The Concept of Flexible Labor

In some dictionaries for social science the term “flexibility” is not defined at all (e.g. Endruweit and Trommersdorff 2002, Hillmann 1994). In those dictionaries that do define the term, the definitions of “flexibility” are superficial, but the existing definitions are helpful as a starting point. Flexibility is generally defined as the ability of an organism to react quickly and reasonably to change or new situations and to adjust its behavior to this new situation. Flexibility is contrasted to rigidity (Reinhold 1997). A different dictionary gives a more specific definition of flexibility in the context of an organization, stating that flexibility means the ability of an organization to adapt to internal forces or changes occurring in its environment. In that context, flexibility is also described as an important basis for stability, continuity, and success within an organization (Fuchs-Heinritz et al. 1994). These definitions miss important aspects that are included in Benner’s definition of flexibility. He defines flexibility “as the ability to change or react to change with little penalty in time, effort, cost, or performance.” And he goes on: “Yet change always entails some cost, and the benefits of flexibility to one actor in the economy may, and often do, come at the expense or loss of others” (Benner 2002, 14). Benner’s criticism of flexibility is described by Brodsky as the general European view of labor market flexibility, whereas he sees the American view concerning flexibility within the labor market as predominately positive (Brodsky 1994, 60).²⁴ Recognizing recent research and developments, we need to acknowledge both positive and negative aspects of flexibility within labor markets. In Europe, the positive aspects of flexibility are increasingly touted, even while negative outcomes become

24 As Benner demonstrates, there are American scientists that are rather sceptical, too. But there is a tendency toward a rather critical European and a rather positive American attitude towards flexibility.

more apparent. In the United States, people have started recognizing the difficulties brought about by flexibility in their lives and have started discussing alternatives. All in all, positive aspects of flexibility are often overemphasized in public discussions in both countries due to the major influence of certain actors in the labor market, such as large corporations and their representatives as well as political voices influenced by industry.

Hence, it is important to point out dangers that come along with constantly increasing flexibility.

Considering all of these aspects of flexibility, it is important to keep in mind that flexibility is a process of adaptation to change that may have benefits for the involved actors but may also be accompanied by detriments for the individuals affected by flexibility.

Labor flexibility

Labor flexibility is not an entirely new phenomenon. Rather, it has always been part of the development of labor processes. Some researchers do not see an increase in flexibility or anything new about the capitalist search for flexibility. They question the empirical groundings of the talk about an increase in flexibility (Pollert 1988, Sayer 1989). Pollert especially disagrees with the analysis of a new flexible workforce, stating that it is not a radically new phenomenon. In addition, she points out that opposed approaches, such as the neoliberal and neo-Marxist approaches, surprisingly agree on their general propositions concerning increasing flexibility in labor (Pollert 1988, 70).

In my view, even if flexibility has always been an issue in capitalist society, there is a clear change in how important flexibility is considered in recent discussions and how it has penetrated the discussion about changes in work and employment conditions. In addition, what is often referred to as increasing flexibility in recent changes in the labor process has a new dimension that was not considered until the end of the 1980s. Pollert and Sayer made the important point that the term flexibility is a highly value-laden concept and often not appropriately defined in studies about flexibility. Also, they noted that the contrast of flexible versus inflexible labor needs to be constantly challenged.

Two years after identifying the loss of importance of the standard employment contract in Germany (Hoffmann and Walwei 1998) Hoffmann and Walwei confirmed a loss of the importance of the standard employment contract in all European countries

(Hoffmann and Walwei 2000).²⁵ Originally one of their propositions was that through a reform of the standard employment contract (e.g., the reduction of the social security contribution), the standard employment contract could be consolidated again. But it has become apparent that their interpretation that the standard employment contract has lost importance was more realistic. The reasons for the decreasing significance of the standard employment contract, however, differ between countries and are not easy to evaluate from existing empirical material.

Another important point of argument was introduced by Mückenberger (1985), who questioned the existence of standard employment from an institutional and regulatory point of view. He emphasized that the standard employment relationship – which is often referred to when talking about an increase in flexible labor – never existed. Whether or not it ever existed, since the mid-1980s the standard employment relationship has lost its role as a “dominant fiction” (Mückenberger 1985, 460, 472).

The origins of some aspects of labor flexibility can be traced back to the 1970s, as changes occurred in the labor force along with changes in the Fordist production system.

Sabel and Piore hit the mark regarding flexibility with their empirical study of the Northern Italian labor market. They argued that a new era of production, which they called “flexible specialization,” had developed. The concept of flexible specialization describes an important step concerning labor flexibility within organizations (see also chapter 1.2).

Aside from this production principle that made discussions about increasing flexibility popular, a common view of labor flexibility differentiates between internal (or functional) and external (or numerical) flexibility. Internal flexibility refers to the restructuring of labor within a firm, for example concerning the arrangements of work hours within a company. External flexibility includes hiring and firing as well as the implementation of flexible employment conditions (see, among others, Matthies et al.

1994). Although internal and functional as well as external and numerical types of flexibility are usually used as synonyms Keller and Seifert draw distinctions among all four types. Internal-numerical flexibility primarily concerns the temporal adjustments of the labor volume to accommodate changing capacity needs. Internal-functional

25 With standard employment contract the authors refer to the full time employment relationship that was typical during the last decades. It is usually associated with a permanent full time position.

flexibility concerns the adjustment of labor organization and broad qualifications of the employees (which is less developed in the Anglo-Saxon countries). External-numerical flexibility concerns the adjustment of the number of employees. And, finally, external-functional flexibility concerns the adaptability of the workforce on the external labor market (Keller and Seifert 2002, 91and 2000, 292).²⁶

But, as Benner points out correctly in his study, the differentiation of internal and external flexibility misses important aspects that are relevant within regional labor markets. In principle, these definitions of flexible labor give too much weight to the role of individual firms, and for network-based organization, the labor process demands a different definition of flexibility (Benner 2002).

