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Class notes Business Management and HR Elgar Introduction to Theories of Human Resources and Employment Relations, ISBN: 9781786439000£10.99
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Notes cover wide range of employment relations. From the EU dimensions, to conflict and cooperation, the UK labour market, flexibility, non-union firms, trade unions and management.
Weeks 4 and 5: Employee Relations and the UK Labour Market
Read these notes in conjunction with the lecture slides
These lectures explore the dynamics of the UK labour market. While the ‘labour
market’ is an analytical device derived from institutional economics reference is
nonetheless often made to it in the popular media. Thus, as we are all aware, an
important recent dynamic has been the influx of migrants from the European
Union. Reference is also often made in the ‘serious press’ to the growth of the
knowledge economy and preponderance of highly skilled jobs. Similarly, it is
commonly accepted that certain groups (e.g. women and ethnic minorities) are
disadvantaged in the labour market. These and other highly topical issues are
considered in these lectures.
1.Introduction
The labour market consists of workers who are looking for paid employment and
employers who are seeking to fill vacancies. Supply is determined by the number
of people of working age who are in employment or who are seeking employment
and the number of hours they are willing to work. The numbers will be
determined by the size and age structure of the population and decisions made
by individuals about the costs and benefits of taking employment. The demand
for labour is determined by the level of demand for goods and services produced
by firms in the market. When sales and production are rising firms’ demand for
labour rises. When sales fall and production is cut back demand for labour falls
(Claydon and Thompson, 2007:123). The price of labour, the real wage rate, is
determined by the demand for and the supply of labour. In ‘perfectly competitive’
labour markets there is no unemployment, no discrimination and market forces
allocate workers to their highest paid occupations. In practice, as we shall see,
there are numerous examples of market failures in the labour market.
2. Contemporary supply side issues
The impact of net migration
The supply of labour to the labour market is driven fundamentally by the size of
the country's population and more specifically the number of men of working age
between 16 and 65 and women between 16 and 60. Over the last 20 years or so
the overall population has been greatly influenced by net migration i.e. more
people coming to the UK than leaving. Between 1991 and 2004 the number of
people allowed to stay permanently in the UK doubled ––in 2004 alone 222,000
more people came into the UK than left. At that point 8 of the former communist
countries (e.g. Poland, The Czech Republic and Slovakia) joined (see figure
below) - In the EU free movement of labour is a fundamental right.
1
, EU Expansion and the Movement of Labour
(http://news.bbc.co.uk/1/hi/world/europe/3513889.stm)
The Demographic ‘Time Bomb’
The aging of the population is another key issue with respect o the supply side -
the so called demographic ‘time bomb’. Overall there has been a decline in the
death rate given rise to an aging of the population – there is now an increased
life expectancy for both men and women. Women in the UK can now expect to
live to 81, men 77 (100 years ago it was 45 for men and 49 for women). So
overall there is an increasing number of people 65 and over. This has major
economic implications - not least issues relating to pensions.
Patters of female and male participation
As discussed in the previous lecture, over the last 30 years or so the employment
rates of men and women have converged significantly. The period 1971 – 2004
saw the employment rate for men fall from 92 – 79%, while for women it went up
from 56- 70%. It is often argued that having children and combing work and
family responsibilities is a break on womens’ ability to enter employment (see
below). Nonetheless, the proportion of women with dependent children who are
in employment has increased from 47% in 1973 to 67% in 2004. The speed with
which women return to work after giving birth has also increased substantially –
according to EOC figures 70% of mothers are back after 8 weeks compared with
15% in 1979. But women do tend to gravitate disproportionately towards the
‘secondary labour market’ (see below).
3. The Dual Labour Market Thesis
2
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