Flexibility bites back: the multiple and hidden costs of flexible employment policies

• Author: Damian Grimshaw,Arjan Keizer,Jill Rubery
• DOI: http://doi.org/10.1111/1748-8583.12092
• Published date: 01 July 2016
• Date: 01 July 2016

PROVOCATION SERIES PAPER

Flexibility bites back: the multiple and hidden costs

of flexible employment policies

Jill Rubery, Arjan Keizer and DamianGrimshaw, Alliance Manchester Business

School, The University of Manchester

Human Resource Management Journal, Vol 26, no 3, 2016, pages 235–251

Flexible labour markets are increasingly regarded as the answer to a wide spectrum of labour market and

societal challenges from creating jobs to reducing segmentation and welfare dependency, improving public

finances and supporting workforcediversity and innovation. Thecontention is that, contraryto these claims,

flexible labour markets generate fundamental contradictions and unsustainable long-term trends. The jobs

miracle is exaggerated and based on low productivity jobs, outsiders often lose most from competition,

claimants must work flexibly but still secure a full-time wage, low-wage employment is shrinking the fiscal

base, jobs are not being adjusted to accommodate workers’changing needs and capacities and the disposable

labour model is undermining long-term productivity.

Contact: Jill Rubery, Alliance Manchester Business School, University of Manchester, Booth Street

West, Manchester M15 6PB, UK. Email:jill.rubery@manchester.ac.uk

Keywords: flexible working; labour market segmentation; work-life balance; welfare state

INTRODUCTION

The UK is famous for its flexible labour market. Not only has it been responsible for an

apparent jobs miracle

1

since the economic crisis but according to the Organisation for

Economic Cooperation and Development (OECD), it offers a model for the rest of

Europe to follow.

2

Its capacity for working economic miracles is said to extend beyond job

creationto promoting less segmented,more inclusive labour marketsfor outsiders, not insiders

(Rueda, 2005), in contrast to dualist European labour markets such as Spain (Bentolila et al.,

2012). It is also held to reduce welfare dependency and welfare costs, thereby also helping to

solve problemsof the public purse posedby the crisis and demographicageing. Flexible labour

markets are also equated with modernisation, with adaptation to an increasingly diverse

labour force by offeringopportunities for work–life balance, unlike traditional inflexible la bour

markets still prevailing elsewhere in Europe. Even zero-hours contracts have been categorised

by some politiciansas a work–life balancepolicy.

3

Finally, flexible labour markets are believed

to facilitate adjustment to transformative technologies (Chesbrough, 2011), therebypromoting

long-term competitiveness and productivity.

These highly positive evaluations are being used to promote the diffusion of flexible labour

markets beyond the archetypical examples of the UK and the US. The absolute insistence on

labour market reforms in the Greek bailout deal reveals the strength of international

policymakers’commitment to flexible labour markets. Much of the counter argument focuses

on the associated low pay and insecure, even exploitative, employment conditions. Here, we

leave this critique on one side, accepting that job quality for its own sake is currently not a political

priority. Instead, we focus on how the claims for flexible labour markets do not stack up, even

given the narrow objectives of international and national governments. The problems we identify

HUMAN RESOURCEMANAGEMENT JOURNAL, VOL26, NO 3, 2016 235

©2016 John Wiley& Sons Ltd.

Please cite thisarticle in press as: Rubery, J., Keizer, A. and Grimshaw D.(2016) ‘Flexibility bites back:the multiple and hidden costs of flexible

employmentpolicies’.HumanResource ManagementJournal26 : 3, 235–251

doi: 10.1111/1748-8583.12092

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derive primarily from three factors: (a) a naive belief among policymakers that labour market

inequalities derive primarily from regulation, (b) insufficient awareness of the complex

interrelations and feedback mechanisms between employment and family, welfare, tax,

education, production and innovation systems, and (c) a belief that it is acceptable for employers

to shed many of their traditional responsibilities towards employees without consideration of the

impact on families and the state. All three factors, we argue, generate major contradictions

between policies and undesirable outcomes even from the perspective of neoliberal policymakers.

Flexibility, thus, has a way of biting back, of creating problems that are neither fully

anticipated nor resolvable within this disposable labour model. The current UK government

is starting to recognise some contradictions, as indicated by the surprise announcement of

significantincreases in the national minimumwage in its July 2015 budget in directopposition

to the mantras of flexiblelabour markets. However, thischange is more a tactical move than a

deep conversion to improving job quality and a cover for reducing low income households’

budgets through deep cuts to tax credits (that is, in-work benefits).

4

To develop our argument, we take six supposed policy benefits of flexible labour markets

and present for each the standard argument for pursuing flexibility before assessing the

plausibility of and evidence for these effects. Finally, for each policy objective, we consider

arguments and evidence that flexibilitymay indeed be biting back, as it createscontradictions

and perverse outcomes. Before unpicking the claimsfor flexibility’s beneficial eff ects, we need

first to explore the various meanings and uses of the term flexibility and clarify the flexibility

policies and practices we will be focusing on. The context is the UK labour market and social

welfare system. Analogous developments are found elsewhere, and we point to examples

where appropriate, but contradictions often take a country-specific form, arising out of the

interplay between social welfare, production and labour market regulations.

FLEXIBILITY –A VERYFLEXIBLE TERM

Fleetwood (2007), in a perceptive article, pointed out that the term flexibility has been

increasingly used synonymously with policies to facilitate work–life balance. Such positive

connotations hide the ongoing trend towards longer and more flexible working hours, which

are actually increasing work–life conflicts. For example, the UK government’s work–life

balance survey interprets flexible working only as opportunities to work in different ways to

combine work and family or personal life (BIS, 2012, 2014). There are no parallel questions

on how often workers ha d to adjust their family schedul e at short notice to meet work

demands. Yet, when policymakers laud flexibility for creating jobs, they have in mind its

impact in reduci ng costs and freeing employers t o hire and fire and deploy labou r

according to demand. And while flexible labour markets are considered to ease the inclusion

of those seeking non-standard hours, this is not followed up by a general obligation on

employers totake employees’needs into account when organisingwork, a move which would

be classified as a return to more rigid and regulated labour markets.

These flexible interpretations of flexibility undoubtedly give rise to ambiguity, intentional

and unintentional. Flexibility may refer primarily to the deployment of labour to include

flexibility in numbers employed, volume of hours and scheduling over the day, week or year.

On the other hand, flexibility is also associated with changes in labour costs and reductions

in the risks and responsibilities borne by employers. To clarify the meanings of flexibility, it is

helpful to takethe standard employment relationship (SER) as a benchmark where this implies

(a) regular, predictable and normally full-time hours with extra hours largely voluntary and

rewarded with additional premia and (b) pay and conditions that not only meet legal

Provocationpaper: costs of flexible policies

236 HUMANRESOURCE MANAGEMENT JOURNAL,VOL 26, NO 3, 2016

©2016 John Wiley& Sons Ltd.