Type: Response Essays
Sample donated: Maxine Simpson
Last updated: April 20, 2019
Throughout the 20th century labour market conditions were continually changing. However, it is the impact of the declining birth rate and low mortality figures that now pose the greatest challenge to human resource planners and government policy makers. This paper shall consider the implications of these demographic changes on the government and organisations, and how those responsible can adapt their attitudes and policies, so ensuring an effective labour market capable of sustaining a growing economy and supporting us all into old age.Working conditions have generally improved resulting in falling hours, an increase in real wages, greater flexibilty and an increase in the female proportion of the workforce (Lindsay 2003 pp 133-144). For many jobs were for life, starting work as young as 14, exiting the labour market at 60 or 65 with sufficient pension income to support their retirement. However, this traditional work culture is currently scarce.
Todays workforce want to be in greater control of their lives and demand ever increasing quality time away from the workplace. Unfortunately these attitudes present additional problems in creating a contented, productive and effective labour market.The macroeconomic affects of having fewer producers relative to comsumers could lead to consequential results. A report commissioned by the Group of Ten (G-10) countries in 1998 identified a number of issues to be addressed;* Demograhic changes will significantly widen budget defecits* Reforms should encourage economic growth and the efficient use of resources* The problems of funding public retirement and health benefits* Increase the supply and efficient use of labour* Strength financial infrastructures* An immediate increase in the funding of private and public pensions.
The implications to successive governments are far reaching. Fundamentally the role of government is to manage the country utilising all available resources, more specificly – finance. An aging population will present ever increasing demands on pension and health resources. In 1994 Mallier and Shafto (pp38-54) were predicting that “from around 2010 onwards the cost of state pension provision will start to esculate and will become an increasing burden on a shrinking workforce.” If we then factor in the reduction in government income (taxes and national insurance) resulting from a reduced labour market it is clear budget defecits will increase. Additionally, a reduction in the supply of labour to meet business requirements could lead to business failures. This, in turn, leads to a rise in unemployment, increasing the reliance on government financial support.
Further impacting a government will be the performance of the nation’s economy as a whole. As corporate bodies grow profits increase. Not only does this provide for further investment but also generates additional tax revenues. Mirroring this is the lack of growth, little investment and a reduction in corporate tax revenue. Government and business need to work together and have similar aims in their long term planning to avert a depressing consequence on the economy. The size, strength and role of the labour market is now a major feature of both human resource planning (HRP) and government policy makers. Indeed, Stredwick (2000 p32) presents HRP as supporting an organisation’s objective of securing a competitive advantage.Presently organisations have some degree of labour turnover, the majority of which is the employee’s decision through job change, career break or early retirement.
In nearly all circumstances these new vacancies need to be filled to maintain business activities. Not only can the recruitment procedure be time consuming and costly, but the investment made in an individual in terms of development and experience is lost, possibly to a competitor. Given the potential for future labour shortages, competition in the labour market could result in the balance of power switching from employer to prospective employee, with the possibility of organisations being forced to offer higher remuneration packages and improved conditions. There are, however, additional costs not directly related to recruitment. Taylor (2002 p306) includes in his list “productivity losses, impaired qality of service, lost business opportunities, an increased administrative burden and employee demoralisation.
“No single organisation is unique in it’s desire to recruit and retain a productive workforce and all planners have to consider not only internal factors but also the external influences on their strategies. Figure 1, below, highlights these external factors.Without doubt the demographic effects of an aging population could have a severe and harmful impact onFigure 1. The organisation as a system open to influences from the external contexts. Pilbeam and Corbridge (2002 p9)Stredwick (p43) offers a number of specific externalities to consider;* Local unemployment rates* Level of interest rates* Infrastructure* Dgree of competetion in the labour market* Density of population* Skill levels* Attractiveness of the company* Sources of recruits.Despite the problems created by the changing labour market government and organisations, both individually or collectively, can act now to avert a possible crisis.Mallier and Shafto consider governments are in a position to;1.
establish the legal framework within which employers and employees operate2. influence employer and employee behaviour through taxation3. initiate changes in attitude4. set examples of good employer practice in their capacity as a major employer.Not only has the national government recognised the challenges ahead but so too has the European Union (EU). Both have introduced many new directives and laws, and will continue to do so for as long as is required. These new legislative instruments are not just aimed at reducing the burden on government finances but also to force organisations and individuals to change their current attitudes and actions (or inactions).Legislation has been introduced to improve the conditions and rights of employees, the emphasis being channelled towards discrimination.
In 1973, as party to the Treaty of Rome, national legislation was required to match other EU members on matters such as equal pay and discrimination on the grounds of gender or race. Whilst the Equal Pay Act 1970 had already begun to resolve the inequalities in pay, further legislation was required. This presented itself as the Sex Discrimination Act 1975 making it unlawful to discriminate not only in employment but other areas, on the grounds of sex or marital status. And, in 1976 the Race Relations Act addressed the unlawful discrimination on the grounds of colour, nationality, race or ethnic origin.During the 1970s and 1980s the Equal Opportunities Commission and Race Relations Board threatened legal actions against organisations found to be in breach of these new acts.However, during the 1990s it became apparent that demographic changes would lead to skill shortages.
