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BUHRM6933BUHRM6933managementmanagement--employee relationsemployee relations

lecture three:lecture three:

labour markets, work reorganisationlabour markets, work reorganisation

and flexibilityand flexibility

Dr Patrick OLearyDr Patrick OLeary

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IntroductionIntroduction

Changes at enterprise level have led to shiftsChanges at enterprise level have led to shiftsin employment practice:in employment practice:

the widespread adoption of more temporarythe widespread adoption of more temporaryemploymentemployment

marketmarket--oriented approaches to the organisation oforiented approaches to the organisation ofwork, payment systems and skills developmentwork, payment systems and skills development

restructuring and downsizing of firmsrestructuring and downsizing of firms

greater wage inequalitygreater wage inequality We will also explore the issue of flexible workWe will also explore the issue of flexible work

through an analysis of:through an analysis of:

flexibility and the flexible firm modelflexibility and the flexible firm model

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Patterns of change in labour marketPatterns of change in labour market

Changes to government policies between 1983Changes to government policies between 1983-- 1996 reduced industry protection and1996 reduced industry protection and

decentralised wage fixing to enterprise leveldecentralised wage fixing to enterprise level

This process was accelerated by the HowardThis process was accelerated by the Howardgovernment from 1996government from 1996

These changes in policies were overlaid onThese changes in policies were overlaid on

broader structural changes:broader structural changes:

changes in female participation in labour marketchanges in female participation in labour market

shifts in the structure of employmentshifts in the structure of employment

changing types of employment in the 1990schanging types of employment in the 1990s

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Shifts in structure of employmentShifts in structure of employment

Shifts in employment from manufacturing to services,Shifts in employment from manufacturing to services,particularly hospitality and retail services.particularly hospitality and retail services.

LowLow--paid / lowpaid / low--skilled jobs in wholesale/retail and hospitalityskilled jobs in wholesale/retail and hospitality

in all countries.in all countries.

Reduction in unemployment achieved with lower levels ofReduction in unemployment achieved with lower levels ofemployment growth:employment growth:

slower annual growth of working population;slower annual growth of working population;

lower labour force participation rates.lower labour force participation rates.

The nature of employment growth differed in the 1990s:The nature of employment growth differed in the 1990s:

only 25% of new jobs were fullonly 25% of new jobs were full--time;time;

growth in fullgrowth in full--time jobs only a quarter that of the 1980s;time jobs only a quarter that of the 1980s;

growth in fullgrowth in full--time jobs restricted to managers and professionals;time jobs restricted to managers and professionals;

lower level partlower level part--time casual jobs up by 446,400.time casual jobs up by 446,400.

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Growth in wage inequalityGrowth in wage inequality

Measure of inequality is dispersion of higher to lowerMeasure of inequality is dispersion of higher to lower--paid:paid: dispersion has increased for men in Australia since 1975;dispersion has increased for men in Australia since 1975; this period encompasses varying wage fixing regimes;this period encompasses varying wage fixing regimes;

growth in real wages for lowergrowth in real wages for lower--paid male employees has stagnated.paid male employees has stagnated.

LowLow--wage employment may be suitable for some, but:wage employment may be suitable for some, but:

70% of low70% of low--wage earners are aged between 25wage earners are aged between 25--54 years;54 years; 70% of low70% of low--wage earners work fullwage earners work full--time;time;

60% of jobs created in the 1990s paid less than $400/wk.60% of jobs created in the 1990s paid less than $400/wk.

Growth in earnings inequality arise for number of reasons:Growth in earnings inequality arise for number of reasons: changes in the composition of employment;changes in the composition of employment;

changes to wage relativities.changes to wage relativities.

Institutional characteristics also play a role:Institutional characteristics also play a role: training systems;training systems;

union strength;union strength;

high minimum standards for wages.high minimum standards for wages.

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Changing composition of workforceChanging composition of workforce

Technological changes:Technological changes: more skilled workers relative to unskilled workers;more skilled workers relative to unskilled workers;

points to countrypoints to country--specific institutional factors.specific institutional factors.

