The Trend towards Labour Market Flexibility - Essay Example

The trend towards labour market ‘flexibility’ inevitably entails employment insecurity and a transfer of risk from employers to employees.” To what extent do you agree with this statement? Table of Contents Introduction 3 Discussion 4 Brief description about the term Labour Market Flexibility 4 Diagrammatic representation of the determinants and dimensions of labour market flexibility 6 Orthodox view of Labour market flexibility 7 How Labour market rigidity hindered economic performance 8 Exploring the visions of the employee and the employer, regarding labour market flexibility? 10 Analysis 11 Performance of labour market is dependent over employment, unemployment and inactivity 11 Findings 13 Labour Market Flexibility leads to economic well-being 13 Conclusion 15 References 16 Introduction Job flexibility has been defined as the ability to shift form one job to another as well as experiencing some level of freedom and ability to make independent decisions that are not subject to the employers. The human resource managers in various organizations are wary of the current trend in which job insecurity is main trigger to search for new employment opportunities. Increased globalization and industrialization have resulted to numerous changes in being witnessed in the labor market. The employers in their bid to reduce their obligations to their employees as well as maximizing their profits, have resorted to transferring a lot of risks to their employees which makes then to feel more insecure about their positions in employment. Owing to the fact that employees are the most essential requirement of an organization, human resources are becoming de-motivated as well as disturbed. As a result of such disturbance, their rate of performance and devotion towards the assigned duties are reducing thereby declining the total productivity of the organization. Therefore, in order to mitigate such negative impacts of jobs flexibilities, maximum extent of the organizations are now trying to implement the strategy of restructuring and reorganization at the workplace. The statement thus portrays a true picture of what is taking place in the current set up in the labor market. A strategy aimed at reducing rate of employee turnover which is as a result of increased flexibility is thus necessary to be introduced and implemented in organizations. Otherwise, it might result in bankruptcy as well as enhancement of termination or attrition of the workers from the organization thereby declining its brand image and portfolio in the market among many other rival contenders. However, due to attrition, the rate of living standard and life style of the employee. As a result of which, the rate of unemployment and poverty is increasing that make hinder the economic prosperity of a nation or country as compared to others (Kalleberg, 2001, pp. 479-504). Organizations thus need to adopt an approach that is geared towards addressing the various forms of flexibilities that is being witnessed in current times. This essay mainly tries to highlight, the fact that due to various labour market flexibilities, the rate of job insecurity is increasing and may lead into serious consequences in the labor market. Discussion Brief description about the term Labour Market Flexibility Flexibility in the labor market can be described as the ability of an organization to make amendment to its labor force in regard to the number of employees employed as well as the conditions under which they work. Flexibility is made manifest by the existence of few rules and regulations that concern the employees as well as their salaries. It further relates to the willingness as well as the capacity of workers to adjust to the changes made by their employers regarding their work conditions. The supply side of the economy heavily depends on the flexibility in the labor market due to the fact that the demand for labor is a form of derived demand. Globalization and decentralization of industries is a key contributor to long-term changes in the labor market flexibility. The flexibility in the labor market depends can be largely attributed to several factors which include flexibility in the wages and its ability to bring about equilibrium in the labor market. There are basically two forms of wage flexibility which are relative wage flexibility and real wage flexibility. However, in order to adjust the economic fluctuations, varied types of flexibilities need to be implemented or approved by the organizations such as work hours, cross-trainings, locations, wages, working conditions, techniques, technologies and compliance of its labour forces etc (Kalleberg, 2001, pp. 479-504). It is done in order to amplify the retention ratio of the labours and the competitiveness of the organization in the market. Therefore, it might be stated clearly that LMF or labour market flexibility is highly dependent on various determinants that are presented in the below figure: (Source: TUC, 2010) Hence, labour market flexibility helped to maintain a unique balance between demand and supply of the products or services of the organization in the market. Diagrammatic representation of the determinants and dimensions of labour market flexibility (Source: TUC, 2010) From the diagram, it might be clearly depicted that labour market flexibility is extremely essential in this age of aggressiveness so as to maintain the profitability of the organization. Along with this, labour market flexibilities also play a significant role in amplifying the motivation and commitment of the employees or labours that may amplify their level of performance. However, due to improvement of their motivation, the rate of interpersonal conflicts