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Workplace ‘flexibility’ on insecure ground

If you were to choose one buzzword that, despite its vagueness, has dominated industrial relations debate over three decades, it would be “flexibility”. It has emerged again in rhetoric surrounding Toyota’s…

Flexible work practices: for employees or employers? Tracey Nearmy/AAPImage

If you were to choose one buzzword that, despite its vagueness, has dominated industrial relations debate over three decades, it would be “flexibility”. It has emerged again in rhetoric surrounding Toyota’s closure.

We love the sound. It’s undeniably good, seen beside its evil twin “rigidity”. If only we knew what it meant. Or at least, knew what others using it mean.

Words convey emotions that legitimise the user’s perspective.

One person’s flexibility is another person’s uncertainty. Just as one person’s stability is another person’s rigidity.

So flexibility might be “good” or “bad”. First, we need to distinguish between flexibility for workers and flexibility by workers.

It depends on your interest

Flexibility for workers occurs when companies change work practices or working time to better suit worker needs. Allowing workers to take time off to attend school concerts, enabling job sharing, permanent part-time work, ‘48/52’ arrangements – these are all examples of employers being flexible for workers. Research shows these things are mostly effective in enabling better work-life balance, and are often aimed at increasing job satisfaction, attraction, or retention of valuable employees.

The Fair Work Act contains a “right to request” enabling some employees to request changed working arrangements to help them care for certain dependants. It might include different start or finish times, shorter hours, or a changed location of work. But it is merely a “right to request”, not a “right to have”. There is no appeal from the employer’s decision. It echoes, but is “generally weaker” than, legislation in various European countries.

But when employers or politicians complain about a lack of flexibility, they usually mean flexibility by workers.

Here researchers distinguish between two types of flexibility by workers.

One is functional flexibility – the employer’s ability to move workers between activities and tasks, in line with changing workloads or production methods. It often requires multi-skilling of workers. It may lead to employees doing more work because they do more varied work.

The other is numerical flexibility – the employer’s ability to adjust labour inputs to changes in output. That means cutting or increasing the number of workers or their hours worked, classifying them as casuals or contractors, or varying the wages they are paid.

Numerical flexibility is sometimes linked to loss of quality in output, and often to loss of job quality– because workers typically don’t like uncertainty in wages, hours or job security.

This is the sort of flexibility that critics of the Toyota unions claimed was needed, and frustrated by the “no extra claims” provision in the enterprise agreement. The whole point of two decades of enterprise bargaining has been to give employers and workers the flexibility to negotiate agreements suiting their particular circumstances.

A key element of that, and indeed of wage negotiations since the early 1980s, has been “no extra claims”. This was an important source of stability for employers, who advocated it and did not want unions reopening wage claims after agreements were made. Even the Productivity Commission’s enterprise agreement had a “no further claims” clause.

Now suddenly “no extra claims” is a rigidity, because it inhibits an employer demanding more while an agreement is in place. And, according to some politicians, it is the fault of the Fair Work Act and of unions, even though this was denied by Toyota and indeed the same provisions existed under Coalition legislation. A virtuous stability has become an evil inflexibility because interests have changed.

You can’t take that away…

Unions actively oppose cuts in pay and conditions, because that’s what workers want them to do. There is nothing unusual about resistance to having things taken away from you. Losses are felt far more strongly than gains. It’s an innate part of human and indeed animal nature.

It’s a phenomenon repeatedly found in psychological experiments. It’s why, when an animal attempts to invade another’s territory, the animal on “home” territory “almost always wins the contest”. It’s why, despite reported deficits of over A$10 million per year, Rupert Murdoch continues to publish The Australian. Resistance to losses is not restricted to workers; but workers have the least they can afford to lose.

So is “flexibility” in labour markets (which, for those who write about it, means flexibility by workers) necessarily a good thing? In the lead up to WorkChoices, and since its repeal, there were claims our industrial relations system lacked flexibility.

Yet by objective measures, the level of flexibility by employees in Australia is amongst the highest.

