Rethinking Workplace Regulation: Beyond the Standard Contract of Employment

1. The Transformation of Employment Regimes: A Worldwide Challenge

1 Chapter 1 The Transformation of Employment Regimes: A Worldwide Challenge katherine v.w. stone and harry arthurs A round the world, workers are embattled, labor markets are in disarray, and labor laws are in flux. The premise of this volume is that the decline of the standard employment contract is both a cause and an effect of these developments. Employment relationships, we argue, have become increasingly unstable in most industrialized countries and this instability is undermining the regulatory regimes that organized and governed labor markets and employment relationships for much of the twentieth century. As a result of the breakdown in regulation , we further contend, working people are increasingly experiencing the debilitating social, political, and psychological effects of growing economic insecurity and inequality. And, finally, we believe it unlikely that the standard employment contract can be revived or that the regulatory regimes once intertwined with it can be resuscitated. In the wake of the decline of the standard employment contract, new regulatory approaches are emerging in many places and in disparate forms. These approaches are sometimes local small-scale initiatives, sometimes national in scope. The focus of this volume is on innovations in labor market regulation that might conceivably improve the lot of workers involved in new, nonstandard types of employment relationships . After assessing the extent and significance of the decline of the standard employment contract, we and our coauthors explore changing legal conceptions of the employment contract, new forms of worker organization , experiments with decentralized regimes of regulation and dispute resolution, and linkages between labor market regulation and social policies. We also examine challenges and opportunities for trans- 2 Rethinking Workplace Regulation national learning and borrowing that grow out of the current regulatory disarray. For four or five decades after 1945, in most industrialized countries, large numbers of workers enjoyed an array of job rights that included decent wages, protections against unfair treatment at work, social insurance provided by the state or the employer and, notably, some degree of job security. These rights comprised what many describe as the standard employment contract. Some elements were literally contractual—that is, part of a bargain between employers and employees, whether individually or collectively negotiated. Some were regulatory requirements layered on top of the individual contract of hire. For example, to reinforce the norm of job security, many industrialized countries gave workers effective protection against arbitrary dismissals, made redundancies prohibitively expensive, and placed strict limits on the ability of employers to use nonstandard workers, such as those hired on temporary or shortterm contracts and independent contractors. The standard employment contract, though not universal, nonetheless constituted a norm such that an employer’s failure to conform might well result in social, economic, or legal sanctions. Moreover, in most industrialized countries, the standard employment contract was the platform from which many other social rights—old age assistance, vacation entitlements, health insurance, and so on—were delivered . State-sponsored labor market policies—skills training, job creation , unemployment insurance—likewise assumed, promoted, and normalized the standard employment contract. The standard employment contract was thought to be foundational for other economic labor market policies as well. It provided the logic underpinning the growth of internal labor markets in which workers developed narrow job-specific skills and knowledge in exchange for advancement opportunities and seniority -related benefits within the firm. It provided workers with the confidence to assert their rights under labor standards and health and safety legislation. And, by giving workers the actual or potential experience of working together over extended periods, the standard employment contract taught them how to organize for industrial and political action. Finally, it is fair to say that the standard employment contract became one of the pillars of the postwar economic system. Decent wages gave workers the opportunity to consume, to acquire the accoutrements of middle-class life, and to better the prospects of their families. The availability of long-term employment gave them the confidence to save and invest either directly, in housing and other capital goods, or indirectly, through their pension and benefit funds. Moreover, the standard employment contract, by providing governments with a dependable revenue stream based on income and consumption taxes, made possible the postwar welfare state. The Transformation of Employment Regimes 3 Of course it is easy to overstate the case. Job tenure—a key feature of the standard employment contract—was neither automatic nor universal . In most countries it emerged only gradually, as...