Growing number of employees with tertiary qualifications.:Growing number of employees with tertiary qualifications.:

high school grads then compete for jobs with early leavers;high school grads then compete for jobs with early leavers; scarcity of grads has raised the overall wages of grads, driving upscarcity of grads has raised the overall wages of grads, driving up

inequality.inequality.

Before 1990s, wages for most groups set by awards:Before 1990s, wages for most groups set by awards:

by 2000 just 24% of employees regulated by award only;by 2000 just 24% of employees regulated by award only;

in 1996 pay increases for awardin 1996 pay increases for award--only employees was 1.3%only employees was 1.3%

compared to 4compared to 4--6% for those covered by agreements;6% for those covered by agreements;

unions able to extract larger wage rises than those without;unions able to extract larger wage rises than those without;

splits in bargaining strength seen within & between industries.splits in bargaining strength seen within & between industries.

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Longer working hoursLonger working hours

Growth in F/T employees working more than 48 hrs a week:Growth in F/T employees working more than 48 hrs a week: 32% in the late 1990s, up from 19% in the early 1980s32% in the late 1990s, up from 19% in the early 1980s

Trend to long hours has accelerated under e/bargaining:Trend to long hours has accelerated under e/bargaining:

nonnon--union agreements encourage nonunion agreements encourage non--standard hours;standard hours;

union decline means many employees are without protection on hours.union decline means many employees are without protection on hours.

More employees working less than the standard week:More employees working less than the standard week:

between 1990 and 1999, 71.4% of new jobs were casual;between 1990 and 1999, 71.4% of new jobs were casual;

ThreeThree--quarters of P/T jobs were casual partquarters of P/T jobs were casual part--time;time;

61% of men & 47% of women work P/T because no F/T work available.61% of men & 47% of women work P/T because no F/T work available.

Changes to training and work organisationChanges to training and work organisation

Reductions in protection has led to company restructuring:Reductions in protection has led to company restructuring:

restructuring with downsizing has increased and deepened in the 1990s;restructuring with downsizing has increased and deepened in the 1990s;

industries most affectedindustries most affected -- utilities, manufacturing, construction & mining;utilities, manufacturing, construction & mining;

dede--layering management levels is an aspect of restructuring.layering management levels is an aspect of restructuring.

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Declining internal labour markets & jobDeclining internal labour markets & jobmobilitymobility

In US between 1983 and 1998:In US between 1983 and 1998:

declines in job tenure in age groups between 35 anddeclines in job tenure in age groups between 35 and

54, while tenure for women rose;54, while tenure for women rose;

a shift away from internal labour markets to a morea shift away from internal labour markets to a more

marketmarket--driven employment relationship for managerialdriven employment relationship for managerial

workers.workers.

In Australia between 1983 and 1998 :In Australia between 1983 and 1998 :

no changes in overall job tenure since the midno changes in overall job tenure since the mid--1970s;1970s; job tenure for women has increased;job tenure for women has increased;

professional/managerial employees face moreprofessional/managerial employees face more

displacement and mobility.displacement and mobility.

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Changes to job classifications, trainingChanges to job classifications, training& workplaces& workplaces

Reforms to job structures saw changes to training:Reforms to job structures saw changes to training:

e.g. competency standardse.g. competency standards

metal industry linked broadbanding with training;metal industry linked broadbanding with training;

union commitment to classification and work organisationunion commitment to classification and work organisation

change, as well as training reform, was important for achievingchange, as well as training reform, was important for achievingworkplace level change.workplace level change.

Award restructuring allowed greater flexibility:Award restructuring allowed greater flexibility:

horizontal job classifications simplified;horizontal job classifications simplified;

vertical job grades broad banded:vertical job grades broad banded:

enabled job rotation and a greater level of responsibility.enabled job rotation and a greater level of responsibility.

Enterprise bargaining took advantage of this:Enterprise bargaining took advantage of this:

work teams, which enabled job rotation to occurwork teams, which enabled job rotation to occur

Total Quality Management and quality circles.Total Quality Management and quality circles.