The Organisation for Economic Co-operation and Development (OECD) analysed a number of aspects of “inflexibility”, referring to them as “employment protection legislation”. It found (even before ‘WorkChoices') that Australia had one of the lowest levels of job protection in the OECD (see chart). Several countries had high job protection and low unemployment, including Norway and the Netherlands.

Source: OECD, Employment Outlook 2004, Chapter 2: Employment Protection Legislation and Labour Market Performance, Paris, p72.

Overall, compared to other OECD countries, Australia also has high rates of part-time employment, temporary employment and people working very long hours.

Most countries do not allow long-serving employees to be denied sick or recreation leave. We call it casual employment, and it affects a quarter of employees.

Lessons from elsewhere

The OECD was one of the strongest advocates of labour market “flexibility”. Yet during the global financial crisis, something happened to force a rethink of its position.

Across the North Atlantic, gross domestic product (GDP) fell as the crisis deepened. Theory said the US labour market, with its far greater flexibility than that in Europe (for example, workers could be fired “at will” in the US), should adapt better than its European counterpart.

Reality was the reverse. The US experienced a smaller fall in GDP between 2008 and 2009 than did Europe yet it suffered a greater drop in employment.

The OECD saw through the flexibility fairytale. So in 2009 it found no evidence that “reforms” to promote flexibility had made labour markets “less sensitive to severe economic downturns than was the case in the past”. It recommended improvements in income security it had previously dismissed as inhibiting flexibility.

We can no longer say that flexibility by employees is necessarily a good thing.

But we can say that the rhetoric of flexibility is often a device for transferring risk onto workers – who can least afford it.


This is the first piece in our Insecure work series. Click on the links below to read the other pieces.

Is job insecurity becoming the norm for young people?

Viewpoints: should penalty rates be abolished?

Online labour marketplaces: job insecurity gone viral?

Join the conversation

16 Comments sorted by

  1. Daryll Hull

    Professor, Centre for Workforce Futures at Macquarie University

    Thank you David for this contribution. The use of so-called "plastic" words (terms whose meaning can be bent any way to meeet your vested interest) has a long and dishonourable history in Australian industrial relations. Short on denotation and long on connotation, such words are vital in influencing community opinions. Your friends nod and agree about "freedom" and "rights", and your opponents reflect on "restrictions" and "controls".

    However, if we want to actually change and improve workplaces, enhance productivity and generally make a better place we need to get beyond slogans and loaded terminology. We need a sensible and reflective conversation about what actually happens in places of work. There are millions of workplaces in Australia, and they cannot be treated as one plastic entity. Perhaps we need to be more flexible in our approach?

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    1. Andy Cameron

      Care giver

      In reply to Daryll Hull

      "The use of so-called "plastic" words (terms whose meaning can be bent any way to meeet your vested interest) has a long and dishonourable history in Australian industrial relations."
      Indeed, it is the duty of us to call out the use of plastic words that trivialise Australian public discourse. The latest comes from the ACTU's marketing department. The trade-unions have concocted "insecure employment", which when you read the fine print basically means 'anybody not a dues-paying trade-union member. Given union membership has sunk to 15%, get ready for a lot of scare campaigns, aimed at people perfectly happy to have access to part-time/casual employment. The unions are trying to scare these people with grim tales of "insecure employment".

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  2. Stephen Ralph

    carer at n/a

    Isn't the bottom line (yet again) employers v workers.

    Sooner or later the realisation that rather than have literal or metaphorical confrontation,but come together for a win-win scenario might be the best way to go.

    Ground needs to be given on both sides.

    If we are indeed tied to globalisation, then that really means a 24 hour work cycle b/c of time zones.

    I can never understand why with a whole gamut of new technology, work practices are not better organised to include work at homes for new mums to save on child care, or staggered work times that might ameliorate traffic congestion.

    These changes are not worker or employment specific, but just commonsense.

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    1. Stephen Ralph

      carer at n/a

      In reply to Stephen Ralph

      Of course what I meant to say in relation to staggered hours was that PARENTS would be able to benefit - not just mums.

