não-regular. Nossos principais resultados indicam que a força de trabalho no setor de aviação é claramente específica quanto à distribuição de gênero e de capital humano acumulado por seus trabalhadores. Além disso, algumas profissões, pilotos em particular, têm especificidades importantes em comparação com outros tipos de trabalhos, mesmo dentro do setor. Também apontamos para evidências de que os salários são fortemente influenciados pelos níveis de escolaridade, senioridade e experiência bem como pelas categorias profissionais, que aparecem como uma especificidade importante deste setor. Palavras-Chave: trabalho, companhias aéreas, salários, capital humano. * Email: . Recommended Citation Barbot, C., González, P. and Santos, L. D. (2013) Wages and jobs in the Portuguese air transport industry. Journal of Transport Literature, vol. 7, n. 3, pp. 8-33. ■ JTL|RELIT is a fully electronic, peer-reviewed, open access, international journal focused on emerging transport markets and published by BPTS - Brazilian Transport Planning Society. Website www.transport-literature.org. ISSN 2238-1031. This paper is downloadable at www.transport-literature.org/open-access. Cristina Barbot, Pilar González, Luís Delfim Santos pp. 8-33 Introduction Although research on the Air Transportation industry is developed up to the point that it has become an autonomous research field, studies on its labour force are relatively scarce. The recent process of de-regulation of this industry and its higher or lower capacity to adjust to changes, namely the recent crisis that affected the sector following the demand contraction after 11.09 and SARS1, have prompted a few studies on airlines’ labour costs and conditions. The effects of those exogenous shocks appear to have been overcome since demand started growing again after 2002 and it continues growing at high rates. ICAO (2007) reports an average annual growth rate of 5.1 per cent between 1985 and 2005 and an expected growth rate of 4.6 per cent for the period 2005 - 2025 (expressed in RPKs: revenue passenger kilometres). Nonetheless, exogenous shocks were not the main factor leading to labour force adjustments within this industry. Important economic and organisational changes have taken place in the last two decades, resulting in fundamental rearrangements in the structure of the industry. In Europe as elsewhere, airlines recently faced the effects of a de-regulation process. Consequently, the entry of new companies in air travel markets has increased competition within the industry, forcing a decrease in fares and an urgent need for reducing costs. This process was enhanced by the entry of low cost carriers, reinforcing the need for full service airlines to adapt in order to meet decreasing fares and, consequently, to decrease costs. The purpose of this paper is twofold: (i) to understand the characteristics which distinguish workers in the air transport industry from other labour market workers, both in regular and non-regular air transport; and (ii) to find the main variables influencing wages in the Portuguese airline sector which contribute to its differentiation from the general labour market. Regarding our first aim, we start with a statistical analysis of the main features of Portuguese aviation labour force compared to workers of all other sectors. To handle the 1 Ito and Lee (2005) provide an assessment of the impact of 11th September on US airline demand. Impacts of the same events in Europe were investigated, among others, by Hätty and Hollmeier (2003) and Inglada and Rey (2004). JTL-RELIT | Journal of Transport Literature, Manaus, vol. 7, n. 3, Jul. (2013) 9 Cristina Barbot, Pilar González, Luís Delfim Santos pp. 8-33 second aim we used Mincerian wage equations to perform a regression analysis, both for the whole sector and for its regular and non-regular segments. Our main findings indicate that the aviation sector labour force is clearly specific regarding male share and human capital accumulated by its workers. Moreover, some professions, particularly pilots, have important specificities compared to other jobs, even within the sector. We also find that wages are strongly influenced by levels of education, tenure and experience. Also, professional categories are an important determinant of wages, which is an interesting specificity of this sector. This paper is innovative in that, as far as we know, no other studies have been done on this theme in Portugal and (...truncated)