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Labour flexibility, risks and the welfare state

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Labour flexibility, risks and the welfare state

    ;Labour flexibility, risks and attitudes to social security

Fabian Dekker

    Erasmus University, Rotterdam

Abstract

    This study examines public attitudes to various social security programmes in the modern flexible economy. While numerical and functional flexibility have become more important in most European countries, these types of flexibility are assumed to affect job security, community feeling and, as a consequence, public attitudes to social security in contradictory ways. An analysis of recent Dutch survey data indicates that support for social security programmes, particularly unemployment spending, can be understood in terms of the increased levels of internal job insecurity experienced by ‘atypical’ workers. In contrast to some of the arguments that are outlined in this article, it appears that the emergence of a flexible labour market has not affected levels of community feeling.

1 Introduction

    In recent decades, certain labour market developments have occurred in most industrialized western countries. Against a background of rapid technological change and ongoing economic interdependence, the flexibilization of the labour market has been perhaps one of the most fundamental changes to affect work and employment conditions in western economies (Kalleberg, 2003; 2001; 2000). Reflecting on this new flexible

     ; Paper prepared for the Dutch Labour Market Conference 2009. Most tables, figures and descriptive statistics are not included in this conference paper, but available on demand. E-mail: dekker@fsw.eur.nl

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economy, some expect greater labour flexibility to lead to a decline in workers’

    dedication levels (Sennett, 2006). Others, meanwhile, point to the joys and meaningfulness of contemporary work (De Botton, 2009). ‘Labour flexibility’ is,

    however, a widely-used concept that can assume many different meanings. For example, the search for flexibility has resulted in more flexible or ‘atypical’ employment relationships. Nowadays, people’s working lives are frequently characterized by

    temporary contracts, agency work and part-time employment. Flexible employment relationships allow workers to combine their work and private lives, but at the same time, ‘atypical’ employment patterns often expose workers to the risk of future job losses. With a view to this, many commentators have addressed the issue of rising employment instability and growing job insecurity in modern labour markets (Heery and Salmon, 2000; Gorz, 1999; Sennett, 1998; Castells, 1996). Working in the modern labour market also brings certain risks with regard to competences. In Ulrich Beck’s view, we are now living in a ‘risk society’, in which skills and knowledge are increasingly becoming obsolete (Beck, 2000:3). In this flexible economy, having multiple skills has become an important asset when it comes to staying in employment (Schmid, 2006). A key concern for employees is being able to continuously improve their (flexible) skills in order to remain employed. ‘Functional flexibility’ is one type of labour flexibility that could help

    employees to manage labour market risks. Functional flexibility involves new work practices, such as job rotation, task rotation, job enlargement, job enrichment and (semi-autonomous) team working, and emphasizes the development of multiple skills among employees. Clearly, this type of flexibility has the potential to lessen labour market risks.

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    Even though many studies have examined the consequences of labour flexibility for how employees experience risk at work, most have looked at ‘atypical’ employment

    and so-called ‘internal job security’ (see, for example De Witte and Näswall, 2003). Studies that examine the relationship between different forms of labour flexibility and different aspects of job security are, however, largely missing from the literature. The first aim of this study is therefore to examine the consequences of two types of labour flexibility flexible employment relationships and functional flexibility on employees’

    experiences of security in the internal and external labour markets.

    As many political economists have assumed, job insecurity plays an important role in understanding public support for social security programmes (Anderson and Pontusson, 2007). Social security programmes generally compensate for certain risks, thereby protecting individuals in a society. At an individual level, one might expect work-insecure people to have strong incentives for supporting broad social programmes. However, there is little empirical evidence with regard to the relationship between job security and public perceptions of social security. Therefore, the second aim of this study is to focus on the specific link between security at work and the societal legitimacy of various policy arrangements. Although it is generally assumed that economic insecurity affects the need for social protection (Katzenstein, 1985; Rodrik, 1997; Iversen and Cusack, 2000; Burgoon, 2001), at an individual level, this remains an open empirical question.

    Another key issue, when considering the relationship between labour flexibility and public opinion on social security, is the idea of community feeling. We will examine

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    whether flexible employment relationships generate less community feeling among individuals, which, in turn, is an important reason for supporting social security arrangements (Van Oorschot, 2002a). In a similar way, we assess how functionally flexible work patterns affect individuals’ sense of community. Although the literature does provide us with several arguments concerning the possible effects of labour flexibility on community feeling, to date, little empirical research has been undertaken.

