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The flexibility demands of globalized labor markets: active labor market policies in a flexicurity system.

1. Introduction

The purpose of this study is to examine the foundations of occupational labor markets, structural changes in the labor market, the complexity of labor laws, the causal relationship between labor legislation and labor market outcomes, and the positive externalities of labor market regulations, and the role of migrant workers in urban labor markets. We seek to contribute to a wider understanding of contextual and cultural influences on the effects of labor law changes, the interaction of supply and demand for labor, the economic analysis of labor law, the empirical effects of labor legislation, and the emergence and application of labor law rules. The results of the current study converge with prior research on the benefits and indeterminacy of labor market regulations, conventional understandings of the economic impact of labor regulations, the challenges of regulating the labor markets of the contemporary global economy, and the role and significance of labor market regulation. This paper seeks to fill a gap in the current literature by examining limitations of labor market regulation, the reform of labor market services, the fierce resistance of organized labor, disadvantaged groups in the labor market, and patterns of labor market policy-making. The objective of this paper is to emphasize the importance of the role of migrant labor in contemporary capitalism, the migrant division of labor, the challenges of labor market deregulation, the collective power of labor, and the margins of the labor market.

2. The Role and Significance of Labor Market Regulation

Kirpal remarks that structural aspects of labor-market and workplace developments influence individuals' actions and orientations to work. Globalizing labor-market trends are increasingly overlapping national traditions. Global labor-market trends impact on how employees redirect and adjust their work and career orientations. One effect of labor-market flexibilization is the decrease of unlimited employment contracts. Increasing the flexibility and mobility of staff is a priority goal for the European labor market. The skill structure typical of internal labor markets combines general skills obtained via general education with the acquisition of company-specific skills. "Labor-market systems interlink with occupational flexibility and mobility through the organization of industrial relations and the system of general education and vocational training. Training systems are thus part of broader institutional configurations, constituting a central arena along which firms coordinate their economic activities."[1] Fleckenstein insists that the shift in labor market policy cannot solely be explained by learning. Labor costs and taxes associated with financing social security are a burden on international competitiveness. [2]

Lee and McCann report that there are potential economic benefits to be derived from regulating labor markets: labor regulations operate in conjunction with related regulations or labor market institutions. "Labor market interventions have not garnered a level of support to match the acceptance of more rigorous regulation of financial markets." [3] Deakin says that labor laws are an external source of imperfections, and can operate as a "beneficial constraint' on firms. Assessments of the economic effects of labor laws must be sensitive to context. Wage regulation depresses demand for labour. [4] Kaufman contends that a labor market presumes the existence of an employment relationship: labor markets are inherently and always and everywhere imperfect (labor is embodied in human beings). There is a negative relationship between the wage and quantity demanded of labor. The existence of a neoclassical perfectly competitive labor market is a logical impossibility (the perfectly competitive labor market model is intrinsically flawed as a theoretical construct). "The process of wage determination in a competitive labor market requires a well-defined and stable downward sloping demand curve." [5]

3. The Role of Migrant Labor in Contemporary Capitalism

Berg and Cazes point out that labor markets are governed by market forces and by a range of labor institutions, labor market flexibility is the degree to which employment or working time (quantitative adjustment) or wages (price adjustment) adjust to economic changes, labor standards can be used to discourage certain production systems that society viewed as undesirable, whereas labor regulations can bring about economic benefits for the firm and the economy. Enforcement plays a crucial role in the functioning of labor markets. Lowering labor costs will worsen conditions of work, increase inequality, and harm the social fabric of society. Payroll taxes increase the cost of labor. "It is never one institutional setting that on its own determines the question of labor flexibility, labor market mobility, and security, but systemic interaction between the main national labor market institutions, such as labor legislation, unemployment benefit schemes, active labor market polices, and wage-setting institutions." [6] Winkelmann-Gleed posits that demographic change, workforce ageing and the management of older workers is an issue of policy concern for governments and employers. The current economic downturn complicates the demographic, migration and labor market situations (work is one aspect of overall quality of life). The economic pressure is the main driving force behind employment targets for older workers. Older worker's continued employment should be based on choice and fair treatment. [7]

