Tuesday, June 12, 2007

labour market flexibility and rising employment


1. Labour Market flexibility means it is easier to hire and fire workers. Therefore this encourages firms to invest and take on workers. If it is difficult to fire workers, or reduce their hours they may not want to have the risk of increasing costs. Difficulty of hiring and firing workers is said to be a factor behind unemployment in France

2. Flexibility Means wages have been kept at competitive levels. (there is an abscence of trade union power and minimum wages) Therefore, this helps to reduce real wage unemployment.As wages fall to competitive levels demand for labour increases.

3. the growth of temporary and part time workers create new job opportunities for firms who don't want to pay a full time / permanent workers

However Evaluation

1. Employment is rising but employment is only temporary. More people in between jobs
2. Employment has risen but workers feel insecure.
3. Rising employment may be due to other factor like economic growth and not flexible labour markets

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