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Labour market institutions and flexibility
- 1. Introduction to labour markets & labour market institution
- 4. Part 1 Labour and labour market Labour history and labour movement International Labour Organization Labour economy and labour market
- 9. Labour economic & labour markets
- 17. Unemployment rate map Unemployment rate by country, from figures at CIA world factbook, 2006
- 19. Part 2 The labour market institution The definition of labour market institution Examples of labour market institution Determinants of labour market institutions
- 24. Determinants of labour market institutions Labour i nstitution National Labour laws Production System Social Norm ILO Standard ** In defence of labour market institutions, Janine Berg and David Kucera
- 26. Part 3 Debates on Labour Market Rigidity and employment The reason of the high-unemployment? Is Labour Market Rigidity really to blame? Flexicurity : Definition, Policy, Approaches of the EU
- 34. The case of Latin America Average urban unemployment rate 7.1%,1990s Average urban unemployment rate 11.4%, 2003 Economic growth due to commodity boom & low interest rates
Notes de l'éditeur
- The beginning of the workers movement was held in England 1833. The laws passed to prohibit that children under 9 cannot work, children age 9-13 can only work 8 hours a day, and children aged 14-18 can only work 12 hours a day. Subsequently, the worker movement to protect their own rights has been developed and progressively improved. Currently, the workers conditions in developing world in which the industrialization started recently has been issued in a same context but the government and industries focused on the economic growth and have passive to the topic.
- During 20 th century, there was different forms of labour security has been achieved within society. With the depression and post-war conditions, employers have agreed to secure the employment and certain labour market institutions for workers protectionism in order to strengthen their business. And government was positive to guarantee the employment and creating jobs for workers with establishing the labour policy for workers.
- With the neo-classical economic view, the labour market would be reached its equilibrium. In case of the increasing supply of the labour forces in the market will decrease the price of labour forces in the market and automatically result in the equilibrium ( the price and overall amounts of the labour forces in the market). In case of the increasing of demand of the labour, there will be shortage in the beginning, but in a short-time, the labour market automatically find the equilibrium which makes market run efficiently. Without any intervention or distortion (Externalities), there will be always the equilibrium helping the market find its balanced price and amounts of labour forces just like other commodities traded. And this is very hypothetical approach in comparison of the real labour market.
- Declaration concerning the aims and purposes of the International Labour Organisation (DECLARATION OF PHILADELPHIA) The General Conference of the International Labour Organization, meeting in its Twenty-sixth Session in Philadelphia, hereby adopts, this tenth day of May in the year nineteen hundred and forty-four, the present Declaration of the aims and purposes of the International Labour Organization and of the principles which should inspire the policy of its Members. 1. The Conference reaffirms the fundamental principles on which the Organization is based and, in particular, that: (a) labour is not a commodity; (b) freedom of expression and of association are essential to sustained progress; (c) poverty anywhere constitutes a danger to prosperity everywhere; (d) the war against want requires to be carried on with unrelenting vigour within each nation, and by continuous and concerted international effort in which the representatives of workers and employers, enjoying equal status with those of governments, join with them in free discussion and democratic decision with a view to the promotion of the common welfare. -Conotinued...-
- What is your opinion about labour forces? Do you agree with the Neo-classical economic view about the labour forces? If yes, could you specify the reason of your thought?
- Unemployment rate by country, from figures at CIA world factbook, accessed 30 March 2006. Even though the data of some countries has been controversial about their update and methodology, this map would be valuable to see the regional differences of unemployment rate and the overall picture.
- The labor force is defined as the number of individuals age 16 and over, excluding those in the military, who are either employed or actively looking for work The participation rate is the number of people in the labor force divided by the size of the adult civilian non-institutional population (or by the population of working age that is not institutionalised) The unemployment level is defined as the labour force minus the number of people currently employed The unemployment rate is defined as the level of unemployment divided by the labor force. The employment rate is defined as the number of people currently employed divided by the adult population (or by the population of working age).
- The development of labour market institutions has been derived from different routes. Some institutions has been inherent from the cultures and history, other might be initiated and adapted because of the international labour law/conventions and some has been achieved by the collective bargaining of workers. And these multiple source of the institution resulted in the distinction among the different labour market institutions. For example, the strong tendency of the anti-discrimination practices and laws in employment of U.S. has been shaped though the history of suffering of the African American slavery and segregation onto various immigrants. Contrast to U.S. there is weak anti-discrimination practices and laws in East Asia. Through the culture of the Confucianism, the different treatments between gender are accepted in the people’s mindset. Whereas, After modernization and feminism, the gender-discrimination has been improved and prohibited in structure, policies and legal level, there are still gender discrimination cases and not reported in practices.
- The LMI are applied to customs and behaviour patterns of workers and employees as well as to particular formal organizations of government and public service. Once the institutions has been settled and matured in a process, the institutions which was the output of influences from the players (employees and workers, governments, employers’ association) start influencing toward the labour market and its players. “ labour institutions are determined by, and comprise of, social norms, national labour laws and policies, as well as the system of production. The three axes of the triangle affect, but also form part of, labour institutions. For example, trade unions and employers' associations are labour institutions. These institutions bargain over national labour laws and polices. How they bargain and what they bargain over will depend on underlying social norms as well as on the constraints or demands of the production system, as well as national labour laws on freedom of association and collective bargaining.” reference : In defence of labour market institutions , page 12,13
- There are differences between the developed and developing countries. In Labour Market institutions has been diversified between the each individual countries in accordance with the different social, political and economical environments.
