The degree of labour market flexibility is the speed with which labour markets adapt to fluctuations and changes in society, the economy or production. This entails enabling labour markets to reach a continuous equilibrium determined by the intersection of the

demand and supply In microeconomics, supply and demand is an economic model of price determination in a market. It postulates that, holding all else equal, in a competitive market, the unit price for a particular good, or other traded item such as labor ...

curves.

Labour union A trade union (labor union in American English), often simply referred to as a union, is an organization of workers intent on "maintaining or improving the conditions of their employment", ch. I such as attaining better wages and benefits (su ...

s can limit labor market flexibility by negotiating higher wages, benefits, and better working conditions with employers. In the words of Siebert, labour unions were seen to inhibit "the clearing functions of the

market Market is a term used to describe concepts such as: *Market (economics), system in which parties engage in transactions according to supply and demand *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an ...

by weakening the demand for labor, making it less attractive to hire a worker by explicitly pushing up the

wage A wage is payment made by an employer to an employee for work done in a specific period of time. Some examples of wage payments include compensatory payments such as ''minimum wage'', '' prevailing wage'', and ''yearly bonuses,'' and remune ...

costs or by introducing a negative

shadow price A shadow price is the monetary value assigned to an abstract or intangible commodity which is not traded in the marketplace. This often takes the form of an externality. Shadow prices are also known as the recalculation of known market prices in o ...

for labor; by distorting the labor supply; and by impairing the equilibrating function of the market mechanism (for instance, by influencing bargaining behavior)."

Theory

The most well-known concept of labour market flexibility is given by Atkinson. Based on the strategies companies use, he notes that there can be four types of flexibility.

External numerical flexibility

External numerical flexibility is the adjustment of the labour intake, or the number of workers from the external market. This can be achieved by employing workers on

temporary work Temporary work or temporary employment (also called gigs) refers to an employment situation where the working arrangement is limited to a certain period of time based on the needs of the employing organization. Temporary employees are sometimes ...

or fixed-term contracts or through relaxed hiring and firing regulations or in other words relaxation of employment protection legislation, where employers can hire and fire permanent employees according to the firms’ needs. Employers typically prefer high levels of unemployment because, as workers become more desperate for employment, they are willing to work for lower wages, thus increasing employer profits.

Internal numerical flexibility

Internal numerical flexibility, sometimes known as

working time Working(laboring) time is the period of time that a person spends at paid labor. Unpaid labor such as personal housework or caring for children or pets is not considered part of the working week. Many countries regulate the work week by law, ...

flexibility or temporal flexibility, is achieved by adjusting

working hours Working(laboring) time is the period of time that a person spends at paid labor. Unpaid labor such as personal housework or caring for children or pets is not considered part of the working week. Many countries regulate the work week by law, s ...

or schedules of workers already employed within the firm. This includes

part-time Part-time can refer to: * Part-time job, a job that has fewer hours a week than a full-time job * Part-time student, a student, usually in higher education, who takes fewer course credits than a full-time student * Part Time Part Time (styliz ...

, flexi time or flexible working hours or shifts (including night shifts and weekend shifts), working time accounts, leaves such as

parental leave Parental leave, or family leave, is an employee benefit available in almost all countries. The term "parental leave" may include maternity, Paternity (law), paternity, and adoption leave; or may be used distinctively from "maternity leave" and ...

, and

overtime Overtime is the amount of time someone works beyond normal working hours. The term is also used for the pay received for this time. Normal hours may be determined in several ways: *by custom (what is considered healthy or reasonable by society) ...

. Many employers thus hire large numbers of part-time employees to avoid government regulations associated with full-time employees, such as the requirement that employers pay for health insurance of their full-time employees. This allows employers to maximize their own profits while decreasing the standard of living of the working classes.

Functional flexibility

Functional flexibility or

organization An organization or organisation (English in the Commonwealth of Nations, Commonwealth English; American and British English spelling differences#-ise, -ize (-isation, -ization), see spelling differences), is an legal entity, entity—such as ...

al flexibility is the extent to which employees can be transferred to different activities and tasks within the firm. It has to do with organization of operation or

management Management (or managing) is the administration of an organization, whether it is a business, a nonprofit organization, or a Government agency, government body. It is the art and science of managing resources of the business. Management includ ...

and

training Training is teaching, or developing in oneself or others, any skills and knowledge or fitness that relate to specific useful competencies. Training has specific goals of improving one's capability, capacity, productivity and performance. I ...

workers. This can also be achieved by outsourcing activities. Job rotation is a label given to many functional flexibility schemes.