within the employer or other co-labours might also get reduced that may enhance their efficiency at work. Other than this, due to implementation of varied types of LMF, the rate of job satisfaction increases that enhance the retention ratio, which is extremely essential for the employee as well as the employer. This is because; it might help to reduce the rate of unemployment or redundancy as well as bankruptcy ratio. Hence, labour market flexibility acts as a catalyst that offers equal balance within the employees and the employers of an organization. Orthodox view of Labour market flexibility As per neo-liberal thoughts, an organization might include various rules and regulations in order to maintain and control its labour forces. However, it is done, to maintain the efficiency and performance of the labours that may prove effective for the organization. However, such types of strict regulations or rules do not prove effective for the organization, as it leads to enhancement of the rate of unemployment and poverty within the country. Other than this, constant wage rates, is also another important cause, that may lead to enhancement of unemployment rate that may hinder the rate of development of the organization in long run. Regulations of working time are also another prime cause that might reduce the efficiency of the labours thereby reducing the rate of motivation and commitment. Unemployment benefits might also lead to unemployment that may decline the economic status of the country in the entire globe among others. Active labour market policies, education and training also need to be implemented by an organization in order to improve the output of the individual worker. As it offers a significant impact over the productivity of the organization as a whole that may offer positive and negative results over its reputation, in this economic turmoil scenario (University of Leicester, n. d.). Hence, the central line of these above mentioned paragraphs or argument is that, labour market flexibility is extremely essential in order to retain the labours or workers with an organization so as to enhance its sustainability and competitive position in the market. However, if labour market flexibility is not adopted effectively, then it might create a risky environment for both employees as well as the employers. How Labour market rigidity hindered economic performance Labour market rigidity has considerable effects on economic growth and development. The setting up of low minimum wages leads to reduction in the general spending levels in the economy mainly because people have less amount of income to consume. Investment on the other hand, tends to increase under rigid labour markets owing to the fact that most people strive to create their own employment opportunities rather than to seek for employment. The high risk of loss of employment opportunities forces workers to venture into private practice with an aim of increasing their financial security and n the long run contributes to economic growth evident by a large Gross Domestic Product (G.D.P). It is evident that countries with more rigid labour markets are likely to experience deeper recessions as a result of high labour turnover and low productivity. Job finding which is due to the rigidity in the labour market, leads to increased unemployment Rate in the economy. As a result flexibility in the labour market assists in minimizing high rates of unemployment. The rate of unemployment is the greatest indicator of the state of the labour market in any country. The regulation role played by government policies on firms and workers assist in determining the rate key economic indicators. In capitalist economies, most of the organizations or employers desired to maintain authoritarian leadership style or policies such as fixed wage rates, accurate working time, no extra incentives for extra work, no unemployment benefits etc. However, due to which, the rate of commitment and devotion of the labours or workers towards their assigned tasks reduced that hindered the performance of the organization. Other than this, due to lack of health and safety policies, the labours or worker failed to maintain their health that hindered their performance (Kalleberg, 2001). Other than this, due to lack of implementation of training and educational training programs, the inner skills and talents of the workers or labours may not get improved. As a result of which, they may not present satisfactory results or performance in changed jobs. Due to which, the management or the employer may offer termination notice to these unproductive labours and recruit highly skilled and talented labours within the organization. Due to which, the rate of unemployment or poverty might get enhanced thereby amplifying the intensity of economic disparity. Moreover, lack of presentation of appropriate wages to the workers or labours also acted as one of the prime causes that resulted in economic downfall. This is because; as the management in capitalist economies tried to offer low wages for longer hours of work by the labours. Other than this, the employers of that age of rejected to offer paid maternity leaves to the female workers of the organization. As a result, the retention rate of these talented female workers declined that offered considerable impact over the health of the mother as well as the child. Therefore due to extensive mental harassment and disturbance, the health of child decreased or resulted in deaths. Other than this, due to termination of the female employees from work, the rate of unemployment or illiteracy of the country increased that hindered its portfolio among other neighbouring nations of the globe (Council of Europe Publishing, 2010, pp. 223-235). In