Academic journal article
By Mutari, Ellen; Figart, Deborah M.
Journal of Economic Issues , Vol. 31, No. 3
Many writers on contemporary economic trends seem to agree that we are rapidly entering a new era of flexibility.(1) Yet what flexibility means and whether it is something to be embraced or thwarted is passionately debated, even among institutionalists and other progressives. Three forms of flexibility have been either advocated or implemented to different degrees. The first two, wage and employment flexibility, reassert the central role of supply and demand forces in external labor markets, signaling a return to classical notions of free market equilibrium. Greater wage flexibility has been pursued through labor market deregulation (such as implicitly or explicitly lowering minimum wage standards) and through concession bargaining. Employers' increased use of part-time, temporary, and contingent workers, as well as subcontractors and homeworkers, are all strategies to increase employment flexibility. In the United States, wage concessions, outsourcing, deregulation, and use of contingent labor are also factors contributing to wage polarization [Harrison and Bluestone 1990]. During the 1980s, Europe's relatively higher unemployment rates ("Eurosclerosis") were used by the Organization for Economic Cooperation and Development (OECD) and other international agencies as a basis for positing the United States as a model of labor market flexibility. European governments, especially the United Kingdom, have pursued deregulation and privatization to promote flexibility in external labor markets as a central policy objective, along with the dismantling of European welfare states [Standing 1991; Curry 1992; Howell 1992; Brodsky 1994; Faux 1995a. 1995b]. The result of such flexibility strategies has been a decline in pay levels and employment security.
A third form, functional (or internal) flexibility, focuses on introducing flexibility within firms and the production process itself. The key element in internal labor flexibility is multi-skilling, which permits employers to reassign workers to various tasks in the production process, consolidating the number of job categories in a firm. Under these systems, job descriptions are relatively open-ended, the length of the working day varies, and team work is emphasized.(2) The OECD began to actively analyze internal labor market flexibility in the late 1980s, and the theme has been picked up by individual governments [see OECD 1989; Carnevale 1991].(3) However, the concept of functional flexibility can be traced to research by institutionalists such as Michael Piore and Charles Sabel , who coined the term flexible specialization to describe an emerging system of industrial relations and organization with the potential to replace mass production. Piore and Sabel advocate flexible specialization, which increases the ability of firms to adapt to changing markets, as an economic response to heightened international competition.(4) In the view of these optimistic proponents of the progressive nature of flexibility, new technologies can benefit workers via a return to craft-oriented production processes, reversing the deskilling and alienation associated with mass production [see also Osterman 1988].
Others writing from a critical perspective view internal flexibility as a complement, rather than substitute, for external flexibility? Functional flexibility increases a firm's reliance upon external labor markets by decreasing the traditional power of workers in unionized, core sectors and by reducing career mobility within internal labor markets [Appelbaum 1987: Standing 1989, 1991; Harrison and Bluestone 1990; Rosenberg 1991; Babson 1995]. While Piore and Sabel depict flexibility as driven by a new structure of demand for specialized, rather than mass-produced goods, critics discern a new employer strategy to wrest control over the labor process from unionized workers. The relationship between flexible specialization and Piore's earlier work on dual labor markets is observed, as James Curry [1992, 111] argues that the new theory recasts the characteristics of secondary labor markets into opportunities rather than problems. …