Lecture 1
1970s’ oil crises sluggish economic growth high unemployment in the West inability to generate full employment for everyone.
Nonstandard employment relations are not new. In fact, internal labor markets in the post-World War II period were more of an exception than a regularity. The main organizational concern of that time: how to internalize their workforce develop their skills; protect from external market competition.
Main organizational concern today: achieving flexibility by externalizing some of their activites.
Part-time work – regular wage employment in which the hours of work are less than “normal”. Different definitions across countries:
Part time proportions:
Rapid increase of part-time employment in Europe:
In all industrial countries, most part-time workers are women:
Lower proportion in the U.S. – many students (both male and female) work part-time.
Europe: part-time work is often associated with low-paid, low-status jobs (sales, catering, cleaning). Legal differences:
“Detached workers”: triangular employment relations where a worker establishes connections with several employers.
Changes in temporary work business cycles, economic fluctuations. Temporary agencies were largely banned before 1980s. About 60% work in temporary jobs involuntarily. Temporary help agencies – “reserve labor army” that helps employers to address under-staffing and over-staffing.
Major temp agencies firms. Use of temporary workers has become a permanent strategy for them. Yet, hourly costs to employees may be more for temporaries than for permanent employees. In 1995, client firms paid 40% more for temporary workers than they received wages. However, these wages are relatively low.
Deliberate wage differences – illegal vis-à-vis full-time regular workers, but doable in case of full-time vs. temporary workers. More fringe benefits for regular employees higher likelihood to use temporary help agencies.
Triangular employment relationship:
Main issues: liability for accidents and other aspects Firms tend to avoid being a joint employer by specifying a period, after which a temp is obliged to leave a company.
Problems of control difficulties with unionizing temps. If a client firm is not a “joint employer” it can fire employees for joining a union. Presence of temporary agency decreased mobility among low-rank permanent workers, increased mobility among advanced workers.
Further careers:
Temps: 1/3 less salary and much fewer fringe benefits than regulars. Largest wage differences – for clerical and industrial workers. However, temp engineers and technicians often earn more than their regular counterparts.
Contrary to temp agencies, contract companies supervise their employees’ work. It has existed for a long time in the construction industry.
Since 1970s – firms started to contract out (outsource) services previously done in-house:
Cost-saving strategy: firms have little incentives of paying high wages to replaceable, easily-monitored workers who perform peripheral duties.
Problem of control: managers sometimes avoid training contract workers to avoid co-employment liabilities.
Presence of contractors in some industries (e.g. aerospace) less employee trust. Yet, contractors can earn more than regulars and usually perform not worse.
EU – 25% increase during 1990s, but representing only 11.5% of the workforce. Has grown less than part-time work. Unlike part-time work, does not normally mitigate unemployment indicator of a weak worker position in a labor market. Particularly important for countries with strong anti-layoff regulations. Labor market rigidities greater use of temporary workers:
U.K.: older organizations are less likely to use fixed-term temporaries. Temporaries’ productivity is usually lower than regulars’. Use of temporaries waste of organizational training efforts. Inter-country differences:
numerical: loosening the hire/fire procedure promptly adjusting the number of workers to employer’s needs
functional: smooth redeployment of workers between activities and tasks anticipating the technological and production changes
financial: widening payment differentials between skilled and unskilled workers assessment-based system facilitating numerical and functional flexibility
Related to short-term, unstable employment. Conditional on employers’ need for labor weak worker-employer connection. No explicit contract, minimum working hours vary non-systematically. Their proportion has declined in the U.S. between 1970s and 1990s.
Possible mental consequences:
Most likely employers: firms in dynamic competitive environments.
Self-employed, no wage contract, responsible for their own tax arrangements. U.S.: relatively little change since 1970s.
Their clients are not “vicariously liable” for contractors’ actions (unlike vis-à-vis their employees) not required to provide fringe benefits and to pay unemployment compensation.
In the U.S., 38% of employers intentionally misclassify their employees as “independent contractors” to avoid payroll taxes.
Many earn more than normal employees, but are less likely to receive health insurance and pensions. “Portfolio workers” – benefiting from moving between firms (e.g. Silicon Valley).
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