Regulation of the labour market

Regulation of Labour Market

The regulation of labor market

The labor market has historically been subject to regulation but this is the result of vested interests rather than any economic imperative

Throughout its existence, the Australian labor force has undergone countless processes of change. It has evolved from a mainly agrarian population, into one which works in office and occupies white collar positions. Initially abused in factories and forced to work long hours in difficult conditions, the Australians eventually became more emancipated and better able to protect their rights. In the process however, the commodification of the labor force also occurred.

The modern day society is faced with challenges and opportunities it has never before encountered. Economic agents can purchase and integrate the latest technological developments through which to increase operational efficiency and organizational results. They can for instance transcend boundaries and seek for the comparative advantages of other regions, such as a better access to natural resources or a better skilled -- however most often more cost effective -- labor force.

Somewhere along those lines -- as well as along the lines of the particular history of the Australian labor force -- a situation has been reached through which the workers are no longer perceived as the most important organizational asset, but as a simple and replaceable commodity. A series of changes occurred throughout the process and the stands in this stance are dual. On the one hand, it can be assumed that the changes followed a natural process of economic evolution. On the other hand however, there is the belief that the changes were driven by specific interests, rather than natural economic evolution. It is the scope of the current paper to discuss the second stand to the change of the Australian labor force.

2. General information about the Australian labor force

The Australian labor force is one of the largest and most developed workforces on the globe. It is formed of a total of 11.45 million, representing more than half of the country's population. Relative to the other countries, Australia owns the 44th largest labor force on the globe. 75 per cent of the Australian workers are employed in the services sector; 21.1 per cent are employed in the industry sector and only 3.6 per cent are employed in the agricultural sector (Central Intelligence Agency, 2010). The figures indicate that the Australian labor force is following the same trend obvious at the global level, namely the move from agricultural and industrial activities into services operations. Another global trend which is also reflected in the Australian labor force is that of the ageing of the population and the incremental strains put on the currently working individuals, who are required to support a more and more bearing retirement system.

Similar to the rest of the globe, the Australian labor force is influenced by the emergence and manifestation of the internationalized economic crisis. Economic growth stagnates and so does the wage of the Australian employees. Additionally, with the problems posed for the economic agents, the processes of downsizing have intensified. In 2009 for instance, the unemployment rate was of 5.6 per cent, significantly higher than the 4.3 per cent unemployment rate of 2008 (Central Intelligence Agency, 2010).

3. The evolution of the Australian labor force

Similar to the global trend, the Australian labor force has its origins in the Industrial Revolution, during which factories were opened and the need for labor increased. The initial participation was reduced and limited mainly to men. The working conditions were difficult and often the work was underpaid. Gradually however, more women joined the workforce and legislations were developed to better protect the rights of the employees. Minimum wages were for instance imposed, maximum hours were set and more recently, equal employment opportunities and the punishment of discrimination was enforced. The economy was supported by the usage of the employees to stimulate purchase of organizational products. They were for instance stimulated to purchase products on debt and pay their purchases by installments. When they lost their jobs, they had to sell their properties in order to pay their debt (Sharon, 2000).

During the 1980s, intense pressures were felt in regard to a more flexible workforce. During the following decade, the deregulation of the workforce commenced. Iain Campbell and Peter Brosnan (1999) state: "Labor market deregulation has proceeded primarily through the dismantling of the distinctive system of awards -- the main avenue of external, protective regulation in Australia for much of the 20th century. […] Labor market deregulation is amplifying existing trends to growth in precarious employment, wage dispersion and the development of a low-pay sector amongst full-time employees. In addition, it is sponsoring a significant fragmentation of working-time arrangements." The results of the deregulation are mixed, including both increases in employee wages and nationally increasing economic rates, but also low levels of full time employment (Gregory, 2004). A recent study by the Australian Institute of Health and Welfare (2010) indicated that the low employment levels are also associated with the high risks in the workplace, such as stress, high blood pressure or otherwise damaged health.

At the turn of the 1980s decade, two major developments were observed in terms of increasing presences and importance of labor unions, as well as casual employment. The latter concept refers to a process by which individuals were hired in a non-standardized manner, in order to complete various professional tasks, but were not granted the full benefits of employed individuals (Campbell, 1996). The bargaining powers of workers increased during the time as well (Lee, 1997).

A major development in the evolution of the labor force was the eventual acceptance of the women in the working structures. Today, the trend is that of increasing the numbers of women in high managerial positions and in the highly technical positions in the IT field (Adya, 2008). Also, efforts are made in the direction of payment equality. In spite of the developments, women are still paid less than men for performing the same job. Additionally, they most intensely feel the pressures of combining the professional and family responsibilities.

