Increasing Tenure of Jobs in the OECD Countries - Literature review Example

Business Executive Summary The current research work has evaluated the role of various factors that have been affecting the increasing tenure of jobsin the OECD countries. The factors are analysed critically in order to understand their significance. The trend in the developed countries has shown that there is reduction in employee turnover. This makes it imperative to study the reasons behind the trends in order to sustain that in the long run. An attempt has also been made to see the significance of those factors in the context of the developing countries. It can be seen that the same factors cannot be applicable in case of the developing countries due to the difference in organisational structure and policies. Contents Introduction 4 Factors increasing job tenure: a critical Analysis 4 Appropriateness of the factors in the developing countries 8 Conclusion 10 Reference List 11 Introduction This study aims to critically discuss the potential factors that may help in increasing job tenure of employees and slow down the fall in employment turnover in the United Kingdom (UK). There have been several researches on the same, and ample evidence is present in the literature which helps to study them. Facts and figures published by the Office for National Statistics (ONS) reported that there was stability in the average duration of work tenure among the males from 2001 to 2007. This average duration was noted to be between 8.5 and 8.75 years (Chartered Institute of Personnel and Development, 2013). However, in 2011, this duration was reported to be more than 9 years. The average tenure of job for women increased steadily from 6.8 years in 2001 to 7 years in 2007. This figure stands at 7.9 in 2011 (Chartered Institute of Personnel and Development, 2013). Research showed that, lately, there was a drastic fall in the attrition rate. Thus, there is ample evidence which shows that employment turnover has seen a sharp fall. It becomes imperative to identify the potential factors that have resulted in this sharp decline. It is also essential to understand whether the identified factors are applicable globally and specially in case of developing countries. Factors increasing job tenure: a critical Analysis The figures reviewed in the earlier section suggest that the job turnover rate that is associated with retirements, resignations and other types of quitting has fallen steadily in the last decade. The fall became drastic from the year 2008. The pronounced fall can be related to the financial recession. The potential factors that help to determine the reason behind the increasing job tenure and fall in employment turnover can be as follows: Recession can be one of the potential reasons that have increased job tenure for employees. Job turnover can be explained by the conditions prevailing in the labour market. It can be seen that, during recessions, voluntary resignation rates fall. With increase in redundancies there is a hike in involuntary turnover. There is a decrease in voluntary turnover because people do not prefer to quit their jobs when they know that it can be difficult to find another suitable job during recession. Recession can also be used to explain the rise in average tenure of job when people, those who are losing jobs generally have a short tenure. However, recession alone cannot elucidate increasing job tenure. Even when there was a fall in unemployment rate and jobs were created in the market, continuous fall in the rate of voluntary separation of jobs were reported (Jackman, et al, 1990). Work structure changes also have an influence on the increasing job tenure. The rate of job separation varies with the diverse groups within labour market. It can be seen that, job turnover rate is high for younger age group than the older and aged employees (Auer and Fortuny, 2000). Differentiation could not be done with respect to gender, type and nature of work. However, changes in workforce composition greatly affected job turnover in spite of the fact that, underpinning turnover rate of job on the basis of sex and age remained unchanged. Proportion of women employee has increased with time and it can be seen that women have a higher separation rate for jobs as compared to males. With the advent of time, there have been changes in type of work. Part time jobs have gained popularity, but people who are involved in such jobs have higher job turnover rate as compared to workers who work full time. It could be expected from the past trends that, job turnover was likely to increase. The total employment rate in public sector showed a growth of 20.2% in 2009 and it again fell down to 19.5% in 2012 (Chartered Institute of Personnel and Development, 2013). In general, the average turnover rate is lower in public sector organisations. This could have resulted in decline in turnover of the job before the recession. However, the impact was negligible. Considering the ageing of population, it can be expected that fall in average turnover of job can be because of the fact that there were less young employees. Though the turnover rate of the job was declining in the pre-recession period, the percentage for individuals between the ages of 16-24 remained stable. Therefore, structure of workforce can explain increasing job tenure, but not significantly (Wölfl, 2005). Regulations in employment can also have an effect on the duration of the job tenure. Theory of economics suggests that reforms that protect the interests of employees, reduces turnover of job and leads to increasing job tenure as employees are protected from unfair and arbitrary practices in the organizations (Bassanini, Nunziata and Venn, 2009). Voluntary turnover in jobs can also be reduced with the help of regulations. For instance, policies within the organisation which makes it easier to keep a work-life balance are conducive for the employees and this reduces job turnover. It can be seen that, countries that have strict regulations in workforce, generally tend to have increasing average job tenure. There are also various examples which have suggested that, legislations and regulations have helped to decrease turnover in job. Setting of minimum wage for the sectors where employees are generally paid less is a method by which turnover of job is reduced (Bertola, Boeri and Cazes, 2000). Various facilities for the women are designed to improve the involvement of women in the workforce. It can be ascertained that regulations at workforce plays a vital role. However, the level of significance of this factor is still unambiguous (Nicoletti and Scarpetta, 2001). Job turnover may decline with the evolution within the organisations. The resourcing and recruiting processes in an organization directly influences job turnover. For instance, if involvement in a job requires adherence to several short term contract, Job turnover would increase as employees would be anxious about their position in the organization (Serrano, 1998). The trend in job turnover in the last 20 years cannot be significantly associated with the workplace recruiting policies. However, there are various policies of the organisations which can be associated with job turnover. Pension