addition, due to lack of flexible work timings, the organizations may not offer temporary employments to the workers or labours. Due to which, the rate of unemployment of the nation may not be reduced. Moreover, due to improper in-work benefits such as medical insurance policies, incentives and extra wage rates etc the rate of retention of the workers reduced significantly. Due to which, the organization failed to present varied types of inventive products and services so as to satisfy the changing demands of the customers. As a result, the organization failed to maintain its image and reputation in the market among many other rival players. Furthermore, the organizations of capitalist economy also reduced to implement advanced techniques and machines within the organization so as to enhance the rate of productivity or efficiency of the workers or labours. In addition to un-advanced machines and improper working conditions, the rate of unemployment is increasing day by day. However, due to improvement of the unemployment, the rate of poverty, illiteracy, migration is also increasing that hindered the path of growth of the nation among others. Therefore, it might be depicted that rigidity in the rules and regulations of the labour market lead to the decrease of economic condition of the country or nation. Hence, in order to improve the economic condition of a country, it is extremely essential to accept the flexible rules and regulations of the labour market in order to retain the workers. However, due to retention of the workers within the organization, the rate of unemployment might get reduced that may increase the economic standard of the country. This is extremely important for a nation to accept flexible rules and policies within the organization so as to attract highly experienced and talented worker or employees that may prove effective for it in long run (Council of Europe Publishing, 2010, pp. 123-134). Thus, the aspects that created a significant impact are the prime causes mentioned above that helped in improvement of the economic condition of the nation and the labours or workers of an organization. Exploring the visions of the employee and the employer, regarding labour market flexibility? The visions and desires of the employees and the employer are totally different and opposite to one-another, regarding labour market flexibility. This is presented below: Dimensions of Employment Arrangements which maximise flexibility for employer Arrangements which maximise flexibility for employee Wage rates Universal wage rates Wage as per experiences and talents Working hours Universal working hours Hours as per the talents and experiences Maternity Leave Limited amount of time Again return to the work after giving birth Health and safety legislation Limited In order to improve the retention rate Implementation of advanced machines Limited In order to increase the efficiency and output Education and training Limited In order to improve the talents and skills Temporary working Available Available After analysing the points and information mentioned above, the employers always try to maintain universal wage policies and working hours within the organization, so as to maintain uniformity among the employees. Along with this, as the points, the employees always try to attain salaries or wages as per their experiences or talents in order to amplify their motivation and commitment. This is because; it might amplify the motivation and devotion of the employees might get enhanced that may increase their productivity and efficiency. Along with this, implementation of varied types of education and training programs also help in enhancement of the knowledge and skills that may help in creation of varied types of inventive products and services in the market among others (TUC, 2010). Thus, from the above mentioned points, it might be clearly stated that, flexibility acts as a weapon to improve the dedication and devotion of the employees that increased the total output of the organization or employer. Hence it is an extremely challenging topic in this age as compared to others (Kalleberg, 2001, pp. 479-504). Analysis Performance of labour market is dependent over employment, unemployment and inactivity The performance of the labour market is entirely dependent over employment, unemployment and inactivity. However, it might be possible only if the organization or the employer tries to implement highly flexible working rules and regulations. Only then, the employer might retain the experienced employees that may improve the productivity of the organization to a considerable extent. Other than this, implementation of the policy of temporary working conditions within the organization, offers an opportunity for numerous unemployed workers or labours to attain employment. Due to which, the rate of output of the organization might be enhanced that may increase its brand image and aggressiveness in the market. Other than this, due to the implementation of flexible working timings, numerous female workers might attain the opportunity to improve their life style and living standard thereby amplifying their economic standard. However, due to improvement of the economic standard, the purchasing behaviour of the citizens or labours might get enhanced that may increase the gross domestic product (GDP) and gross national product (GNP) of the nation. This might improve the economic condition of the nation in the entire globe among others (University of Leicester, n. d.). Furthermore, implementation of varied types of incentive rates within the organization, the rate of attrition of the labours or workers reduces to a significant extent that may improve the sustainability and competitiveness of the