Employment Relations - Essay Example

The socio-economic environment for businesses has changed and so has the labour market. Companies have global operations and trade and with increasedinternational competition, the regulated working week is now become a 24-hour economy. This has resulted in flexible working patterns and has made way through structural job changes. In recent times, contingent employment which includes temporary employment, part-time working and outsourcing, has grown significantly in every country. Labor market changes have resulted in changes in the employer/employee relationship. The trend differs across nations as it depends upon the individual nation’s culture and traditions. In outsourcing and contracting, both employees and the employers have definite advantages and disadvantages and hence the solution would depend upon the time, the market condition and the business environment in that nation. In Australia, the non-tradition form of employment or part-time employment is more to avoid unemployment and hence it is involuntary. By 1995 as much as one-fourth of the Australian workforce was classified as being in part-time employment. Females account for about 75% of the part-time workforce while youth account for about 20 percent (Burgess, 1997). Part-time workers on an average work for about 6 hours per week. There is no concept of temporary employment enshrined either in Australian labour regulations or in the Australian workforce typology. As such the definition of casual workers differs across industries and there is also a considerable range of entitlement for casual workers. In addition, there are restrictions placed on the employment of casual workers. Besides, it is also difficult to classify workers who have been employed on a contractual basis or through specialist employment agencies. The employees do not benefit because such employment does not require notice for termination and no redressal for reinstatement or damages is considered. The employers have been attracted to these non-traditional forms of employment because they do not have to provide sick leave or holiday leave or other benefits like a permanent employee. The local business and political environment impacts the labour market. For instance, in Germany the proportion of part-time employment was very low in and the average length of employment was second only to the Japanese organization (Hiltrop, Jenster & Martens, 2001). Workplaces have been using flexibility like outsourcing and casualisation which have a less direct relationship between employer and the worker. The employers prefer flexible labour policies as it allows them to adjust to match the changing demand patterns, thereby enabling the employers to exercise internal numerical flexibility (Allan, Brosnan, Horwitz & Walsh, 2001; Bronstein, 1999). They are able to attain external numerical flexibility when they outsource particular functions. Employers benefit as they save on costs by engaging labor on just-in-time basis (Allan, Brosnan, Horwitz & Walsh, 2001; Hiltrop, Jenster & Martens, 2001). Outsourcing helps to avoid capital investment and the funds can be used for other investments. By contracting out, the employers also gain as they are able to de-unionize the unionized workforce (Allan, Brosnan, Horwitz & Walsh, 2001). Most importantly, through outsourcing, employers gain from the highly specialized skilled workforce that can be available. The employers may have to compromise on quality as the flexile workers have less experience and expertise. The flexible workers are less likely to receive training as they are not integrated into the human resource system of the organization. Co-ordination and delivery of services also pose problems in outsourcing out work. Employees benefit as it serves to provide temporary employment to many who do not want full-time employment and also serves a springboard for those who are looking for stable employment (Bronstein, 1999). Employees are at a disadvantage with flexible labour policy. They are denied the fringe benefits and rights, the minimum employment standards, they face employment insecurity, and there is a decline in bargaining power as they are not a part of any union when work is outsourced or when they are engaged as contract laborers (Allan, Brosnan, Horwitz & Walsh, 2001) and they are unable to accumulate the length of service making them eligible to receive health or unemployment insurance (Bronstein, 1999). They also receive fewer paid holidays, they receive dead-end jobs and their skill adjusted wages are low (Hiltrop, Jenster & Martens, 2001). They also do not have protection against unfair dismissal. It also results in lower organizational commitment and declining work satisfaction. In the US, employers promise challenging jobs and interesting assignments but no long-term promises of a career. Labor market flexibility provides job mobility and in the US they change jobs very often. They have stopped expecting any job stability. Because of high skills, they can sell their skills to the highest bidder and for such people job mobility is advantageous. Their sense of identity is linked to their profession rather than to their organization or team. Research also suggests that those who stick on to a job just for stability face problems like emotional instability, poor work output and ill-health. Some feel that temporary work provides greater job satisfaction, better work conditions, reduced employee travel, better work-family balance and higher commitment. Outsourcing has its own pitfalls for the company concerned. It may indicate the company’s incapability to compete in the market. Besides, the company may become dependent on a large number of suppliers. Most often outsourcing decisions are taken to cut costs but it does not help to build the people-embodied skills necessary to sustain product leadership (Benson & Ieronimo, 1996). Coordinating