policies that are directed towards increasing benefits for the employees can restrict them from switching jobs. Employee’s discontentment can be reflected through absenteeism and job quits (Porter and Steers, 1973). It is evident that, people who are dissatisfied with their current job would prefer changing it in order to avail better opportunities. Therefore, improving job conditions can ensure increasing job tenure. Management decisions thus have an important role to play in order to maintain a fall in job turnover. The recent decrease in job turnover or increase in tenure of job is greatly guided by the relationship that an employee shares with its workforce. Improvement in conditions in the labour market might increase turnover in job, but other factors have to be strong enough to outweigh its effect. A stable workforce is preferred by the organisations, as this increases return from human resource investment. Thus, policies in the organisations which are aimed to serve interests of the employees play a crucial role (Chartered Institute of Personnel and Development, 2013). Appropriateness of the factors in the developing countries The trend of job turnover is not similar across the world. Different countries have different trend in the job turnover. Job trends in the UK have shown shortest average tenure of job. This is evident from presence of labour market dynamism in this country. Recent data suggest that, there is an increase in the tenure of jobs in not only UK, but also other countries like Norway, Spain and Ireland. On the other hand, countries like Sweden and Netherlands have not shown similar trends. Job turnover in the United States has also been dynamic. The dynamism in the job turnover is due to various factors. Similarly, such trends are also present in the developing countries. It becomes imperative to evaluate whether the factors which plays a crucial role in influencing job turnover in the developed countries remain applicable in case of the developing countries (Koch and Steers, 1978). In case of the developed countries, it has been seen that recession has played a vital role in influencing the turnover of jobs. The financial and economical activities in the developed countries significantly affected the labour market. It can be observed that, with globalization in the financial sector, the emerging and the developing countries are associated with the developed nations. The economic activities integrate the labour market. Thus, recession in one nation would indirectly affect another market. In the developing countries where opportunities are less in the labour market, recession would prove to be equally significant. However, it can be seen that the recession of 2008 had major impacts on the economy of the UK and the US. The impact of the recession was less significant in the labour markets of India and China. Unemployment rates are also low in these developing countries. Many individuals in the developing countries also depend on agricultural activities. This sector is not affected by the recessionary trends. Job turnover cannot be determined by the forces of recession in such cases (Frenkel and Kuruvilla, 2001). The organisational structures in the developed nations are well organized and formal, unlike the developing countries. The developed countries have stricter organisational policies which influence the job turnover rate. The developing countries have comparatively flexible policies in the work force which may not significantly affect the labour market. However, Discrimination at the workforce in terms of race, sex, caste and creed has always been a growing concern in the developing countries. Organisational policies are directed towards eliminating such discriminations at workforce. Thus, composition of workforce influences job turnover even in the developing countries (Firth, et al, 2004). Several empirical studies have showed that, factors like job security and retirement benefits have a significant and pertinent impact on employee turnover. These problems associated with security of job and retirement plans are sensitive in the developing nations. Employees in the developing countries prefer working in those organisations which provide them with attractive retirement benefits (Khan, 2014). This is because; the family structure and the income trends in the developing countries make retirement policies important from the employee’s perspective. Thus, it can be seen that the factors that were relevant in the developed countries might not prove equally significant in the developing countries because of the difference in the structure of the labour market and the workplace culture (Allen, Shore and Griffeth, 2003). The organisational policies also differ in the developing countries and as a result, the impact of such factors cannot be equally meaningful for developed and developing nations. The mindset of the people towards work is also an important criterion that governs job turnover. It can be perceived that, women employment is different in developed and developing countries. This is because, in developing countries, women are still not regarded as equally valuable as men. Women are treated better in the developed countries (Matland, 1998). Thus, the same factors influencing job turnover cannot be applicable in case of developing countries. Conclusion The study helps in critically analysing the factors that can potentially affect the job turnover in the developed countries. It has been noticed that, several factors contribute towards increasing job tenure. These factors are significant with regards to the consequences they have on the rate of employee turnover. The recent trends in job turnover make it imperative to understand the significance of the factors in order to see, that the prevailing increasing job tenure in the labour market is maintained even in the future. On analysing the factors, it can be seen that the same factors cannot be applicable in case of the developing countries. This is because, the developing countries have different workplace structure and the organizational policies in these countries are not same. Employee’s perspective towards work is also different in the developing countries. There are certain factors which are equally important in both developed and developing countries but their level of impact varies. Reference List Allen, D. G., Shore, L. M. and Griffeth, R. W., 2003. The role of perceived organizational support and supportive human resource practices in the turnover process. Journal of management, 29(1), pp. 99-118. Auer, P. and Fortuny, M., 2000. Ageing of the labour force in OECD countries: Economic and social consequences. Geneva: International Labour Office. Bassanini, A., Nunziata, L. and Venn, D., 2009. Job protection legislation and productivity growth in OECD countries. Economic Policy, 24(58), pp. 349-402. Bertola, G., Boeri, T. and Cazes, S., 2000. Employment protection in industrialized countries: The case for new indicators. International Labour Review, 139(1), pp. 57-72. Chartered Institute of Personnel and Development, 2013. Has job turnover slowed down? [online] Available at: [Accessed 30 October 2014]. Firth, L., Mellor, D. 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