organization in the market among others. In addition, execution of varied types of training programs such as job rotations also helps an employee to increase their performances and skills. This might help in improvement of the motivation and commitment of the employees within the organization that may increase its yield. As a result, it helps in reduction of inactivity within the employees thereby amplifying their economic condition and standards (WHO, 1999). Hence, it might be stated clearly that implementation of varied types of flexibilities for the labours within the organization helps in enhancement of their performance and efficiency. Thus, all the above mentioned information might prove extremely advantages and useful in future era, although it seemed difficult to recapitulate from varies sources. Findings Labour Market Flexibility leads to economic well-being The competitive advantage of the firm can be greatly enhanced through flexibility the manner in which organizations operate as well as how the employees feel about their freedom in the organization. Other than this, flexible conditions of the labours also help in their retention that may prove effective for the organization in developing varied types of new products thereby amplifying its profitability and total revenues. The development of varied types of inventive products and initiatives, the range of customers might get increased that may improve the economic condition of the nation or country GDP. Furthermore, due to the retention of the labours or workers within the organization, the rate of prosperity and brand image of the organization might get enhanced to a considerable extent as compared to others (Kalleberg, 2001, pp. 479-504). Thus, prior implementation of flexible labour market policies, the rate of unemployment is extremely high in numerous countries as presented below: (Source: TUC, 2010) Thus, it might be clearly depicted that due to the implementation of varied types of flexibilities such as adoption of advanced techniques, machines helped in improvement of the total productivity and earning of the organization. Due to which, a specific amount of share might also be attained by the employees as bonuses or incentives that may improve their motivation and inner desires. In addition to this, specific employment protection measures need to be taken by the organization so as to protect the employees from any sort of job insecurity or mental disturbances. So this concept is offered high concentration and attention so as to increase its portfolio and competitive position in the market among others. In-spite of being highly important, it is not being included in the module (TUC, 2010). Hence, it might be stated that implementation of specific employment protection measures, the rate of unemployment reduced in a significant extent as presented below. (Source: TUC, 2010) So, it is recognised as one of the most important concepts as compared to others. Thus, from the all the above mentioned information, it might be revealed that rigidity in labour market conditions might prove ineffective both for the employers as well as the employees. Rigidity in rules and regulations might hinder the inner morale and satisfaction of the labours that may reduce their efficiencies and such inefficiencies might also decline the productivity of the organization as a whole (WHO, 1999). Conclusion Conclusively, it might be stated, that flexibility in the policies of the labours or workers within the organization proves extremely essential. This is because; it might help in improvement of its productivity or earnings along with brand value. Moreover, due to the implementation of varied types of advanced machines within the organization might also prove effective in introducing varied types of product lines that may enhance its customer base and profitability in the market among many other rival players. Other than this, due to the introduction of varied types of incentives, bonuses or performance related pay systems within the organization, the rate of retention of the employees or labours might get enhanced that may increase its reliability in the market. Other than this, introduction of varied types of job protection policies within the organization also helps to increase the rate of job security and retention ratio that enhances the level of performance of the labours. The workplace flexibility thus involves insecurity in employment as well as risk transfer to employees to a greater extent. Hence, it might be revealed that flexibility in labour market acts as one of the most important medium to enhance the employment rate and economic standard of the labours of a nation as compared to many other neighbouring countries. As such type of flexibility is worthy for the employers and employees in equal extent. References Council of Europe Publishing, 2010. Reconciling Labour Flexibility with social cohesion –facing the challenge. [Online] Available at: http://www.coe.int/t/dg3/socialpolicies/socialcohesiondev/source/trends/trends-15_en.pdf [Accessed on 15th May, 2014]. Kalleberg, A. 2001. Organizing flexibility: The flexible firm in a new century. British Journal of industrial relations, Vol. 39(4), pp. 479-504. TUC, 2010. Flexible with the Truth? Exploring the Relationship between Labour Market Flexibility and Labour Market Performance. [Online] Available at: http://www.tuc.org.uk/sites/default/files/extras/flexiblewiththetruth.pdf [Accessed on 15th May, 2014]. University of Leicester, No Date. Labour Market Issues and controversies. Centre of Labour Market Studies. WHO. 1999. Labour Market and job insecurity. [Online] Available at: http://www.euro.who.int/__data/assets/pdf_file/0005/98411/E66205.pdf [Accessed on 15th May, 2014]. Read More