strategy

Increasing labour flexibility

Synonyms:
Reducing rigidity of labour market
Increasing flexibility of the labour market
Having flexibility in labour markets
Providing flexible labour market
Description:
Increasing the variety of patterns of labour relations. "Labour flexibility" and "labour flexibilization" are "container concepts" that hold many ideas and measures. Flexibility can be related to the labour market, the income policy and the organization of social bargaining (the decentralization of industrial relations, for instance). In practice it is also linked up with deregulation, or efforts to reduce government intervention in socio-economic life.
Context:
The new period of expansion of the world economy or "end of century globalization" has had two stages: the period of "structural adjustments", in the 1980s, that was able to prepare the peripheral economies to open to global trade, and secondly, the expansion of globalization proper that began at the start of the nineties. The principal consequence of the recent processes of globalization in the peripheral countries has consisted in the diminishing ability of States to control the economic development of their countries. The aim of the "structural adjustment" processes was to prepare the way for the globalization stage. The results have been the opening of economies to the world market, the internationalization of financial systems, the reduction of customs barriers, the privatization of State-owned enterprises and the diminishing, in some cases only a deterioration, of State bureaucracy.

In many cases globalization has also meant a deregulation or "flexibilization" of labour markets. This word much used at the moment often consists in the elimination of labour laws preventing the dismissal of workers, wage-reductions, changes in pensions and social security systems, recourse to temporary labour, subcontracting, and outsourcing of tasks essential to enterprises. This is leading to very marked wage differentials depending on the type of enterprise and the technical demands of jobs. It involves less interference by the State in the control of working conditions, wages and social security for workers. In many cases States in the peripheral countries have made a great effort to place their national economies, human and natural resources, at the disposal of the forces and needs of the international market.

The moderating function fulfilled by States in setting progressive taxation on wealth has been diminished by the adjustment processes of the 1990s. Almost all States have reduced taxes and especially in the peripheral countries there has been a reduction in the conditions and prerequisites for the installation of international corporations on their territories. The active functions which the State accomplished in regulating relations between capital and labour have, in many countries, also been reduced or simply modified. There are not a few cases in which workers are released to developing deregulated labour markets, arbitrary treatment at the hands of employment agencies, and in many cases a system of neo-slavery has developed in which workers have no protection whatsoever.

These new forms of deregulation especially affect the most vulnerable sectors of society, and women in particular. Thus the question is not naive, and needs once again to be asked: Does the changing function of the State also change its responsibility? Does globalization perhaps involve alteration or dissolution of the responsibility of States? The answer to this question would appear very clear in the general theory of human rights and particularly in economic, social and cultural rights: the responsibility of the State is the [sine qua non] for the fulfilment of economic, social and cultural rights, as established in the Covenant, where it states, [inter alia], that "The States Parties will take the appropriate steps to ensure the realization of this right, recognizing to this effect the essential importance of international cooperation based on free consent".

Implementation:
Around 1980 economists and political leaders started to take an interest in the flexibility of the labour market. It appeared at the time that macro-economic policy aimed at restoring the balance of public finances and the balances of payment, in combination with an income policy, was insufficient to remove the rigidity in the economic system. Removing obstacles to labour flexibility would allow firms to regain their competitive strength and be able to create new jobs. The trade unions saw in this analysis a threat to the social acquisitions of the past decades and offered fierce resistance. But the persistent crisis, the constantly high unemployment and the dis-industrialization of the economy (followed by losses of members in most countries) resulted in a more balanced stand. A decade later it is now more and more accepted that some degree of restrained flexibility is necessary for economic reorganization and may have, in some circumstances, positive effects for workers.

The adjustment of human, or labour, resources can be done in various ways. Internal labour flexibility occurs within the enterprise and goes hand in hand with flexibility in job content and the multi-availability of permanent staff. External flexibility is achieved by establishing flexible labour relations in the form of temporary labour, freelance labour and the like, where the workers are not offered regular contracts. Functional flexibility can be increased by making optimum use of employees capacity for work, for example by broadening job descriptions and creating the possibility of deployment in more than one enterprise. A high degree of functional flexibility makes it possible to cushion fluctuations in client requirements or facilitate the introduction of new technologies. Numerical flexibility seeks to adjust the number of staff as much as possible to fluctuations in sales or production; it can can be increased, for example, by the means of part-time work, overtime, or staff-on-call. Numerical flexibility uses available labour as efficiently as possible and is of real importance in the services sector when employees are taken on on a temporary basis to cushion According to a Belgian researcher, there seems to be a shift in the nature of labour flexibilization. Before 1985 the emphasis was on numerical flexibility, after that year on functional flexibility.

Flexibility of remuneration for work bears mainly on the "usual" procedures regarding job rating and remuneration schemes within a country or profession. The purposes of such procedures are to regulate, legitimate and verify employment conditions and offer security. From the employers point of view, wage flexibility enables adjustment of wages to the labour market, and arguably improves competitive performance, job security, job creation and other features which structural schemes are also intended to protect. As a general rule, employers want to decentralize wage bargaining down to the enterprise level, lower the minimum wage, widen wage differences and make the wages dependent on individual, group or firm performances.

Claim:
Flexibilization allows the worker to decide working conditions for him/herself and allows freer use of time.
Counter Claim:
1. The freedom given to workers by work flexibility is rather relative -- it is only true for specific groups and the new situation has to be compared with the former one. Flexible labour relations are spread widest in weaker labour-market groups and in low jobs. They are often applied to young people who are still seeking their place in the labour process, and to women dividing their roles between the family and society. Only a small group of higher-skilled workers accepts on a voluntary basis a flexible job (particularly students and younger people). The others regard it as a leg-up to a better job or have reconciled themselves to the situation, though quietly they keep hoping for something better.

2. A constant IMF/World Bank prescription for countries where they operate is increasing "labor market flexibility." In practice this means opposing increases in the minimum wage, weakening trade unions and workers' bargaining power and opposing any social protections that would make workers less willing to work for low wages.

Subjects:
Human resources
Work
Type Classification:
C: Cross-sectoral strategies