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Lack of mutual gainsLack of mutual gains

There were expectations of mutual gains fromThere were expectations of mutual gains fromchanges to work organisation, but, in 1990s:changes to work organisation, but, in 1990s:

the existence of TQM was not associated withthe existence of TQM was not associated with

greater increases in average wages for employees;greater increases in average wages for employees;

only work teams are associated with higheronly work teams are associated with higher

average wages;average wages;

wages are growing at a rate lower than that ofwages are growing at a rate lower than that of

productivity improvement;productivity improvement; some employees would have had even less gains insome employees would have had even less gains in

real wages from the changes, since average wagesreal wages from the changes, since average wages

includes both low paid and higher paid employees.includes both low paid and higher paid employees.

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In search of flexibility:In search of flexibility:Flexible patterns of workFlexible patterns of work

The key factor in the development of organisationalThe key factor in the development of organisationalperformance is the ability of management to flexibly adjustperformance is the ability of management to flexibly adjust

the available labour in line with minimal disruption to thethe available labour in line with minimal disruption to the

production process (Blyton & Morris 1991 in Teicher et al.production process (Blyton & Morris 1991 in Teicher et al.

2006; p. 241).2006; p. 241). These patterns integrate both the hard and soft approach toThese patterns integrate both the hard and soft approach to

HRM (Storey 1991 in Teicher et al.; p. 241).HRM (Storey 1991 in Teicher et al.; p. 241).

Forms of Flexibility:Forms of Flexibility:

Functional flexibilityFunctional flexibility

Numerical flexibilityNumerical flexibility

Financial flexibilityFinancial flexibility

Procedural flexibilityProcedural flexibility

Other forms of flexibilityOther forms of flexibility

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In search of flexibility:In search of flexibility:functional & numerical flexibilityfunctional & numerical flexibility

Functional flexibilityFunctional flexibility Deploying workforce on wide range of tasks in response toDeploying workforce on wide range of tasks in response to

demand.demand.

Training in a wide range of skills.Training in a wide range of skills.

Technological change through blurring skill boundaries.Technological change through blurring skill boundaries. Reskilling rather than deskilling?Reskilling rather than deskilling?

Intensification through larger number of unskilled tasks?Intensification through larger number of unskilled tasks?

Numerical flexibilityNumerical flexibility

Adjusting the size of the workforce to levels of activityAdjusting the size of the workforce to levels of activity

Use of casual, P/T, contractors and subUse of casual, P/T, contractors and sub--contractorscontractors

WorkWork--time flexibility and internal numerical flexibilitytime flexibility and internal numerical flexibility

Outsourcing of nonOutsourcing of non--core activitiescore activities

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In search of flexibility: financial,In search of flexibility: financial,procedural & other flexibilityprocedural & other flexibility

Financial flexibilityFinancial flexibility Market forces allowed to dictate pay for external workforceMarket forces allowed to dictate pay for external workforce

Pay systems that facilitate numerical and functional flexibility forPay systems that facilitate numerical and functional flexibility forcore workerscore workers

Procedural flexibilityProcedural flexibility Consultative mechanisms for introducing changes or variations inConsultative mechanisms for introducing changes or variations in

work practices.work practices.

Acceptance of the new relationship for employees.Acceptance of the new relationship for employees.

Other forms of flexibilityOther forms of flexibility

Mobility or location flexibility:Mobility or location flexibility:

change in nature of work or in work location.change in nature of work or in work location.

Cognitive flexibility:Cognitive flexibility:

a change in the psychological contract to cope with changes from lessa change in the psychological contract to cope with changes from lesssecure forms of employment to multisecure forms of employment to multi--skilling.skilling.

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In search of flexibility: the flexible firmIn search of flexibility: the flexible firm

Organisational flexibilityOrganisational flexibility is a structural response to theis a structural response to thedevelopment of the flexible patterns of work.development of the flexible patterns of work. Why?Why?