Emmenegger analyzes the relationship between labor market status and preferences for job security, gendering the insider/outsider theory of employment and unemployment. Insiders and outsiders have opposing preferences with regard to job security regulations. Living together affects preferences for job security in case of main contributors to the household income. Job security regulations increase the insiders' market power vis-a-vis their firm. Low labor turnover and high labor turnover costs are strongly influenced by job security regulations. "Individuals living together with their partners and main contributors to the household income consider job security to be particularly important, while the presence of small children in the household does not affect preferences for job security." [8]

The basic idea here is that the whole family's economic security is a function of the main earners' job security. Secondary wage earners living together with a full-time working partner develop their own social policy preferences (full-time male labor market participants in the manufacturing sector are a small minority group within the labor force). Emmenegger holds that on average, women experience more labor market transitions than men, whereas the insider/outsider theory of employment and unemployment does not incorporate the household situation. Respondents living together with a partner are more interested in job security than respondents living alone. The household situation has an important effect on preferences for job security. Gender does not affect individuals' preferences for job security, does not have a significant net effect on attitudes concerning the importance of job security in choosing a job, and has diametrically opposed effects on labor market insiders and labor market outsiders. "Social policy institutions are likely to influence perceptions of responsibility. The presence of generous unemployment benefits (or other forms of social insurance) decreases the family's economic dependency on the main income earner's job. In case of job loss, the income of the main earner is replaced by generous unemployment benefits." [9]

4. The Dynamics of Labor Markets

Pieke and Biao observe that the new informal sector's demand for cheap and docile labor has fuelled the immigration, while immigrant labor creates its own demand, changing the very structure of the economy itself. "In the US and western Europe, neoliberal deregulation of the labor market and curtailing of labor unions have facilitated the employment of immigrant labor, both at the fringe of the formal economy and in a growing unregulated, informal sector in developed countries." [10] Ashman and Gibson state that there is a great deal of what organizations do to employees that acts as direct attempts to challenge the individual's existential identity: a particular factor that may lead to mental health problems is attacks on individual existential identity. Long working hours and the problems of work/life balance contribute to the increasing incidence of work related mental health problems. Extended working hours and working pressure can lead to stress and anxiety. Stress is the greatest cause of absenteeism among non-manual employees. The workplace has replaced the family as the main social environment, workplace activity impacts differentially among individuals, and promulgating and maintaining a first-rate corporate image can demand emotional labor. "If we all suffer a degree of ontological insecurity, then specific organizational policies and activities that impinge upon individual existential identity have the potential to exacerbate mental health problems among all employees." [11]

Wills et al. outline the evolution of London's migrant division of labor, charting the emergence of a new migrant division of labor at the bottom end of the city's labor market, revealing how London's low-wage labor market continues to be characterized by national, ethnic, racial and gender divisions (global cities like London have benefited immensely from migrant labor), and highlighting the extent of London's dependence on the rest of the world for its low-paid labor supply. London's migrant division of labor is characterized by workers from a plethora of different countries. The migrant division of labor is constituted by workers from a super-diversity of different locations. The twin processes of deregulation and international migration have generated rapid change in the labor market.