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    2. Jeremy Culberg

      Electrical Asset Manager at Power Generation

      In reply to Stephen Ralph

      Staggered start times have been suggested in many workplaces, however in the few I've been in, the worry by management was ensuring that the workers worked.

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    3. Jeremy Culberg

      Electrical Asset Manager at Power Generation

      In reply to Stephen Ralph

      Stephen, I agree that KPIs would have solved the problem. But if KPIs solve the problem (when managers aren't there), why do you need management at all?

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    4. Stephen Ralph

      carer at n/a

      In reply to Jeremy Culberg

      There's plenty of work for managers to do other than monitor staff output........as you would know.

      I assume kpi's are an integral part of most businesses.

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    5. wilma western

      logged in via email @bigpond.com

      In reply to Stephen Ralph

      Particularly when things get tougher unions do realise this, for example Bell Bay smelter deal with RioTinto.

      Joe Hockey 's now spouting the great need for more flexibility and demonising unions... more publicity needed for the info in this article. Of course it's all "blame the unions=ALP for the present economic downturn and threat to employment- instead of the high dollar, global prices, obsolete works etc.

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  3. peter spencer

    Non-Executive Company Director

    David is there any association between the level of flexibility and growing wealth inequality? USA and to a lesser extent Australia have experienced a transfer in relative wealth between workers and senior business managers and owners. Do you know if this occurs most in more "flexible" environments. For instance is a metric like the Gini coefficient positively correlated with flexibility?

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    1. Andy Cameron

      Care giver

      In reply to peter spencer

      "USA and to a lesser extent Australia have experienced a transfer in relative wealth between workers and senior business managers and owners."
      Australia is the most wealth equitable nation on the planet

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    2. peter spencer

      Non-Executive Company Director

      In reply to Andy Cameron

      Andy,

      the evidence doesn't support your statement.

      A recent 2012 OECD report on income equality shows that based on the metric they use (gini coefficient) Australia has the 9th most inequitable income distribution out of 34 countries (i.e. it has the 26th highest gini coefficient). The USA is 3rd after Chile and Mexico.

      A 2013 AUS productivity working party report (http://www.pc.gov.au/__data/assets/pdf_file/0006/122496/income-distribution-trends.pdf)
      found
      "• Between 1988-89 and 2009-10…

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    3. Andy Cameron

      Care giver

      In reply to peter spencer

      Peter, your original claim was about "growing wealth inequality? USA and to a lesser extent Australia have experienced a transfer in relative wealth between workers and senior business managers and owners". You did not mention *income*. Australia has the highest wealth per capita of on the planet, with the 8th lowest (or something like that, level of wealth inequity on the planet.

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    4. David Peetz

      Professor of Employment Relations at Griffith University

      In reply to peter spencer

      Dear Peter,

      I presume that you’re referring to inequality of income, rather than wealth. The cross-national statistics on income inequality are much better than those on wealth inequality.

      I haven’t seen any studies directly comparing the two. Small numbers of observations would be a limiting factor in such analysis, and a few outliers can affect results. I’d expect that the relationship would be stronger on after-tax/transfer incomes (net incomes) than on before-tax/transfer incomes (gross…

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  4. Andy Cameron

    Care giver

    "It found (even before ‘WorkChoices') that Australia had one of the lowest levels of job protection in the OECD (see chart). "
    Data and source are over 10 years old.

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    1. David Peetz

      Professor of Employment Relations at Griffith University

      In reply to Andy Cameron

      Dear Andy,

      thanks for pointing that out. Unfortunately (or maybe fortunately?) the OECD has stopped putting together its composite index of EPL, and so these days it focuses on individual components – though it still does produce an index that is said to measure flexibility in individual and collective dismissals (whereas temporary employment it now considers separately).

      That index of individual and collective dismissals can be found in Table 2.6 of the publication at http://www.keepeek.com/Digital-Asset-Management/oecd/employment/oecd-employment-outlook-2013/protecting-jobs-enhancing-flexibility-a-new-look-at-employment-protection-legislation_empl_outlook-2013-6-en#page24

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