Transitional Labour Markets

From Risk to Opportunity: Labour Markets in Transition project, 2003-2004

click here to download Background Paper (March 2004)

The fundamental aim of this project is to explore new institutional arrangements in the area of social policy to cope with structural change in both labour markets and household formation. The project uses the idea of key labour market transitions both explore to the dynamics of labour markets over the life course for individuals or groups and to envisage new types of institutional arrangements that serve to manage risk and enhance people's capacity for social participation.

There is a widely held view that Australia's seeming incapacity to produce adequate full-time, remunerative work, distributed equitable amongst households, amounts to a social crisis (Borland et al. 2001). Australia appears to be faced with a growing gulf between 'employment-rich' and 'employment poor' households, a gulf which now has regional and spatial aspects as well as social. Recent experience shows that jobs growth alone cannot address the marginalisation of large numbers of people of workforce age nor bring down welfare caseloads. The proportion of people of workforce age in receipt of social security has grown and remained high, even while the numbers of officially unemployed have fallen by over four percentage points since the early 1990s (Reference Group on Welfare Reform 2000). That is, the problem appears to be not a lack of jobs but a lack of good waged, full-time jobs that allow for self-sufficiency. A reduced unemployment rate may in fact mask the emergence of other forms of workforce divisions. Recently evaluating the outcomes of labour market deregulation in Australia, Campbell and Brosnan (1999) conclude that 'deprivation can no longer be seen as confined to the sphere of unemployment but, in fact, extends deep into the sphere of employment'.  

At the same time, greater diversity of working arrangements widen the range of choice open to workers and potential workers. We know that changing demographic and household structures and patterns of family formation have diversified working-time preferences over the life course. Young people remaining in education longer and women caring for young children or aged relatives are two examples where there has been an increasing demand for jobs not organised on a traditional full-time basis. Yet there remains a concern as to how much the demand for non-traditional jobs represents constrained choice. Furthermore, the new casual and part-time employment is also a destination for a disproportionate share of the unemployed and other welfare beneficiaries. There is no guarantee that such jobs lead to better jobs as earnings mobility at the bottom of the labour market appears fairly limited. A recent OECD (1997) study concluded that in the US labour market the predominant flow seems to be between no-pay and low-pay, and back again. 

We can discern the consolidation of new patterns of intermittent employment as people move between periods of unemployment, short-term or low paid employment, participation in government-sponsored schemes and periods of withdrawal from the labour force. For many, working life now consists of a variety of jobs and employment statuses across the life course and the management of transitions between them. The old dichotomy that seems to inform much social policy debate here and overseas - that of 'welfare' versus 'work' - is clearly no longer sustainable. 

The concept of 'transitional labour markets' (TLMs) offers a useful way forward. Drawing on the work of Gunther Schmid (1995), the project identifies four main pathways between standard employment and other statuses. These are: the education-to-work transition, the transition between unemployment and work, the transition between unpaid work and paid work, and the transition to retirement. These TLMs, as an analytical concept, allow us to observe the increased blurring of the borderline between paid work and other activities in the face of structural change. Yet the idea of TLMs also provides a normative concept that allows us to assess the quality of key transitions (Cebrian, Lallement and O'Reilly 2000). Many transitional states represent churning or revolving doors whereby periods of temporary or precarious employment merely interrupt longer patterns of unemployment or non-employment and indicate a labour market segmented between skilled, secure elites and an underpaid, insecure class of secondary workers. By contrast, 'quality' TLMs facilitate social inclusion and adequate sources of livelihood.

Adapting Schmid (1995), we suggest an assessment of quality TLMs will focus on three questions. The first concerns financing mechanisms, that is, how combinations of wages, transfers payments and other income sources can support the living standards of people or households in transitional labour markets. The second is one of regulatory environment, that is what legislative and/or collectively or privately contracted entitlements govern people's participation in transitional employment and how these allow choices to be made between different activities according to shifting preferences and circumstances during the life course. The third question asks whether such financial and regulatory frameworks empower individuals when faced with critical life events and increase their capacity to cope with new risks.

