Labor Market Flexibility

During the last few decades, labor market flexibility has been a widely and intensely debated issue. The discussion has often conveyed the impression that everything is more in flux than ever before and it is assumed that actors in the labor market must constantly be prepared to make adjustments of various kinds. The story goes something like the following. Everybody — employers and employees alike — must be ready for change in different ways. Firms confront increasing pressures from market competition, because their products must be in demand and possible to sell at prices by an ample margin above costs. As a result, they have to be oriented toward developing products that fit in with specialized consumer preferences. To be competitive also requires continuous renewal of technology and organizational solutions; it is not enough to be responsive to consumer demands, but there must also be an aim to look after costs, find the best buy of machinery and raw materials, streamline the production process, improve the coordination of activities, and downsize the workforce to a minimum, that is, make production lean, on time, etc. There are thus unceasing demands for adjustment and flexibility represents the ethos of a new era; that is the message.