At the turn of the twenty first century, the labor force in the developed countries -- including Australia -- was more protected than ever. Legislations had been developed and the rights of the employees were better safeguarded. Additionally, given the perceived importance of the employees in creating organizational value, the competition organizations faced intensified in this area also intensified. In other words, firms were no longer competing just for market shares, but also for the most skilled and capable staff members. One direct outcome of this situation was the increase in the benefits offered to employees. These benefits include flexible working schedules, higher wages, premiums and bonuses, but also insurances, such as the severance e pay (Asher and Mukhopadhaya, 2004).

4. The commodification of the labor force

As it has been mentioned throughout the previous sections, modern day Australia is facing the challenges of an aging population. In light of the socio-economic problem raised by the situation, the elderly who have -- either voluntarily or involuntarily -- been retired seek opportunities to work again. This evolution is observable at a historic level as well. In 1984 for instance, only 70.25 per cent of the labor force between the ages of 45 and 54 were still employed; by 2003 however, the proportion had grown to 82.2 per cent. A similar increase is observable at the level of the 55-64 age group. For them, the participation rates to employment in 1984 were of 42.25 per cent, whereas by 2003, the figures had grown to 52.2 per cent. A study conducted by Kate Shacklock, Liz Fulop and Linda Hort (2007) identified the following characteristics of the elderly candidates:

They often need to work due to financial considerations

They prefer flexible working schedules and often part time

They often encounter barriers when they want to get rehired, such as bias, over qualification, lack of training, inability to provide recent references and so on They seek the social interaction, the self-worth from working and the job satisfaction.

Despite the desires of the elderly to reenter the workforce, the employers nevertheless are seldom welcoming of this pool of candidates. Their reasons differ to include the barriers previously met, such as the difficulties raised by the need to manage across generations (Hill, 2002). Other managers however simply lack the consideration of this particular pool of candidates. The direct implication is given by the necessity to develop and implement more human resource strategies which reintegrate the retired into the workforce (Shacklock, Fulop and Hort, 2007).

The probability for this situation to materialize is rather increased especially as the aging of the population materializes in increased pressures on the state aid budgets, as well as reduced organizational abilities to complete tasks due to labor force shortages. In other words, as the elderly are reintegrated in the workforce, the measure will not constitute a process of natural economic evolution, but it will most likely be the result of combined interests to reduce the financial burdens of the pension system and interests to better support the economic system by creating staff sufficiency. This situation once again proves that the people are not considered valuable additions, but commodities. And the management of these commodities changes based on business needs.

In terms of the younger employees, their careers -- or their end thereof -- are extremely intensely subjected to the evolution of technology. As a parenthesis, the advent of technology has imposed new standards for the employees in the meaning that they must progress alongside with the technological developments. And this state of events has also led to the commodification of the staff members. In a context in which technologies evolve, employees are more and more required to themselves evolve in order to be able to operate the new machines and the new technologies. From this standpoint then, alongside with the intensified usage of the technological resource, the human resource is perceived more and more as a commodity.

A specific issue related to technology is its use. In the workplace, employees might make use of the technology in a non-work related manner and this has constituted grounds for firing the respective employees. Nevertheless however, employees have been fired for blogging for work related purposes. A study conducted by Sean Valentine, Gary M. Fleishman, Robert Sprague and Lynn Godkin (2010) has identified that in most cases, the underlying reasons for firing the employees were unethical. In other words, the employers used blogging as an excuse to fire the respective employees. This once again points to the means in which the staff member is reduced to the level of any other commodity. It is used for as long as he is necessary, and he is afterwards let go, with the use of a pretense.

Despite the negative elements in the treatment of the staff members, fact remains that the modern day workforce is one of the strongest and best protected ones. It is safeguarded by legislations and by competition for the best employees. The result of this was the expansion of the benefits offered to employees, and modern day firms even include human resource initiatives in their budgets. With this movement however, came along the need to better manage the expanses with the staff members. And in a context in which organizational expenditures are always seen as in need of reduction, the incentives to the employees are also seen in terms of the need for capping. In other words, through the lenses of financial organization and restructuring, the labor force is understood objectively and financially, just like any other organizational resource which has to be managed in the most efficient manner.

Following this line of thoughts, economic agents need to reduce operational costs in order to reduce their retail price and as such better serve the needs of their customers. The example at Southwest Airlines is extremely relevant. The company decreased its expenditure and paid its employees by trip. The benefits and other incentives were kept to a minimum. This materialized in low flight fares and satisfied customers -- the key to a successful business (Tuck School of Business at Dartmouth -- William F. Achtmeyer Center for Global Leadership). The lesson from this is that the employees are a commodity used in the direction of satisfying customers -- which are not the target of the business -- but which constitute the means to the desired financial ends. And the commodification of the labor force is nowhere more obvious than in the services sector, where the organizational success depends directly on the ability of the employees to interact with and satisfy the customers. The high levels of individuals employed in services in Australia once again support the theory of commodification.