That is, immigration status is a key determinant of labor-market position and prospects. It is not possible to understand the labor market without attention to national immigration regimes. According to Wills et al., the UK government's immigration and labor-market policies will enhance the synergies between migration and development. Migrant workers from an extraordinary range of backgrounds are located at the bottom end of the labor market. London's labor market is characterized by processes of both income and occupational polarization. London has well-established ethnic and gender divisions of labor. London's migrant division of labor means that the foreignborn are concentrated in low-paid jobs. Employers have proved very adept at responding to changes in the labor supply. Labor mobility has provided the best route to advancement. The restructuring of London's economy and labor market has profound implications for Londoners. "London's low-wage labor market is particularly dependent on an immigrant labor force that is differentiated from locals through immigration control." [12]

5. Conclusions

In this paper we were particularly interested in exploring the impact of immigration on local labor markets, the relationships between immigration and labor-market change, the emergence of London's new migrant division of labor, the role of migrant workers in the labor markets, and the nature of the low-paid labor market. The findings of this study have implications for the performance of the labor market, the acceleration of labor market reforms, the effect of labor regulations on economic and labor market outcomes, new models of labor market institutions, and new patterns of labor market practices. Scholarly research reveals strong correlations between the content of labor laws, the emergence of redistributive labor law regimes, the operation of labor market regulation, the protective potential of labor regulations, and the labor law reform process. The current study extends past research by elucidating the substance of labor law, the emergence of new labor market actors, the relationship between labor regulations and social values, the productivity-enhancing role of labor regulations, and the dynamic roles of labor institutions. The results of the current paper provide useful insights on the linkages between labor market and structural policies, forecasts of labor market developments, the structures of labor market policy-making, the governance of the labor market, and significant changes in labor market policy. Research focusing on previous work experience revealed the institutional structure of financing labor market policy, the significance of learning in the labor market reforms, the speed of reform for the labor market, the flexibility demands of globalized labor markets, and the dynamics of labor markets.


[1.] Kirpal, Simone R. (2011), Labor-Market Flexibility and Individual Careers: A Comparative Study. Dordrecht: Springer, 24.

[2.] Fleckenstein, Timo (2011), Institutions, Ideas and Learning in Welfare State Change: Labor Market reforms in Germany. New York: Palgrave Macmillan.

[3.] Lee, Sangheon, and Deirdre McCann (2011), "New Directions in Labor Regulation Research," in Sangheon Lee and Deirdre McCann (eds.), Regulating for Decent Work: New Directions in Labor Market Regulation (eds.). New York: Palgrave Macmillan, 3.

[4.] Deakin, Simon (2011), "The Evidence-Based Case for Labor Regulation," [3], 31-57.

[5.] Kaufman, Bruce E. (2007), "The Impossibility of a Perfectly Competitive Labor Market," Cambridge Journal of Economics 31: 781.

[6.] Berg, Janine, and Sandrine Cazes (2008), "Policymaking Gone Awry: The Labor Market Regulations of the Doing Business Indicators," Comparative Labor Law Journal & Policy Journal 29: 361.

[7.] Winkelmann-Gleed, Andrea (2011), "Demographic Change and Implications for Workforce Ageing in Europe," Contemporary Readings in Law and Social Justice 3(1): 62-81.

[8.] Emmenegger, Patrick (2009), "Gendering Insiders and Outsiders: Labor Market Status and Preferences for Job Security," Economics, Management, and Financial Markets 5(3): 94.

[9.] Ibid., 103.

[10.] Pieke, Frank N., and [X.sub.i]ang Biao (2009), "Legality and Labor: Chinese Migration, Neoliberalism and the State in the UK and China," Geopolitics, History, and International Relations 1(1): 12.

[11.] Ashman, Ian, and Caroline Gibson (2010), "Existential Identity, Ontological Insecurity and Mental Well-Being in the Workplace," Contemporary Readings in Law and Social Justice 2(2): 133.

[12.] Wills, Jane, Kavita Datta, Yara Evans, Joanna Herbert, Jon May and Cathy McIlwaine (2010), Global Cities at Work: New Migrant Divisions of Labor. LondonNew York: Pluto Press, 76.




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Author:Iancu, Anica; Popescu, Luminita Florentina; Popescu, Virgil Daniel
Publication:Economics, Management, and Financial Markets
Date:Sep 1, 2011
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