Much of the work in Europe has been directed at the capacity of TLMs to prevent unemployment or to integrate previously unemployed people into paid employment. From a macro-economic perspective, the growth in part-time employment might also make economic growth more job-intensive (see, eg, Walwei 1998 on the Netherlands experience). This project plans to move beyond this concern by marrying the idea of TLMs more closely with a life course approach. An important feature of the postwar life course was the idea of a linear progression through a series of age-related norms. This means that many transitional labour markets could easily be identified with certain life course stages. Yet whereas postwar life course transitions tended to be few, predictable and linear, the emerging life course appears to comprise transitions that are multiple, random and recurring. Seen in this light, TLMs need to cater for a more diverse group of people and be conceptualised in a wider context of both appropriate social policy 'packages' and value judgements about the balance between paid employment and the enhancement of productive non-market activities.

Utilising the TLM approach in Australia will, therefore, require detailed research of a series of interrelated policy areas. For example, a focus on work to retirement includes issues such as the relation between social security and superannuation, the availability of retraining, personnel management at the enterprise level and the financing of long-term aged care. Similarly, the question of the transition between unemployment and employment involves the articulation between employment service delivery and active labour market policies, the interaction of the wages and welfare systems, and the structuring of eligibility conditions around unemployment support. In this second case, the past decade or so has witnessed major change which makes the boundary between 'work' and 'welfare' far more permeable than in the postwar period (Gregory et al. 1999; Pech and Landt 2000). 

The Chief Investigators are particularly well-placed to undertake this broad research agenda. Over the past two years, Linda Hancock and Brian Howe have been pursuing various aspects of this research agenda in collaboration with the Brotherhood of St Laurence and the Committee for Economic Development Australia (CEDA). That work has shown the strengths of applying a life course approach to interrogating social policy in Australia and for formulating proposals for policy reform within given sectors (see Hancock, Howe and O'Donnell 2000; Hancock, Howe, Frere and O'Donnell 2001). In particular, aspects of the transition between unpaid and paid work in the context of work/family balance and the gender contract, and the 'moral economy' of retirement were the focus of attention (Hancock 2002; Perry 2001). As well, that project mapped emergent issues in the policy fields of income support, lifelong learning, housing and workplace relations. In doing so, it delineated a new set of issues around institutional frameworks and the intersections between policy provision across various social policy fields that this current project will address.

At the same time, Professor Mark Considine, Director of the Centre for Public Policy, has carried out major research in the area of employment services in Australia (Considine 1999, 2000, 2001; Considine and Lewis 1999). The research represents a major contribution to our understanding of 'welfare-to-work' or active labour market policies and hence of the unemployment to employment transition. As well, the work positions its analysis of policy within new models of governance and emerging regulatory environments based around contractualism, public-private partnerships and 'networked' administration.

The Chief Investigators are now positioned to consolidate aspects of these various research projects into the major program outlined above and to address the new questions that have arisen. The Chief Investigators and industry partners have been in loose collaboration around these issues, along with a diverse group of leading Australian scholars working in various fields of social and labour market policy, including income security, workplace relations, family policy and demographic change, housing policy, retirement policy and welfare state design (see, eg, Hancock, Howe and O'Donnell 2000; Hancock, Howe, Frere and O'Donnell 2001). They now have the capacity to mobilise these wide networks of expertise with a view to modelling policy scenarios in a multi-dimensional manner. This means the current project will have a strong focus on both policy development and inter-sectoral thinking. The program is specifically designed to be of national importance, to produce continuing, long-term benefits, to enable collaboration between leading scholars with proven track record in the fields of social policy, public policy and social economics, and to continue firm working relationships between the University of Melbourne, Deakin University and the industry partners.

References

ACIRRT (1999), Australia at Work: Just Managing?, Prentice Hall, Sydney.

Borland, J.; Gregory, R.G. and Sheehan, P. (2001), Work Rich, Work Poor: Inequality and Economic Change in Australia, Centre for Strategic Economic Studies, Victoria University: Melbourne.

Buchanan, John and Sue Bearfield (1997), Reforming Working Time, Brotherhood of St Laurence, Fitzroy.

Buchanan, John and Barbara Pocock (2002), 'Responding to Inequality Today', Journal of Industrial relations, vol. 44, pp 108-135.

