Do happy workers enhance the bottom line?

DB's 'employing workers' indicator has been a real lightning rod for criticism because it measures the costs -- but not the benefits --  of certain restrictions on  hiring, firing and working hours.

At our evaluation launch, Mr. Jeff Wheeler, an expert in international  employment law made a plea (see event video, time code ~ 1hr. 16mins., 200MB download!) for a more 'holistic' view of labor markets than the one offered by the  indicator.  One vision of what 'holistic' might look like is sketched in Be careful when Doing Business by Hoyland et al (for the Norwegian Ministry of Foreign Affairs). 

Quoting from Hoyland's report: "Higher wages and non-wage employment costs may promote greater employee effort and a stronger employee commitment to the business enterprise. This may raise profits directly, and in turn reduce labor turnover, which increase profits further by saving on other costs related to training and social conditions in the workplace. All in all overall efficiency may go up. Similarly, protecting employees against overwork and child labor may increase social stability and thus long run business efficiency and work performance."