The Liberalization of Labour Markets - Literature review Example

The Liberalization of Labour Markets Name: University: Course Title: Instructor: Date: The Liberalization of Labour Markets Introduction As peoples (1998, p.111) notes, the liberalization of the labour markets has been one of the most crucial economic policy changes in the pas couple of decades. The liberalization of the labour market involves the removal of barriers or restrictions on entry, as well as the removal of government rate regulation in the labour market. The liberalization of the labour market has played an instrumental role in the expansion of the use of market-like mechanisms such as competition, pricing, dispersed decision-making, outsourcing and work-based incentives to enhance program outputs. It is also due to the liberalization of the labour market that the public sector in various countries has been able to use market-like mechanism to enhance their role as both purchasers and providers of public goods and services (OECD-Asian Senior Budget Officials, 2005, p.2). The purpose of this paper is to describe the purpose, operation, as well as positive and negative impacts of competition and work-based incentives in the workplace. Secondly, this paper aims at evaluating the impact of each on the quality and value of the services that the workplace provides. Liberalization of labour markets and the market-like mechanisms Labour markets are the frameworks through which employers and individual employees relate or rather interact with reference to jobs, as well as working conditions. Labour market issues are those which relate to employment, unemployment, as well as participation wages and rates. The outcomes of labour market are determined by institutions such as governments, the roles of employers, and processes that result from collective bargaining by trade unions (Eurofound, 2007). According to Dix-Carneiro* (2010, p.2), free trade and the liberalization of the labour market contribute to the increase of aggregate welfare of individuals by facilitating efficient allocation of various resources within countries. OECD-Asian Senior Budget Officials (2005, p.2) reiterates that some of the most crucial market-like mechanisms whose uses have been enhanced by the liberalization of labour market include outsourcing, public-private sector partnerships, as well as vouchers. Other market-like mechanisms which have been expanded by the liberalization of labour markets include competition, pricing, dispersed decision-making and work-based incentives among others. These mechanisms cut across both private and public workplaces. Eurofound (2007) regards the liberalization of labour market as a strategy whose objective is to facilitate the removal of institutions of labour market regulation and minimize legal intervention that exists between individual employees and their employers. Eurofound further notes that the liberalization of labour market not only involves state intervention through regulations, but also the removal of interventions and regulations that results from collective bargaining activities of labour organizations and trade unions (Eurofound, 2007). In Europe for instance, the labour market is characterized by stringent employment regulations, strong labour organizations, as well as generous welfare provisions. This has contributed to high levels of unemployment as compared to the US whose labour market is relatively liberalized (Eurofound, 2007). Competition Competition at workplace is inevitable as each employee seeks to outdo one another with regard to the level of their performance at work. Employers appreciate employees whose work performances are exceptionally excellent. The world is at competition at all levels, countries compete at various levels, multinational corporations try to outdo each others business performance, and SMEs also seek to prosper through competition. Therefore, it is only natural that competition exists at the workplace (Shukla, 2009). Employers judge their employee’s work performance by comparing their work performance to that of their fellow employees. As a result, for an employee to climb up the ladder of success with regard to pay rise and promotion they must demonstrate higher levels of work performance than those of their fellow employees. According to Shukla (2009), management encourages workplace competition with the aim of motivating their employees, and achieving better results or performance from them. Levitt and Harwood (2010, p.290) argues that workplace completion in combination to the current day technological advancement has significantly influenced the way and the pace at which employees perform their duties. In their view, employee efficiency is a prerequisite for competition. Organizations and employers are increasingly looking for employees who are flexible, who are able to the changing technology, business and organizational environments, as well as employees who are able to work independently when it comes to decision making and problem solving. It is this need for maximum productivity by employers and the desire by employees to achieve their employers’ quality needs and expectations that results into workplace competition (Levitt & Harwood, 2010, p.290). Shukla (2009) notes that competition among employees can either be healthy and beneficial to a company, or can be unhealthy and lead to friction among the employees involved. When this happens, their performance may be significantly jeopardized. The benefits or advantages of competition among employees may include greater work productivity and better quality of work as each employee seeks to be the best performer. Competition may also enable employees to meet deadlines by ensuring timely delivery of their work. Workplace competition also shapes employees to be work-oriented (Shukla, 2009). Overall, competition ensures that business organizations realize higher profits. As already been mention, unhealthy competition may also occur among the employees of a company, and may adversely affect their performance, as well as the quality and value of the services provided by a company or rather a workplace. First, unhealthy competition may result into too much stress for the employees involved. Second, competition