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Labour market flexibility By making the labour market more responsive to changes in the macro-economy improves international competitiveness and increases employment. What is a Flexible Labour Market? A flexible labour market has several aspects:- Occupational (functional) flexibility i.e a workforce with transferable skills. Skills that can be used a range of different jobs The benefit of this is that a worker with transferable skills will be able to move easily from one job to another – in other words they will be occupationally mobile. Occupational flexibility can be improved through increased training, and by providing incentives for workers to adapt their skills. Ease and cost of hiring and firing workers: Reforms to UK employment laws now make it easier to hire and fire workers - this reduces the costs to the employer of making modifications to the size of their employed labour force. Output and employment can more easily be matched Contractual flexibility: Instead of having a workforce of full ime permanent staff some jobs are now offered on short term contracts and on temporary and part time basis. Some 25% of all workers are now part time in the UK Flexible contarcts increase the numbers of workers working shifts or weekends. Through contractual flexibility employers can match more easily their workforce with the changing demand for their product. Wage flexibility: Wage flexibility refers to the ability to change real wages to eliminate imbalances between the supply of and demand for labour. E.g. performance related pay regionalisation of pay awards (different pay for the same job in different areas of the country) 5. Geographical flexibility: ie the ability to travel between areas to complete work |