copyright 2005 mcgraw-hill australia pty ltd powerpoint slides t/a industrial relations 3e by bray,...

Copyright 2005 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Industrial Relations 3e by Bray, Deery, Walsh and Waring 2–1

Part oneThe changing nature of work

and employment

CHAPTER TWOTHE CHANGING CONTOURS OF

THE LABOUR MARKET


Overview Labour-market restructuring Workforce restructuring and wage inequalities Flexibility and the flexible firm Final observations Summary


Labour-market restructuring

Context in which participants in IR operate. Major sectoral shifts occurred over the last decade in

Australia: stability of the primary sector decline of manufacturing sector growth in services sector, especially finance, property

and business services. Equivalent trends in other OECD countries, with the

exception of Japan where manufacturing has not declined.


Labour-market restructuring (cont.)The decline of full-time work

The proportion of full-time and part-time employment has changed significantly in the last three decades.

In 1970, 89.4% of all employees were in a full-time job; by 2001, the equivalent figure was 72.1%.

Conversely, part-time jobs grew from 10.6% in 1970 to 27.9% in 2001.


Labour-market restructuring (cont.)The growth of part-time jobs

Part-time jobs have accounted for most of the growth in employment over the last two decades.

Two million part-time jobs were created in Australia between 1970 and 2001.

Part-time employment grew from 21.3% in 1990 to 27.9% in 2001.


Why has there been a growth in part-time jobs?

– Employers’ initiatives: reduce working hours to coincide with peak times reduce wage costs by eliminating penalty rates.

– Employee preferences: women (particularly mothers) prefer part-time work compared with the US, part-time wages for women in

Australia are substantially higher, relative to the male wage.

Labour-market restructuring (cont.)The growth of part-time jobs (cont.)


Why has there been a growth in part-time jobs (cont.)?– Part-time employment and working conditions:

often undesirable inability of federal commission to regulate hours worked do not always match employee

preferences.

Labour-market restructuring (cont.)The growth of part-time jobs (cont.)


Labour-market restructuring (cont.) The casualisation of the labour force

High incidence of casual employment in Australia:– much higher incidence that in comparable countries– by the late 1990s one in four jobs were casual– between 1984 and 2000 the number of casual jobs

trebled from 700 000 to two million– males dominate full-time casual employment– females dominate part-time casual employment.


Demand-side explanationsType Definition

Probationary casual employment

Initial short-term employment to assess suitability for permanent employment

Quasi-permanent casual employment

Casual basis in ongoing jobs, performing tasks indistinguishable from those of permanent workers to save cost

Restructuring casual workers

Employed before and during restructure to maximise employer options

Tech-organisational casual workers

Workers have specific skills that are not necessarily organisation-specific

Labour pool casual workers

Organisations seek to develop reliable staff to manage unforeseen change

Agency casuals Workers employed by an agency and contracted to host enterprise; insulates the enterprise from risk


Hours of work for employees have increased:– from 38.2 hours per week in 1982 to 41.3 in 2001– much of the increase is unpaid.

Various interpretations:– growth of employment in those occupations that involve

long working hours (Wooden 2000)– overall increase in most occupations (ACIRRT 1999)– enterprise bargaining—‘trading in’ hours and conditions

for wages.

Labour-market restructuring (cont.) Hours of work


Increase in hours has also been coupled with an intensification of work, which has serious consequences:– increased stress for workers– increased incidence of workplace accidents– increased difficulty achieving work–life balance.

Labour-market restructuring (cont.) Hours of work (cont.)


Labour-market restructuring(cont.)Downsizing and delayering

Downsizing: planned elimination of positions or jobs, which may occur by reducing work or eliminating functions, hierarchical levels or units.

The expected outcomes of downsizing are:– lower overheads– less bureaucracy– faster decision making– smoother communications– greater entrepreneurship and– increases in productivity (Cascio 1993).


Delayering: involves the removal of one or more layers or managerial or supervisory staff from an organisation.

The objectives of delayering are:– streamlined decision making– improved internal communications and– reduce labour costs.

Delayering reflects a strong preference in Australia for flatter organisational structures.