between sub-contractors can be time consuming and costly – more cumbersome than managing in-house production. Even recruitment is outsourced but a good recruitment company cannot have the same knowledge and understanding of the business as its own people (Anon, 2005). The contractor has to be aware of the company’s culture and its subtle modifications. Even though there are huge cost benefits in outsourcing recruitment, the cost of hiring the wrong person can be equally huge. Besides, the company has no control over the entire process. In New Zealand the trend is towards increasing permanent full-time employment and the same trend could be perceived in Australia too. Australia and New Zealand has similar cultures and traditions and they have shared a unique system of wage determination (Allan, Brosnan, Horwitz & Walsh, 2001). South Africa has a colonial past and the system or apartheid underlaid the industrial relations system until the 1990s. Social reforms brought about changes in South Africa and the industrial relations system developed features like New Zealand and Australia. The three countries share similarities but also contain unique national characteristics. Survey revealed that the three countries had a general trend towards less secure forms of employment but there were also increases in core full-time employment. They planned to increase casual employment and use more consultants and contractors in the future. The employers find that in the long-run the contingent employment forms are unsuitable. According to Hiltrop, Jenster and Martens (2001) a lot of temp agencies have come up that screen job applicants and supply to organizations. In the US the employers can get away by paying lower wages to the temporary workers but in the European organizations, such an act is frowned upon. The highly restrictive labor legislation in European countries encourages employers to use more temporary staff in order to avoid expensive long-term contractual commitments. The legislation is based on individual nation’s culture and cannot be associated with moving trend towards flexible employment. Most countries prohibit temping especially in construction and impose time limitation, minimum wages and benefits to protect the temps. PEST analysis Political – Usually a country’s employment protection law and its industrial regulation specific to staffing are complementary to each other but Netherlands is an exception. It has a restrictive employment law but a liberal staffing legislation which is the reason that Netherlands had the highest number of daily temps as a proportion of the labor force (Hiltrop, Jenster & Martens, 2001). The regulatory laws of the country determine the employment laws and the use of temporary or permanent workforce. For instance, when the government found an excessive use of temps in France, re-regulation of the staffing industry was done. In the UK there is tighter regulation of the industry. The legislative regulations have to be complied with in any country and this is usually based on the nation’s culture and traditions. Economic – the economic situation determines the labor market trends in every nation. During downturn, even temporary workers are encouraged as it provides some work and income to them. The managers are under constant pressure to perform and register profits (Thompson, 1997) which compels them to apply flexible labour policies to sustain competition. Social – flexible labor market helps to provide a work-family balance and is also beneficial for those having family care obligations (Hiltrop, Jenster & Martens, 2001). The employers are at a disadvantage also as they are unable to accumulate the length of service that entitles them to health and employment insurance. Technology – internet has gained importance as a recruitment medium globally. Companies are making massive investments in technology but are unable to derive the benefit from the use of such technology. Manual labor has been eliminated but knowledge workers have become important (Thompson, 1997). This requires highly skilled workforce where to a large extent outsourcing and temporary workers help. It thus is evident that flexible labor policies depends on various factors and differs across nations. While there are perceived advantages both to the employers and the employees, in the long-run companies and the employees both look for stability. The employer cannot train and develop managers if it is constantly having temps and the employee feels insecure with job mobility. At the same time, outsourcing benefits the companies as they are ale to get professional skills which may be costly to hire. Outsourcing is primarily undertaken to minimize costs but may not always be the right decision. The companies have been attracted to such flexible employment forms for economic reasons and to some extent the employees to have benefited. References: Allen, C., Brosnan, P., Horwitz, F., and Wash, P. (2001) Casualisation and Outsourcing: a comparative study, New Zealand Journal of Industrial Relations 26 (3) 253-272 Anon (2005) The recruitment debate, Human Resource Management International Digest, 13 (3) 27-29 Benson, J., and Ieronimo, N., (1996) Outsourcing decisions: Evidence from Australia-based enterprises, International Labour Review, 135 (1) 59-73 Bronstein, A. S. (1991) Temporary work in Western Europe: Threat or complement to permanent employment? International Labour Review 130 (3) 291-310 Burgess, J. (1997) Part-time employment in Australia: unusual features and social policy issues, International Journal of Social Economics 34 (7/8/9) 831 Hiltrop, J. M., Jenster, P. V. and Martens, H. (2001) Managing the outsourced workforce: strategic challenges for human resource management, Strategic Change 10 (7) 367-382 Thompson, J. A. (1997) The contingent workforce: The solution to the paradoxes of the new economy, Strategy and Leadership 25 (6) 44-45 Read More