Flexible Labour Markets means that the labour markets quickly adjust to a competitive equilibrium. Flexible labour markets involve factors such as:
- Easy to hire and fire workers
- Labour is occupationally and geographically mobile
- Government intervention does not distort the market
Characteristics of Flexible Markets:
- Skilled workforce which can adapt to changing requirements
- Flexible hours and working contracts e.g. more temporary employment or working from home.
- Self-employment where workers and firms can be more flexible in how and when to work.
- Greater flexibility in pay arrangements
Why has there been an increase in labour market flexibility?
- Globalisation has opened the UK to more international competition therefore to remain competitive firms have to keep labour costs relatively low
- Technological change has made it easier to have flexible labour markets. For example the internet has increased the provisions of information better and makes it easier to work from home.
- Changing social environment e.g. increased female participation in the labour force, women are more likely to favour part time flexible work.
- Core periphery model. This states that firms are making more use of a core workforce but also part time temporary workers who are more flexible.
- Privatisation. Private firms have sought to increase profitability by cutting excess workers
- Reduced power of trades unions such as banning closed shops and limitations on the right to picket.
- Harder to get unemployment benefits.
- Growth in self-employment – more people classed as self-employed rather than employed
- Increased migration, e.g. workers from Eastern Europe coming to UK to fill labour shortages.