Traditional bureaucratic and vertical hierarchical firms areTraditional bureaucratic and vertical hierarchical firms aretoo inflexibletoo inflexible

The need for faster pace in all organisational aspectsThe need for faster pace in all organisational aspects

Structures needed to adapt and manage change andStructures needed to adapt and manage change andinnovationinnovation

Flexible specialisationFlexible specialisation -- small core company with satellitesmall core company with satellitecompaniecompaniess

TheThe corecore:: characterisedcharacterised byby functionalfunctional flexibilityflexibility Permanent, highlyPermanent, highly--skilled, internal career pathsskilled, internal career paths

The periphery: characterised by numerical flexibilityThe periphery: characterised by numerical flexibility

plugplug--in jobs, not firmin jobs, not firm--specific, links to external labourspecific, links to external labourmarketmarket

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A critique of flexible firm modelA critique of flexible firm model

Does management have such a distinctiveDoes management have such a distinctivestrategy or is change promulgated on a more adstrategy or is change promulgated on a more adhoc basis?hoc basis?

No longNo long--term empirical evidence to support allegedterm empirical evidence to support alleged

advantages of the model.advantages of the model. Model is too simplistic and change is more unevenModel is too simplistic and change is more uneven

and complex.and complex.

The model promotes variation in terms and conditionsThe model promotes variation in terms and conditionswithin a firm creating polarisation between a skilledwithin a firm creating polarisation between a skilledcore and a disenfranchised peripheral workforce.core and a disenfranchised peripheral workforce.

Inflexibility moving from periphery to core.Inflexibility moving from periphery to core.

A framework for analysis, insight and explanation intoA framework for analysis, insight and explanation intonew patterns of work.new patterns of work.

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Assessing advantages & disadvantages:Assessing advantages & disadvantages:employer perspectiveemployer perspective

Employer advantages:Employer advantages: Enable employers to matchEnable employers to match

organisational resources moreorganisational resources more

closely with supply and demandclosely with supply and demand

Aid recruitment and retentionAid recruitment and retentionby developing contractualby developing contractual

arrangements appropriate toarrangements appropriate to

both partiesboth parties

Increase productivity, as thoseIncrease productivity, as those

working for a reduced period ofworking for a reduced period oftime are likely to be less tiredtime are likely to be less tired

and stressed, which can lead toand stressed, which can lead to

reduced absenteeism andreduced absenteeism and

turnoverturnover

Employer disadvantages:Employer disadvantages: The cost of training andThe cost of training and

developmentdevelopment

More complexMore complex

administration andadministration andcommunication difficultiescommunication difficulties

leading into increased directleading into increased direct

and indirect costsand indirect costs

Administration of theAdministration of theflexible workforceflexible workforce

Reduce fixed costsReduce fixed costs

(overheads)(overheads)

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Assessing the advantages &Assessing the advantages &disadvantages:disadvantages: Employee perspectiveEmployee perspective

Claimed advantages:Claimed advantages:

The ability to combineThe ability to combine

work with outsidework with outside

interestsinterests for example,for example,carer responsibilities orcarer responsibilities or

hobbieshobbies

Greater job satisfactionGreater job satisfaction

Improved motivationImproved motivation ReducedReduced

fatigue/tirednessfatigue/tiredness

Claimed disadvantages:Claimed disadvantages:

Unequal treatment inUnequal treatment in

terms of pay and benefitsterms of pay and benefits

Reduced training,Reduced training,development and careerdevelopment and career

opportunitiesopportunities

The changing demandsThe changing demands

on the psychologicalon the psychologicalcontract, including jobcontract, including job

insecurity and stressinsecurity and stress

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ConclusionConclusion

S

tructural shifts include the growth of female participation andS

tructural shifts include the growth of female participation andthe shift from manufacturing to servicethe shift from manufacturing to service--sector jobs.sector jobs.

Institutional factors explain different outcomes betweenInstitutional factors explain different outcomes between

counties.counties.

NeoNeo--liberal policies have exacerbated income inequality;liberal policies have exacerbated income inequality;

accelerated restructuring; accentuated downsizing; andaccelerated restructuring; accentuated downsizing; and

facilitated the growth of precarious employment.facilitated the growth of precarious employment.

At the workplace level institutional changes have interacted withAt the workplace level institutional changes have interacted with

new ideas of work organisation.new ideas of work organisation.

Provides a blend of regulation and flexibilityProvides a blend of regulation and flexibility

Managers need to be more versatileManagers need to be more versatile and strategicand strategic in therein there

approachapproach to managing labourto managing labour

Flexibility is an ambiguous termFlexibility is an ambiguous term