- The accumulation of evidence on these polices led the world bank to modify its views in 1995. However, the majority from employers and investors-side have maintain this idea still and claim for the de-regulation and liberalism.
- International Labour Review, Vol. 148 (2009) “ Lessons from Latin America’s neo-liberal experiment : An overview of labour and social policies since the 1980s”, The labour policy which has been undergone the neo-liberal reformation in the 1980s and 1990s didn’t produce big success in improving employment or other type of performance in labour market in case of 6 countries – Argentina, Bolivia, Brazil, Chile, Mexico and Uruguay. Figure 1 showing the unemployment rate of the 6 South American countries has not been improved after their reform in labour policy. The fluctuation between 1990 to 2003 resulted from the economic crises (Mexico’tequila’ in year 1994- 1995, Brazil in 1999, Ecuador in year 1999- 2000, Argentina in year 2001-2002, Uruguay in year 2002) and the graph has been rising in general through time-period. The average unemployment rate in 2003 among 6 countries was 11.4%. After year 2003, the reforming movement in Latin American countries has been skeptical and diminished.
- In the globalization era, the consensus among the workers, employers and states is the pursuit of flexibility in the labour market and overall regulations. Even though a few researches has proven the relationship of the rigid labour market policy and unemployment rate and other economic growth, the majority of players in market agreed upon the necessity of flexibility. Workers party also understood the need of changes in workers protectionism within the current diversity markets. Workers protectionism should be more than just the security to maintain one’s job, but about equipping people with the skills that enable them to have more chances of employment.
- The European commission is the main political promoter of flexicurity. Although it has been mentioned mainly at the European level, the concept to flexicurity has to be developed into concrete policies and regulations in the level of the member state. The uniqueness of the Flexicurity is not easy to establish its model for the every country and there could be the criticism about the respect of the autonomy of the member states. Flexicurity policies can be characterized as a form of coalescence and synchronisation of economic and social policy.
- Danish Flexicurity Model could be explained by the low level of Employment protection, strong life-long learning programs (within active labour market policy and also national education policy) and comprehensive social safety net with Unemployment benefits. Figure 1 is explaining that the workers flow in Labour market is in this “Golden Triangle”. Thus, the workers in Flexible labour market inevitably unemployed and need to be given the generous welfare systems. If the longer duration of the unemployment or new trends in working environment making the workers to be re-trained or developed for new skills set. To maintain the flexible labour market, there are generous welfare system and active Labour Market Policy supporting the flexible market.
- The Common Principles of Flexicurity by European Commission in the framework of the European Employment Strategy. (1) Flexicurity is a means to reinforce the implementation of the Lisbon Strategy, create more and better jobs, modernise labour markets, and promote good work through new forms of flexibility and security to increase adaptability, employment and social cohesion. (2) Flexicurity involves the deliberate combination of flexible and reliable contractual arrangements, comprehensive lifelong learning strategies, effective active labour market policies, and modern, adequate and sustainable social protection systems. (3) Flexicurity approaches are not about one single labour market or working life model, nor about a single policy strategy: they should be tailored to the specific circumstances of each Member State. Flexicurity implies a balance between rights and responsibilities of all concerned. Based on the common principles, each Member State should develop its own flexicurity arrangements. Progress should be effectively monitored. (4) Flexicurity should promote more open, responsive and inclusive labour markets overcoming segmentation. It concerns both those in work and those out of work. The inactive, the unemployed, those in undeclared work, in unstable employment, or at the margins of the labour market need to be provided with better opportunities, economic incentives and supportive measures for easier access to work or stepping-stones to assist progress into stable and legally secure employment. Support should be available to all those in employment to remain employable, progress and manage transitions both in work and between jobs. (5) Internal (within the enterprise) as well as external flexicurity are equally important and should be promoted. Sufficient contractual flexibility must be accompanied by secure transitions from job to job. Upward mobility needs to be facilitated, as well as between unemployment or inactivity and work. High-quality and productive workplaces, good organisation of work, and continuous upgrading of skills are also essential. Social protection should provide incentives and support for job transitions and for access to new employment. (6) Flexicurity should support gender equality, by promoting equal access to quality employment for women and men and offering measures to reconcile work, family and private life. (7) Flexicurity requires a climate of trust and broadly-based dialogue among all stakeholders, where all are prepared to take the responsibility for change with a view to socially balanced policies. While public authorities retain an overall responsibility, the involvement of social partners in the design and implementation of flexicurity policies through social dialogue and collective bargaining is of crucial importance. (8) Flexicurity requires a cost effective allocation of resources and should remain fully compatible with sound and financially sustainable public budgets. It should also aim at a fair distribution of costs and benefits, especially between businesses, public authorities and individuals, with particular attention to the specific situation of SMEs.