may also lead to work pressure which eventually affects employee health. Third, unhealthy competition affects team spirit among the employees of an organization due to suspicion towards the motives of fellow employees. Fourth, unhealthy competition may contribute to malpractice among employees in order to bring down another employee. Last, unhealthy competition may also jeopardize an employee’s sympathy towards another employee as they may only be interested in their work results or performance (Shukla, 2009). Work-based Incentive Stolovitch, Clark and Condly (2004, p.2) define incentive as something that is valued by either an individual or a group that is offered for them in exchange for better or rather increased performance. Work-based incentive is a form of employee motivation which has been used by employers in the workplace to achieve desired work performance by their employees. An incentive, like motivation has an immediate influence on employees with regard to their direction, vigour, as well as persistence of action. Thus, an incentive system in an organization is a program of rewards or recognition intended to motivate employees in an organization in increase their performance in a specific way. Work-based incentive governs the choices made by individuals in given alternative forms of voluntary choices or rather activities (Stolovitch, Clark & Condly, 2004, p.2). Robbins and Judge (2011, p.204) reiterates that this form of motivation is a process of influencing an individual’s intensity, direction, as well as persistence of effort geared towards achieving an organizational goal. In their definition, intensity refers to the degree of effort; direction is the quality of effort while persistence refers to the period of effort. Thus, work-based incentive is an essential component of management as managers get thing done through their employees (Tietjen & Myers, 1998, p.226). Incentive Research Foundation (2008) notes that key findings of research have shown that both employers and employees value incentive programs, long-term incentive programs outperform short-term based incentive programs According to Incentive Research Foundation (2008), some of the benefits of work-based incentive include the following. First, it increases the productivity (performance) of employees, job satisfaction and organizational citizenship. Second, work-based incentives enable managers to manage employee behaviours such as decreasing involuntary absenteeism and employee disengagement at the workplace hence, engaging employees. Third, work-based incentives could also be applied by managers to direct and manage the behaviours of an organizations consumers or rather customers hence, increasing consumer loyalty and sales. Fourth, work-based incentive could be used to by an organization to attract quality employees (Incentive Research Foundation, 2008). In their study, Stolovitch, Clark and Condly (2004, p.4) reiterates that the major disadvantages of work-based incentive merely myths that have not been proved through research. Thus, the first myth is that incentives destroy personal, intrinsic interest in work. Secondly, that work-based incentive only leads in employers paying more for the performance result they would have had anyway. However, well articulated and designed systems of incentives in an organization dramatically increase employees’ performance. Retrospective Commentary on Liberalization of Labour Markets and the Market-Like Mechanisms From the research on liberalization of labour markets and the market-like mechanisms one is able to learn a lot of new things which he or she could not have possibly known. The theory of labour markets is an interesting one. It is worth noting that the liberalization of labour markets involve policy changes to enhance deregulation of employment relationships between employers and their employees (Brewster & Hegewisch, 1994, p.170). This is the case in many parts of the world including Australia, the United Kingdom, the United States, Middle East, as well as in the developing countries in Africa among other parts of the world. Liberalization of the labour market in all these parts of the world involves changing the laws and regulations, as well as labour institutions, which are regarded as unfavourable to employees and industrial workers. It is through conducting this research that one is able to understand the regional and international differences among countries and regions when it comes to the issues regarding the liberalization of the labour market. For instance, the labour market in the United States is more liberalised as compared to that of most European countries, which laws such as those relating to protection against dismissal remains greater (Brewster & Hegewisch, 1994, p.170). However, with the exception of the United Kingdom, most European countries have not fully adopted policies that encourage outright liberalization of the labour market, but have continued to embrace measures that promote labour market flexibility. Despite the so much publicised benefits of the liberalization of the labour market, it must be noted that extreme effects of the liberalization of the labour market has not been realized despite significant number of employees being on flexible employment contracts. Conducting research on the liberalization of labour markets enable one to understand the expanded use of market-like mechanisms such as competition, work-based incentives, outsourcing among others which accompanies the liberalization of labour markets. This research has discussed two of these market-like mechanisms whose uses within the labour market has been expanded by the very liberalization of the labour market. Through this research one notes that competition among employees and work based incentive programs have significant influence on the performance of the employees themselves, as well as on the quality and value of the services provided by their workplace. As Brewster and Hegewisch (1994, p.170) notes, the liberalization of the labour market has enabled employees across the globe where policies regarding employer-employee relations have been changed to employee friendly policies, to bargain or negotiate for better terms of employment. This then