Financial or wage flexibility

Financial or

flexibility occurs when wage levels are not decided

collectively A collective is a group of entities that share or are motivated by at least one common issue or interest, or work together to achieve a common objective. Collectives can differ from cooperatives in that they are not necessarily focused upon an ...

and there are more differences between the wages of workers. This is done so that pay and other employment costs reflect the supply and demand of labour and so that employers can force employees to compete for wages, thus lowering the average wage paid to employees and ultimately to maximize profits while decreasing the standard of living of the working classes. This can be achieved by rate-for-the-job systems, or assessment based pay system, or individual performance wages.

Flexibility for workers

Labour market flexibility refers to more than the strategies used by employers to adapt to their production or

business cycle Business cycles are intervals of expansion followed by recession in economic activity. These changes have implications for the welfare of the broad population as well as for private institutions. Typically business cycles are measured by examin ...

s as it is in the definitions above. Increasingly, the common view is that labour market flexibility can potentially be used for both workers and companies, or employees and employers. It can also be used as a method to enable workers to "adjust working life and working hours to their own preferences and to other activities". As companies adapt to business cycles and facilitate their needs through the use of labour market flexibility strategies, workers adapt their life cycles and their needs through it (Chung, 2006). The

European Commission The European Commission (EC) is the executive of the European Union (EU). It operates as a cabinet government, with 27 members of the Commission (informally known as "Commissioners") headed by a President. It includes an administrative body ...

also addresses this issue in its Joint Employment Report and its new

Flexicurity Flexicurity (a portmanteau of "flexibility" and "security") is a welfare state model with a pro-active labour market policy. The term was first coined by the social democratic Prime Minister of Denmark Poul Nyrup Rasmussen in the 1990s. The term ...

approach, calling for an adequate method to enhance flexibility for both workers and employers that is "capable of quickly and effectively mastering new productive needs and skills and about facilitating the combination of work and private responsibilities."

ETUC The European Trade Union Confederation (ETUC) is the major trade union organisation representing workers at the European level. In its role as a European social partner, the ETUC works both in a consulting role with the European Commission and ...

also emphasizes the importance of the development of working time flexibility as an alternative to implementing external flexibility as the sole method of increasing flexibility in the labour market (ETUC, 2007). In their report on working time, the TUC has also argued that flexible working should be extended to all workers through stronger regulations (Fagen et al. for TUC, 2006). As authors Gerson and Jacobs agree, "flexibility and autonomy are only useful if workers feel able to use them" (Gerson & Jacobs, 2004, pg. 238).Gerson, K., & Jacobs, J. (2004). The work-home crunch. In Gender and Sexualities (pp. 231-240). Some of the widely used arrangements that enable workers more flexibility in their work include

flextime Flextime (also spelled flexitime ( BE) or flex-time) is a flexible hours schedule that allows workers to alter their workday and decide/adjust their start and finish times. In contrast to traditional work arrangements that require employees to w ...

, remote work, and part-time jobs.

Notes

References

* Atkinson, J. (1984) ''Flexibility, Uncertainty and Manpower Management'', IMS Report No.89, Institute of Manpower Studies, Brighton. * Atkinson, J. and Meager, N. (1986) ''Changing Working Patterns: How companies achieve flexibility to meet new needs,'' Institute of Manpower Studies, National Economic Development Office, London.
Chung, H
(2006) ''Labour Market Flexibility, for Employers or Employees? A multi-dimensional study of labour market flexibility across European welfare states,'' Paper presented at the 2006 Annual ESPAnet Conference, Shaping Euoropean Systems of Work and Welfare, 7~9 September 2006, Breme
paper link
* Fagan, C., Hegewisch, A., and Pillinger, J. (2006) ''Out of Time: Why Britain needs a new approach to working-time flexibility. Trade Union Congress, London.'
Out of Time report link
* Reilly, P. (2001) ''Flexibility at Work: Balancing the interests of employers and employee.'' Gower Publishing Limited, Hampshire. * Wallace, C. (2003) ''Work Flexibility in Eight European countries: A cross-national comparison.'' Sociological Series 60.Institute for Advanced Studies, Vienna.

External links

ReflecT: Research Institute for Flexicurity, Labour Market Dynamics and Social Cohesion at Tilburg University.

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