Labour-market restructuring(cont.)Downsizing and delayering (cont.)


Prior to the 1990s, downsizing was usually a response to crises and largely involved the loss of blue-collar production jobs.

During the 1990s, downsizing usually involved the loss of white-collar managerial jobs in both the private and public sectors.



Effects on employees:– survivor syndrome, the effects on those people who keep

their jobs after downsizing– victims, psychological effects such as reduced self-

esteem, depression, social isolation, helplessness and anxiety.

Research findings on downsizing to enhance performance are mixed.



‘Outsourcing’: where an external vendor provides, on a recurring basis, a service that would normally be performed within an organisation.

The victims of downsizing and delayering often re-enter the labour market as self-employed or non-employees.

The decision to outsource is usually driven by short-term costs considerations and the quest for external economies of scale.

Labour-market restructuring (cont.)Self-employment and outsourcing


The short-term savings seem to be quite clear and readily quantified.

However, the longer-term costs of outsourcing are not as clear and not as easy to quantify, and include:– convergence of costs– elimination of competition– establishment and monitoring costs– commitment of contract workers.

Labour-market restructuring (cont.)Self-employment and outsourcing


Workforce restructuring and wage inequalities

Distribution of earnings is becoming more unequal:– growth in high- and low-paid employment at the expense of

middle-paid employment– the ‘hollowing out’ of the income profile due to the loss of

middle-income jobs, due to downsizing and delayering. Role of the social wage in debates about earnings equity:

– ‘real’ money wages may have fallen during the Accord, leading to an observed increase in income inequality but

– the ‘real’ wages of the lowest-paid workers was supplemented under the Accord by the social wage (i.e. transfers of cash, goods and services from the government).


Why the growth in income inequality?– Growth of contingent labour, in particular casual and part-

time employment and other forms of non-standard employment.

– Increase in relative earnings of highly-educated workers.– Declining union membership.– Borland (1996) estimated that the decline in union density

can explain approximately 30% of the variance of weekly earnings.

Workforce restructuring and wage inequalities (cont.)


Flexible firms use more systematic labour-utilisation strategies to achieve greater efficiency and flexibility in production.

Flexible firms segment their labour force into a: – numerically flexible periphery – functional flexible core.

Flexibility and the flexible firm


Flexibility and the flexible firm (cont.)Numerical flexibility Aims to enhance firm’s usage of labour pool according to

fluctuations in market demands. Primarily engages peripheral employees who are

characterised by precarious forms of work, especially casual, and part-time.

Allows firms to adjust rapidly the number of workers to better meet fluctuations in market conditions.

Peripheral employees tend to be poorly educated and relatively unskilled and are unlikely to have any form of career path.


Flexibility and the flexible firm (cont.)Functional flexibility

Requires core employees to undertake a wider range of duties, often peripheral to their main tasks or functions.

Mostly takes the form of horizontal job enlargement, rather than skill upgrading.

Means employers can switch employees rapidly between different functional tasks, this allows the firm to develop new products and markets.

Core employees tend to be better educated, multi-skilled and employed on a full-time permanent basis with a career path.


Implications for the employees:– flexibility has greater benefits for employers than it is has

for employees– it allows employers to enhance managerial prerogative– employability—associated with rapid decline in

employment security– increased work intensification and stress.

Flexibility and the flexible firm (cont.)


Final observations Structural shifts in the economy:

– decline in the manufacturing sector– increase in employment in the services sector.

Changes in the nature of employment:– decline in number of ‘standard’ jobs, growth in the

number of ‘non-standard’ jobs– longer hours of work– job losses through downsizing– contractors– growth in income inequality.

Debates about the need for numerical and functional flexibility.


Summary There has been a sectoral shift in employment from

manufacturing to the services sector. There has been a decline in the number of ‘standard’ jobs. Workers are working longer hours. Organisations have reduced their size by downsizing and

delayering. There has been a rise in earnings inequalities since the

1980s. Many of the changes that have occurred to the nature of

employment in Australia have been driven by the desire of organisations to increase ‘numerical flexibility’ and ‘functional flexibility’.

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