facilitates their ability to compete among themselves and attract work-based incentive from their employers. Conducting research on the liberalization of the labour market and the accompanying expanded use of market-like mechanisms that accompanies it enables one to learn a lot of things about such mechanisms as work-based incentives that probably they may not know they need to know. Work-based incentive is a form of employee motivation that has a central role in the field and practice of management. To organization managers, work-based incentive is regarded as a crucial and integral component of employees performance equations at all levels in an organization. Organizational researchers on the other hand, regard work-based incentive and employee motivation as an essential and fundamental building block for the building of critical and useful theories in the practice of effective organization management. As such, research on work based incentive is crucial in understanding the foundation of employee motivation in order to envision where this field is headed. It is thus, crucial to note that the various definitions of work motivation all have three common components. These components are primarily concerned with the factors that energize, channel and sustain the behaviours of humans (employees) over a given period of time (Steers, Mowday & Shapiro, 2004, p.379). Contemporary theories of work or employee motivation are derived from the interrelation of these factors in influencing organizational behaviours which eventually inform liberalization of labour markets across the world. Liberalisation of labour markets comes with a lot of benefits to the employees. However, employers are also not left out. Liberalization of labour markets enables employers to motivate their employees by rewarding them (work-based incentives) in order to achieve their desired goals through them. It is argued that it is very easy to energize individuals who want to be motivated. However, the question is how to deal with the tough cases, individuals or employees who never seem not to do what should be done, yet take up all the vital time. It takes good managers to motivate their employees with the power vested in their vision, their passion to deliver, and their compelling reasoning in a logical manner. Work-based incentive and motivation to such managers simply means adding in the appropriate incentives, and employees will enthusiastically do what should be done and march off in the much needed direction (Steers, Mowday & Shapiro, 2004, p.379). Competition on the other hand is an equally crucial factor in the labour market whose expanded use has been enhanced by the liberalization of the labour market. Researching on this unit will enable one to learn the two crucial types of competition in the labour market. According to Sprenger (2012), competition among employees is motivational if only a manager knows how it affects his or her employees. Thus, for an organization to motivate its employees through competition at the workplace, the management must understand how to positively build and encourage workplace competition. Conducting research in this unit enables one to learn that two crucial types of workplace competition exist; direct and cooperative workplace competition. Direct competition occurs between two individual and can be destructive. This is because if there is one winner then the other person is the looser. If not well managed, this kind of competition might lead to lower productivity, loss of focus, anger, hostility and hard feelings between the employees involved. Cooperative competition on the other hand, involves a group or a team who set up goals to collectively pursue. This kind of competition is characterized by high levels of motivation, bonding, as well as pleasure among the employees involved. Cooperative completion involves collaboration, brainstorming and other team strategies, which enhance or rather facilitate collective achievement of goals (Sprenger, 2012). References Brewster, C. & Hegewisch, A. (1994). Policy and practice in European human resource management. London: Routeledge. Dix-Carneiro, R. (2010). Trade liberalization and labor market dynamics. Retrieved, March 18, 2012 from: http://www.usitc.gov/research_and_analysis/documents/Dix-Carneiro- TradeLiberalizationAndDynamics%282%29.pdf Eurofound. (2007). Deregulation. Retrieved, March 18, 2012 from: http://www.eurofound.europa.eu/areas/industrialrelations/dictionary/definitions/DEREG ULATION.htm Eurofound. (2007). Labour market. Retrieved, March 18, 2012 from: http://www.eurofound.europa.eu/areas/labourmarket/index.htm Incentive Research Foundation (2008). Incentives, motivation and workplace performance. Retrieved, March 18, 2012 from: http://www.incentivecentral.org/employees/whitepapers/incentives_motivation_work place_performance.1824.html Levitt, J.G. & Harwood, L. (2010). Your Career: How to make it happen. Mason: South- Western, Cengage Learning. OECD-Asian Senior Budget Officials. (2005). The role of market type mechanisms in the provision of public services. Retrieved, March 18, 2012 from: http://www.oecd.org/dataoecd/42/41/35651554.pdf Peoples, J. (1998). Deregulation and the labor market. Journal of Economic Perspectives, 12(3): 111-130. Robbins, S.P. & Judge, T.A. (2011). Organizational Behaviour. Upper Saddle River, NJ: Prentice Hall. Shukla, A. (2009). Competition at workplace – advantage and disadvantages of competition. Retrieved, March 18, 2012 from: http://www.paggu.com/jobs-and-career/competition- at-workplace-advantages-and-disadvantage-of-competition/ Sprenger, M.B. (2012). How to use competition in the workplace. Retrieved, March 18, 2012 from: http://www.dummies.com/how-to/content/how-to-use-competition-in-the- workplace.html Steers, R., Mowday, R. & Shapiro, D. (2004). The Future of Work Motivation Theory. Academy of Management Review, 29(3): 379-387. Stolovitch, H.D., Clark, R.E. & Condly, S.J. (2004). Incentives, motivation and workplace performance: Research and Best practice. Retrieved, March 18, 2012 from: http://www.caffeineperformance.com/researcharticles/BestPracticesResearchSU206.pdf Tietjen, M. & Myers, R. (1998). Motivation and job satisfaction. Management Decision, 36 (4): 226-231. Read More