The changing nature of the workplace with a declining, male dominated industry, and the growth in the service sector, traditionally the realm of women, presented even further challenges. Further legislation and incentives were needed if the inactive labour market (housewives/husbands, single mums or dads, the disabled,etc) were to be encouraged to enter (or re-enter) the labour market. The introduction of the Disability Discrimination Act 1995 sought to encourage and protect disabled workers.
It became illegal to discrimante not only against employees, but also applicants, because of any disability they have.Despite opposition by the then Conservative government to the EU’s Working Time Directive 1993, regulations were issued in 1998 limiting the number of hours an employee can be made to work. However, the right to opt out was secured giving workers more control over their time. At around the same time, and to avoid putting families under financial duress, assistance was available from government resources to supplement income. This was initially known as Family Credit but is now entitled Working Family Tax Credit. The introduction of the Minimum Wage and training initiatives such as the New Deal Programme sought to further encourage the inactive to contribute to society. Unfortunately for organisations the administrative burden this has created has long been the source of conflict between government and business.Additional disputes arise when addressing pension provision.
The introduction of the State Earnings Related Pension Scheme (SERPS) in the 1980s aimed at switching the responsibilty for topping up the basic state pension, from government to individuals. However, recent problems with the collection and transfer of monies has depressed confidence in this scheme. Whilst there are a number of employers offering in-house pension schemes there are many employees (and the self-employed) who have no provision at all. Legislation has forced the creation of the Stakeholder Pension.
This scheme requires employers with at least 5 employees to offer set up and the scheme and collect cotributions into it. This pension scheme, offering transparent information and low charges, is aimed at low income workers with the aim of encouraging individual pension provision. However, the current spending habits of many in the labour market (earn today, spend today) and current low investment returns and has not provided the incentive for widespread acceptance.The current Labour Party policy on it’s proposed Pension Protection Fund (PPF) is also causing disagreement with business. Richard Greenhalgh, Chairman of the CBI, is reported in The Times (Oct 2003) by Christine Seib as believing “the entire burden of pension provision will be placed on employers whilst the Government refuses to share the risk.” In response to this and the ever increasing administrative and financial commitment required to operate a company pension scheme many large organisations are switching from final salary to money purchase pensions. Yet again we see the reponsibility for providing for income in retirement falling on the individual. Unfortunately despite all the incentives and initiatives, many of today’s workforce will not be in a financial position to retire until much later in life.
The need for many to continue working beyond the traditional retirement age and the demograhic effects of an aging labour market are issues that will directly affect many, if not all employers. It is now necessary for organisations to reconsider their attitudes, culture and planning if they are to succeed in today’s economic environment.Employers now, more than ever, have to consider the needs of their staff.
The traditional working day of 9 to 5 is no longer seen as normality. Whilst many of the inactive labour market do wish to find employment all to often their working hours need to fit around other commitments. It has already been mentioned that as the size of the labour market reduces prospective employees will have greater bargaining power.So what can organisations do to recruit and retain a skilled workforce?One solution that can meet the demands of employees and, if correctly implemented, maintain, or even increase, the competitive advantage of a firm, is flexibility. Pilbeam and Corbridge (p79) define flexibility at work as “the ability of the organisation to adapt the size, composition, responsiveness and cost of the people inputs to achieve organisational objectives.”Taylor (ch 15) presents two types of flexibility;* functional flexibilityo less demarcation between jobso more teamworkingo flatter hierarchieso job rotation to ensure familiarity between roles* numerical flexibilityo employ people on different contracts* part-time* temporary* subcontractors* homeworkersIn addition, Taylor also suggests working arrangements such as flexitime, which he views as the least radical departure from standard employment practices; annualised hours which allows for fluctutions in business demands and avoids employing people at slack times and then paying overtime as the workload increases; and the notion of zero hours, utilising casual employees on an as and when required basis.Adding flexibilty to HRP cannot be a singular change. A flexible workforce needs to have the skills, training and knowledge to adopt other roles as operational needs arise.
It is at this juncture that multi-skilling becomes a consideration. Horbury and Wright (2001), as part of a report for the Health and Safety Executive considered multiskilling as “part of a raft of changes that organisations might introduce with the aim of improving efficiency, competitiveness, reducing costs, improving quality, increasing production and so on.” The report further offers different forms of multiskilling;* vertical multiskilling – where supervisory and administrative tasks are learned by individuals* horizontal multiskilling – learning the skills from another discipline or function within an organisation* depth multiskilling – the acquisition and application of more complex skills within the same trade or discipline* multiskilled teams – the members of each team have a range of skills sufficient to complete the task.The final view on flexibility and multiskilling is left to Pilbeam and Corbridge (p208) who suggest that “if the organisation has a philosophy and strategy which seeks flexibility, teamworking and continuos staff development, then this should be reflected in the pay policy.” This not only leads to less tension in the workforce but can be seen as a motivator for loyalty and long service.Attitudes towards the more mature members of the labour force are also changing. As individuals desire to continue work (through choice or need) increases and as the availability of younger people is in decline then organisations need to include strategies geared to recruiting and retaining older workers.
Indeed, by signing up to a recent European Commission Directive (2000/78/EC), the government has committed itself to legislate against age discrimination in employment, yet another example of legislation forcing organisation to change.