Campbell, Iain and Peter Brosnan (1999), 'Labour Market Deregulation in Australia: The Slow Combustion Approach to Workplace Change', International Review of Applied Economics, vol. 13.

Cass, Bettina and David Cappo (1995), Social Justice and the Life Course: Work, Social Participation and the Distribution of Income, Occasional Paper No 4, Australian Catholic Social Welfare Commission, Canberra.

Cebrian, Immaculada, Michel Lallement and Jacqueline O'Reilly (2000), 'Introduction' in Jacqueline O'Reilly et al., eds, Working-Time Changes: Social Integration Through Transitional Labour Markets, Edward Elgar, Cheltenham.

Considine, Mark (1999), 'Markets, Networks and the New Welfare State: Employment Assistance Reforms in Australia', Journal of Social Policy, vol. 28, pp183-203.

Considine, Mark (2000),  'Selling the Unemployed: The Performance of Bureaucracies, Firms and Non-profits in the New Australian "Market" for Unemployment Assistance', Social Policy and Administration, vol. 34, pp 27-95.

Considine, Mark (2001), Enterprising States: The Public Management of Welfare-to-Work, Cambridge University Press: Cambridge.

Considine, Mark and Jenny Lewis (1999), 'Governance at Ground Level: The Front-line Bureaucrat in the Age of Markets and Networks', Public Adminsitration Review, vol. 59, pp 467-80.

Gregory, B, E Klug and YM Martin (1999), 'Labour Market Deregulation, Relative Wages and the Social Security System' in S Richardson, ed, Reshaping the Labour Market: Regulation, Efficiency and Equality in Australia, Cambridge University Press, Melbourne.

Hancock, Linda (2002), 'The Care Crunch: Families, Policies and Shifts in Labour Markets and Households',  Critical Social Policy, vol. 22.

Hancock, Linda, Brian Howe and Anthony O'Donnell, eds (2000), Reshaping Australian Social Policy: Changes in Work, Welfare and Families, Growth no. 48, CEDA, Melbourne.

Hancock, Linda, Brian Howe, Marion Frere and Anthony O'Donnell, eds (2001), Future Directions in Australian Social Policy: New Ways of Preventing Risk, Growth no. 49, CEDA, Melbourne.

Howe, Brian and Anthony O'Donnell (2000), 'Working Life, Families and the Welfare State' in Marjorie Quinn and Wendy Weeks (eds), Issues Facing Australian Families, 3rd ed, Longman, Sydney, pp. 225-239.

Landt, John and Jocelyn Pech (2000), 'Work and Welfare in Australia: The Changing Role of Income Support', Paper presented at the Australian Institute of Family Studies Conference, Sydney, 24-26 July.

Levitas, Ruth (1996), 'The Concept of Social Exclusion and the New Durkheimian Hegemony'. Critical Social Policy, vol. 16, pp 5-20.

O'Reilly, Jacqueline, Immaculada Cebrian and Michel Lallement, eds (2000), Working-Time Changes: Social Integration Through Transitional Labour Markets, Edward Elgar, Cheltenham.

Perry, Julia (2001), 'The Moral Economy of Retirement' in L Hancock et al., eds, Future Directions in Australian Social Policy: New Ways of Preventing Risk, Growth no. 49, CEDA, Melbourne.

Reference Group on Welfare Reform (2000), Participation Support for a More Equitable Society, Final Report, Department of Family and  Community Services, Canberra.

Schmid, Gunther (1995), 'Is Full Employment Still Possible? Transitional Labour Markets As a New Strategy of Labour Market Policy', Economic and Industrial Democracy, vol. 16, pp 429-456.

Schmid, G, J O'Reilly and K Schomann (1996), International Handbook of Labour Market Policy and Evaluation, Edward Elgar, Cheltenham.

Walwei, Ulrich (1998), 'Are Part-Time Jobs Better than No Jobs?' in J O'Reilly and C Fagan, eds, Part-time Prospects: International Comparison of  Part-time Work in Europe, North America and the Pacific Rim, Routledge, London.

For more information, please contact the Centre Manager, Lauren Rosewarne.