Rethinking Workplace Regulation: Beyond the Standard Contract of Employment

2. Changes in the Labor Market and the Nature of Employment in Western Countries

23 Chapter 2 Changes in the Labor Market and the Nature of Employment in Western Countries morley gunderson T he labor policies of Western developed countries were generally established in an earlier era when the nature of work was quite different from what it is today. The old world of work was generally characterized as male-dominated involving blue-collar manufacturing jobs in a fixed worksite with lifetime jobs often protected by a tariff as well as a collective agreement or employment standards legislation established and monitored by governments that had the power and discretion to enforce regulatory initiatives. The new world of work is vastly different. In such circumstances, it would be surprising if the labor regulations previously established for the old world of work were appropriate and relevant to the new world of work (see also Supiot 1999; Gomez and Gunderson 2005b; Gunderson and Riddell 2000). This chapter outlines the nature of changes in the labor market and employment in Western developed countries that have important implications for labor regulation. Emphasis is placed on Canadian material. This may be of more general interest because Canada is often regarded as between the less intensively regulated regime of the United States and the more extensive regulatory regimes of Europe. This chapter also brings to bear on the issues a neoclassical economics market-oriented perspective. pressures affecting the Standard employment contract Although they are interrelated, various pressures that are affecting the standard employment contract can be categorized as emanating from 24 Rethinking Workplace Regulation the demand side of the labor market, from the supply side, and from its institutional and regulatory features. The impact on labor markets of many of these factors reflects regulatory choices, such as immigration policy, and the decision not to impose labor protections in the structure of global trading regimes. Demand-Side Pressures Skill-biased technological change, such as the use of robotics in assembly -line work and computers in all aspects of the knowledge economy, has fostered a hollowing-out of the occupational structure with former well-paying, often unionized blue-collar jobs in manufacturing that are disappearing and being replaced by jobs at polar ends of the pay distribution : well-paying professional, managerial, and administrative jobs at the high-end, and poor-paying jobs in personal services at the low-end (Autor, Katz, and Kearney 2008). Workers displaced from the former middle jobs generally have industry-specific skills that do not enable them to obtain jobs at the high end so they are displaced to low-end jobs, where their supply influx further depresses wages. The hollowing out of the middle of the occupational distribution also means that the rungs in the middle of the career ladder have often disappeared, leaving groups such as youths and new immigrants trapped at the bottom with fewer chances for upward career progression. Skill shortages at the high-end have often placed a further premium on pay at that end. Globalization and trade liberalization, such as the North American Free Trade Agreement), have meant increasing imports from and outsourcing offshore to low-wage countries like China and India, further depleting the declining middle of what were once secure jobs protected by collective agreements or labor regulations (see, for example, Rodrik 1997; Wood 1996; Yan 2006). Deregulation of formerly regulated industries in sectors like transportation and utilities has generally led to more competitive pressures in those industries, and this has filtered down to more competitive pressures in their labor markets. The same applies to the privatization of services formerly provided in the public sector. In both cases, these pressures have generally led to reductions in wages, employment, and job security, often associated with reductions in collective bargaining protection after deregulation and privatization (Benjamin et al. 2012, 297). As indicated, these demand-side forces have had negative consequences on a number of labor market outcomes. Workers displaced from their jobs who are fortunate enough to find new jobs often take wage losses in the neighborhood of 10 to 30 percent. Wage polarization has also increased the risk of a society of haves versus have-nots. The associated stresses have broad negative social consequences in terms of health Changes in the Labor Market 25 problems, child abuse, spouse abuse, accidents, and criminal activity (Gunderson and Riddell 2000). Supply-Side Pressures Demand-side pressures emanate from employers, but pressures from the supply side of the labor market arise from the changing...