The Labor Market And Employment Security

Considers the effects of employment security on labour market dynamics and productivity.

With the onset of the recession in 1990, job security has moved to the forefront of labor market concerns in the United States. During economic downturns, American employers rely heavily on layoffs to cut their work force, much more than do their counterparts in other industrialized nations. The hardships imposed by these layoffs have led many to question whether the U.S. workers can be offered more secure employment without burdening the companies that employ them. In this book, Katharine Abraham and Susan Houseman address this question by comparing labor adjustment practices in the United States, whether existing policies arguably encourage layoffs, with those in Germany, a county with much stronger job protection for workers. From their assessment of the German experience, the authors recommend new public policies that promote alternatives to layoffs and help reduce unemployment. Beginning with an overview of the labor markets in Germany and the United States, Abraham and Houseman emphasize the interaction of various labor market policies. Stronger job security in Germany has been accomplished by an unemployment insurance system that deters layoffs. In the U.S., the unemployment insurance system has encouraged layoffs while discouraging the use of work-sharing schemes. The authors examine the effects of job security on the efficiency and equity of labor market adjustment and review trends in U.S. policy. Finally, the authors recommend reforms of the U.S. unemployment insurance system that include stronger experience rating and an expansion of short-term compensation programs. They also point to the critical link between job security and the system of worker training in Germany, and advocate policies that would encourage more training by U.S. companies.

Since the oil crisis of the 1970s, increased labor market flexibility seems to have become an indispensable ingredient of economic success. This book examines the critical issues that affect labor market flexibility and job security in the main industrialized economies of the United States, Japan, West Germany, the United Kingdom, and Europe, in an attempt to more fully understand the complex forces at work within such labor markets. Employment Security and Labor Market Flexibility originated from The International Symposium on Labor Market Flexibility in Yokohama, Japan, in 1986, in which scholars in economics, industrial relations, and labor law scholars scrutinized the similarities and differences of the labor markets in these countries. They focused on three main topics: wage flexibility in response to changing economic conditions, the legal and institutional framework for employment security, and international comparison of employment adjustment. Comparison of wage flexibility as well as numerical and functional flexibility among these countries were examined by both qualitative and quantitative analyses. The labor market cannot be treated in the same way as other markets because it deals directly with human beings who are less likely to obey the immutable laws of the market mechanism. Nevertheless, Kazutoshi Koshiro asserts that it is still important to build a framework on which to understand and assess the role of labor flexibility in the competitive process, and it is with this framework in mind that these chapters have been assembled into one volume. Individual chapters compare the relative flexibility of compensation and employment over the business cycle in the United States with that of Japan; analyze the relative flexibility of Japanese wages; unravel some of the underlying forces that comprise the employment security situation in the United States; study the important relationship between economic conditions and the labor market and explain the difference between the employment protection legislation of the United States on the one hand, and Europe and Japan, on the other; and compare the nature of labor markets and employment adjustment techniques of the United States, Europe, and Japan.