In his study of flexible labor markets in Silicon Valley, Benner introduces a broader concept of labor flexibility, which helps in understanding the long-range changes in employment and work. He distinguishes between work and employment as well as between flexible work and flexible employment, because this differentiation helps to point out the controversial effects of flexibility on actors in the labor market. In addition, it helps in analyzing processes across company boundaries. As networks become more important, it is crucial to analyze flexible labor processes not only within a firm’s setting, as is commonly done, but across firms. Benner points out that flexible work helps companies become successful in economic competition. To some extent, flexible work improves employees’ environment as well, although it may have negative effects on workers, too. In Benner’s analysis, work refers to what people actually do while engaged in production. Several aspects of work can be flexible such as work requirements, work-related knowledge, and the quantity of work. Flexibility facilitates performing work that is characteristic of the information revolution. Benner focuses on the pace of the changes. That is, beyond the changes in the quantity of work and the skills, knowledge, and information required, rapid change itself is what most characterizes the labor process in the information economy. In addition, reflexivity – the need to consequently challenge work tasks through applying knowledge, skills, and information – becomes important in the work process. Reflexivity not only makes great demands but also creates opportunities for workers. Flexible work therefore refers to those aspects of the “actual nature of the activities people do while engaged in the

26 Keller and Seifert’s discussion about deregulation as a currently more often addressed aspect of flexibility is briefly discussed in chapter 1.3.

process of production” that face rapid changes and need constant adaptation by the workers (Benner 2002, 22ff.).

Although flexible work, according to Benner’s findings, is necessary for economic success, flexible employment relations are often the result of the institutional, regulatory, or organizational changes made for the benefit of an older industrial economy. Benner notes that these changes may be used to increase short-term profit and to cut costs, but “in many ways undermine the long-term competitive success of the region” (Benner 2002, 5).²⁷ Employment refers to the “informal and formal contractual relationship between worker and employer” and flexible employment includes the rise in external employment relations, such as subcontracted, self-employed or contingent labor, weakening of direct employment contracts, and mediated management practices (Benner 2002, 24). A lot of studies about flexible labor do not differentiate between flexible work and flexible employment. This leads to inaccuracies when interpreting the effects of flexible labor on both employees and employers in the labor market. It is most important to distinguish between the two phenomena, because employees with flexible work conditions do not necessarily have flexible employment conditions and vice-versa.

Moreover, the outcomes of each are, as stated above, quite different.

In 1984 Werner Sengenberger compared the labor market flexibility of the United States with that of Germany. He particularly considered the relation between a highly flexible labor market and the increase in employment in the United States and contradicted the common view that flexibility leads to more employment. During the 1970s and 1980s US employment rose, mainly in the service sector, because the size of the service sector is strongly related to the population growth. Also employment of women and teenagers increased significantly during that time. Nevertheless, the cycle-adjusted unemployment rate increased during that time. Hence, the increase of employment that resulted out of a higher population is accompanied by an increase in cycle-adjusted unemployment. Therefore, the structural component of unemployment increased during the 1970s. Sengenberger argued that flexibility needs to be defined relatively; taking into consideration a system’s starting point before measuring the increase or decrease in flexibility. He suggests looking at the “net-flexibility” when considering the results of an increase in flexibility (Sengenberger 1984).

27 Chris Benner researches flexible labor markets in Silicon Valley. He is therefore interested in the effect of flexible labor on the region rather than on companies. His definition of flexible work and flexible employment is based on the assumption of a diminishing role of companies in contrast to networks within regions.

Contemporary approaches to flexibility have begun recognizing the importance of qualitative and subjective results increasing labor flexibility. The negative aspects of increasing flexibility are discussed by Zilian and Flecker (1998), who question whether increasing flexibility really offers more freedom of action to the employee, as often supposed. Zilian proposes that in reality flexibility leads to a fragmented life (Zilian 1998). I think that this is especially important when looking at flexible labor in informational capitalism. Focusing on quantitative aspects of flexibility limits a full understanding of current developments of economic restructuring. I think that the effects of flexibility are especially significant at the individual level, and further, that modern communication structures play an important role in the subjective dimension of work affecting the individual.

In his definition of labor market flexibility, Brodsky includes the following six categories: flexibility in labor costs, conditions of employment, work practices and work patterns, rules and regulation, mobility, and education and training.²⁸ Brodsky summarizes three general negative outcomes of a flexible labor market: income inequality, workplace turbulence that weakens labor relations practices and human resource policies, and short-term responses that reduce the workforce productivity (Brodsky 1994).

All in all, I agree with Brodsky who concludes his analysis about the term labor market flexibility with the notion that labor market flexibility is a concept that defies a simple definition and indeed has different meanings for different people and in different contexts (Brodsky 1994, 60). Because of this complexity, I have described my underlying understanding of labor flexibility in this study, to help the reader to understand the term as used here. Keeping the difficulties of a definition of labor flexibility in mind, I define labor flexibility as both the qualitative and quantitative adoption to change in the dimensions of space, work, employment and time that have positive as well as negative effects on the involved actors and that occurs in a relatively short time frame and with relatively low costs.