View source for Finance:Labour market flexibility

{{Short description|Speed with which labour markets adapt to changes}}
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 [[Finance:Economic equilibrium|equilibrium]] determined by the intersection of the demand and supply curves.<ref>Standing, 1989; Jimeno and Tohara, 1994</ref><ref>{{cite web |last1=Karanassou |first1=Marika |last2=Sala |first2=Hector |last3=Snower |first3=Dennis J. |title=The Macroeconomics of the Labor Market: Three Fundamental Views |url=https://docs.iza.org/dp2480.pdf |publisher=Institute for the Study of Labor |access-date=15 September 2022}}</ref>

Labour unions can limit labor market flexibility by negotiating higher wages, benefits, and better working conditions with employers. In the words of Siebert,<ref>Siebert, 1997: 43</ref> labour unions were seen to inhibit "the clearing functions of the [[Finance:Market (economics)|market]] by weakening the demand for labor, making it less attractive to hire a worker by explicitly pushing up the [[Finance:Wage|wage]] costs or by introducing a negative [[Shadow price|shadow price]] for labor; by distorting the labor supply; and by impairing the equilibrating function of the market mechanism (for instance, by influencing [[Bargaining|bargaining]] behavior)."<ref>{{cite journal|last=Siebert|first=Horst|date=Summer 1997|title=Labour Market Rigidities: At the Root of Unemployment in Europe|journal=Journal of Economic Perspectives|volume=2|issue=3|pages=43|doi=10.1257/jep.11.3.37|doi-access=free}}</ref>

==Theory==
The most well-known concept of labour market flexibility is given by Atkinson.{{sfn|Atkinson|1984}}{{sfn|Atkinson and Meager|1986}} 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 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 [[Finance:Working time|working time]] flexibility or temporal flexibility, is achieved by adjusting working hours or schedules of workers already employed within the firm. This includes part-time, flexi time or flexible working hours or [[Chemistry:Shift work|shifts]] (including night shifts and weekend shifts), working time accounts, leaves such as [[Social:Parental leave|parental leave]], and [[Finance:Overtime|overtime]]. 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 [[Finance:Standard of living|standard of living]] of the working classes.

===Functional flexibility===
Functional flexibility or [[Organization:Organization|organization]]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 [[Social:Management|management]] and training workers. This can also be achieved by [[Outsourcing|outsourcing]] activities. Job rotation is a label given to many functional flexibility schemes.

===Financial or wage flexibility===
Financial or [[Finance:Wage|wage]] flexibility occurs when wage levels are not decided [[Social:Collective bargaining|collectively]] 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 [[Finance:Business cycle|business cycle]]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.<ref> Chung, H. & Tijdens, K. (2013) "Working time components and working time regimes in Europe: using company-level data across 21 countries" International Journal of Human Resource Management,  24(7): 1418-143. </ref> 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".<ref>Jepsen & Klammer, 2004:157</ref> 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 also addresses this issue in its Joint Employment Report and its new Flexicurity 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."<ref>Chung, 2008 "Do institutions matter?" {{cite web |url=http://www2.sofi.su.se/RC19/pdfpapers/Chung_RC19_2008.pdf |title=Archived copy |accessdate=2008-09-25 |url-status=dead |archiveurl=https://web.archive.org/web/20111005055937/http://www2.sofi.su.se/RC19/pdfpapers/Chung_RC19_2008.pdf |archivedate=2011-10-05 }}</ref> ETUC 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.{{sfn|Fagan|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).<ref>Gerson, K., & Jacobs, J. (2004). The work-home crunch. In Gender and Sexualities (pp. 231-240).</ref>

Some of the widely used arrangements that enable workers more flexibility in their work include [[Social:Flextime|flextime]], remote work, and part-time jobs.

==See also==
* {{annotated link|Social:Corporate amnesia}}
* {{annotated link|Finance:Labour economics}}
* {{annotated link|Social:Labour law}}
* {{annotated link|Social:Occupational licensing}}
** {{annotated link|Finance:Exploitation of labour}}
* {{annotated link|Finance:Working time}}


==Notes==
{{Reflist|2}}

==References==
* {{cite report|author=Atkinson,  J.|year=1984|title=Flexibility, Uncertainty and Manpower Management|series=IMS Report No. 89|publisher=Institute of Manpower Studies, Brighton|ref={{sfnref | Atkinson| 1984}}|url=https://www.employment-studies.co.uk/system/files/resources/files/89.pdf}}
* {{cite book|author1=Atkinson, J. |author2=Meager, N.|year=1986|title=Changing Working Patterns: How companies achieve flexibility to meet new needs|publisher=Institute of Manpower Studies, National Economic Development Office, London|url=https://www.researchgate.net/publication/269690425_Changing_Working_Patterns_How_Companies_Achieve_Flexibility_to_Meet_New_Needs|isbn=0729207889|ref={{sfnref | Atkinson and Meager| 1986}}}}
* [http://www.heejungchung.com 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, Bremen.[http://www.espanet2006.de/downloads/ESPAnet2006_paper_Chung.pdf paper link]
* {{cite book|author1=Fagan, C.|author2=Hegewisch, A.|author3=Pillinger, J.|year=2006|title=Out of Time: Why Britain needs a new approach to working-time flexibility|publisher=Trade Union Congress, London|archive-url=https://web.archive.org/web/20070927230410/http://www.tuc.org.uk/extras/outoftime.pdf |archive-date=2007-09-27|url=https://pure.manchester.ac.uk/ws/portalfiles/portal/32466792/FULL_TEXT.PDF|ref={{sfnref|Fagan|2006}}}}
*{{cite book |last1=Reilly |first1=Peter Andrew |title=Flexibility at work: balancing the interests of employer and employee |date=2001 |publisher=Gower |location=Aldershotd |isbn=978-0-56608-259-7|url=https://www.employment-studies.co.uk/resource/flexibility-work-balancing-interests-employer-and-employee}}
* Wallace, C. (2003) ''Work Flexibility in Eight European countries: A cross-national comparison.'' Sociological Series 60.Institute for Advanced Studies, Vienna.
* {{cite web | title=‘Flexibility’ or ‘exploitation’? What do we know about zero-hours contracts? | website=Understanding Society | date=2022-03-24 | url=https://www.understandingsociety.ac.uk/blog/2022/03/24/%E2%80%98flexibility%E2%80%99-or-%E2%80%98exploitation%E2%80%99-what-do-we-know-about-zero-hours-contracts | ref={{sfnref | Understanding Society | 2022}} | access-date=2023-11-02}}

==External links==
*[http://www.tilburguniversity.nl/faculties/law/research/reflect/ ReflecT: Research Institute for Flexicurity, Labour Market Dynamics and Social Cohesion at Tilburg University.]
* [https://web.archive.org/web/20061023215425/http://www.socsci.auc.dk/carma/indexenglish.htm CARMA]

{{Aspects of capitalism}}

[[Category:Labour economics]]
[[Category:Labor rights]]

{{Sourceattribution|Labour market flexibility}}