    Overall, this study demonstrates how ‘atypical’ and functionally flexible employees perceive different forms of job security, and how their sense of community feeling has been affected in the contemporary labour market. Furthermore, this study helps to explain support for various forms of social protection in the new flexible working economy. Before introducing our data and results, we start by providing an overview of relevant theories on labour flexibility and public opinion on social security.

2 Working in the new economy and public opinion on social security

    It is generally agreed that the experience of working in the post-industrial economy is considerably different from past experiences of work. For a start, there has been a shift in the employment structure from manufacturing towards a service economy (see, for example ILO, 2006; Esping-Andersen, 1993), and employment relations have become more flexible (see, for example Dekker, 2007; Auer and Cazes, 2003). Nowadays, people’s working lives are often characterized by ‘atypical’ forms of employment such as temporary contracts, agency work and part-time employment. Taking the EU as a whole,

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    in 2007, 14.5% of the total workforce had limited-duration contracts, while approximately 18% of employees considered themselves to be employed on a part-time basis (see Tables 1 and 2).

    [TABLE 1 AND TABLE 2]

    Another feature of working in the contemporary labour market is the growing need to offer multiple skills. Functionally flexible work practices can be extremely important when it comes to dealing with changing conditions in a more global economy. New flexible work arrangements, such as job rotation, task rotation and team working, are

    i In 2005, therefore increasingly being used in most European countries (OECD, 1999).for example, 47% of all employees in the EU engaged in task rotation with colleagues, while 60% did part or all of their work in teams (see Tables 3 and 4).

    [TABLE 3 AND TABLE 4]

    Task rotation requires people to perform some tasks that lie outside the scope of their main jobs, while team working implies that more discretion is left to team members. Job rotation is another form of functional flexibility, and involves an employee moving from one position to another within an organization. We focus on the Netherlands in this chapter, on the grounds that the Dutch are some of the most flexible workers in Europe. Approximately 18% of workers in the Netherlands are employed in fixed-term positions, and approximately 46% of jobs are part-time. Furthermore, approximately 62% of all

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    Dutch workers engage in task rotation with colleagues, and approximately 75% participate in teams (see Tables 1-4).

Labour flexibility, risks and attitudes to social security

    It is widely agreed that social security policies embody some kind of solidarity between (future) recipients of benefits and people who are less dependent on social programmes. At an individual level, people can have different motives for contributing to such programmes. People may be motivated by self-interest, or by feelings of moral or emotional commitment to others (Van Oorschot, 2002a; 2002b; Van Oorschot and Komter, 1998). Largely missing from the literature is research that examines the implications of labour market flexibility for public attitudes to social security.

    Our first hypothesis is that workers with ‘atypical’ employment contracts experience less security at work. Although some authors find no correlation (Böckerman, 2002), most of the literature suggests that this is indeed the case (see, for example Clark and Postel-Vinay, 2005; De Witte and Näswall, 2003; Green, 2003). While most scholars focus on perceptions of internal job security, we differentiate between two types of job security: company-specific or ‘internal job security’, and ‘external job security’, which is

    ii We expect that in both senses, the possibility of finding a job across a company.

    ‘atypical’ employment contracts are associated with increased insecurity at work. First, flexible working carries a higher risk of unemployment in the near future, because of the predetermined duration of the contract. Second, ‘atypical’ employees do not experience

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    feelings of security outside an organization, because having to work for relatively short periods does not allow them to develop their credentials.

    Hypothesis 1: Workers with flexible employment contracts experience lower levels of in- and external job security than other workers.

    While ‘atypical’ forms of employment may cause employees to feel less secure at work, functional flexibility may be an important means of allowing employees to obtain multiple skills, thus making them feel less insecure. As suggested in the introduction, functionally flexible work practices may counter the risk of skill obsolescence. Authors such as Forrier and Sels (2003) and Moss Kanter (1993; 1991) stress the importance of so-called ‘employability-security’ as a new form of security in ‘modern’ labour markets. According to these authors, the idea of ‘lifetime employment’ is being replaced with the notion of ‘flexible employment’. Nowadays, so-called post-Fordist regimes are

    characterized by flexible career structures, and people can no longer expect to have a stable, predictable career within the same organization. In this view, workers are operating in a more unpredictable labour market, and employability may provide them with a new form of job security (Forrier and Sels, 2003). In other words, people can no longer rely on organizations to provide them with traditional job security: ‘jobs for life’ are said to have disappeared, and skills are becoming obsolete. Workers are increasingly reliant upon being able to offer multiple skills; that is, their employability (Moss Kanter, 1993). One way to ensure ‘employability-security’ in the modern labour market is by

    creating challenging jobs and allowing employees to engage in assignment rotation

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    (Moss Kanter, 1991). The development of functionally flexible jobs could offer employees opportunities for acquiring multiple skills (see also Goudswaard, 2003). As such, workers would be able to exercise more control over their work than in the past. Greater emphasis would be placed on problem-solving and undertaking different tasks and roles within an organization, encouraging employees to develop different skills.

    While some remain sceptical about functional flexibility and point to the possible exploitation of employees by employers (see for example Hyman, 2004) or the ‘time-

    greedy’ nature of the high-performance workplace (Van Echtelt, 2007), functional

    flexibility does have the potential to offer employees new ‘employability-security’ in the

    labour market. This would mean that functionally flexible workers would experience

    iii Theoretically, functional more job security than workers without flexible job features.

    flexibility can provide workers with multiple skills, which is related to perceptions of increased job security. Although the empirical evidence is scarce, a recent study by Kashefi (2007) shows that in the United States, employees who are functionally flexible experience higher levels of job security, while Kalmi and Kauhanen (2008) find that being included in self-managed teams is positively but not significant related to job security. In general, the threat of dismissal seems to be the proxy for job security. Again, our research distinguishes between two types of job security: ‘internal job security’ and ‘external job security’. We would expect functionally flexible work practices to be

    associated with increased feelings of security at work in both senses. First, functionally flexible workers are more adaptable in their response to demands, and are therefore more valuable to organizations. Such workers would be unlikely to believe that they would be made redundant in the near future. Second, these workers are also likely to feel more

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    secure in the external labour market, because enhancing their knowledge and skills is likely to cause them to feel more ‘marketable’. This, in turn, leads to our second hypothesis:

    Hypothesis 2: Functionally flexible workers experience higher levels of in- and external job security than other workers.

    From a self-interested perspective (see for example Hechter, 1987), we would not expect secure workers to be likely beneficiaries of social security protection. In other words, people who are not facing labour market risks, such as unemployment, are unlikely to protect themselves by taking out social insurance. We hypothesize that this is especially true with regard to unemployment benefits spending, because this programme is most closely related to the risk of becoming unemployed. The macro-level research indeed indicates that economic insecurity affects public spending (Katzenstein, 1985; Rodrik, 1997; Iversen and Cusack, 2000; Burgoon, 2001). At the individual level, meanwhile, some studies provide information on specific labour market-risks and policy preferences (Cusack et al., 2006; Kramer and Stephenson, 2001; Iversen and Soskice, 2001). Nevertheless, with these few exceptions, the micro-level picture remains largely unstudied (see for example Scheve and Slaughter, 2004), as does, in particular, the

    iv. relationship between different insecurities about individual jobs and policy attitudesThis, in turn, leads to two further hypotheses:

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    Hypothesis 3: Experiencing internal and external job security is negatively related to an individual’s support for unemployment benefits.

    Hypothesis 4: Experiencing internal and external job security is not related to other social security programmes (pensions and healthcare).

    Labour flexibility, community feeling and attitudes to social security

    Another factor that can explain attitudes towards social security is having a sense of community, or moral sentiments. Although support for social security can be affected by perceived self-interest, the experience of shared identity is also a relevant predictor

    (Van Oorschot, 2002a; 2002b; Van Oorschot and Komter, 1998). This type of motivation is grounded in Durkheim’s classical approach to sociology (Durkheim, 1964), which suggests that people feel an obligation to serve the collective interest. However, following Richard Sennett (1998) and Zygmunt Bauman (2001), we may assume that

    v. ‘atypical’ employment forms have negative consequences for this sense of communityIn their view, the erosion of long-term employment contracts undermines loyalty, trust and the sense of belonging to a wider collectivity. The ‘new’ short-term, unstable labour

    market simply leaves no room for long-term social relations and mutual commitments. Our fifth hypothesis tests this claim:

    Hypothesis 5: Workers with flexible employment contracts report lower levels of community feeling than other workers.

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