Sonia rao

10-111

The impact of labor market

and other factors on the
changing nature
of human resource
management

Introduction
An assessment of the contemporary labor market
context of HRM and the impact of current trends in
labor supply and demand on the practices associated
with HRM.
Labor market context inevitably shapes the approach a
firm takes to HRM and is one of the key factors in
determining an organizations degrees of freedom in
HR strategic formation
Over recent years a range of developments in the
economic, political, technological and social spheres
have significantly altered the composition of the labor
supply and the types of labor required by
contemporary firms.

Introduction
Firstly , by defining what is meant by internal and
external labor markets before discussing in detail
a range of developments in organizations.
With this in mind, it takes a relatively broad
perspective on the notion of labor markets and
discusses a range of developments that are
taking place inside and outside of organizations.

What is a labor market?

Alabor marketis the place where workers and

employees interact with each other.

In thelab our market, employers compete to hire
the best, and the workers compete for the best
satisfying job.
Labor market information covers theprincipal
elementsof the labor market and its operations.
The principal elements are the demand for labor
and the supply of labor.
Demandmeans
the
number
of
jobs
available.Supplytells you the number of people
who are able work.

What is a labor market?

A labor market can be understood as the
mechanism through which human labor is bought
and sold as a commodity .
to achieve its strategic objectives, a fundamental
concern for an organization is to ensure that it
has the right people with the right skills,
knowledge and attributes in the appropriate
positions.
Two types of labor market
1. internal labour market
2. External labour market

Aamir Nazir
11-101

Internal labor market

The internal labor market refers to that which
exists within a single organization and represents
its internal supply or stock of labor.
internal labor market is the mechanism by which
existing employees are attributed particular roles
within a firm.
The specific characteristics of an organizations
internal labour market are reflective of a number
of HR policy.
internal labour market can fulfil a number of
functions for an organization.

Internal labor market

in seeking to retain employees the internal labor
market can act as a source of motivation.
The operation of the internal labor market can
also be understood as a device for managerial
control through a process of stratification.
internal labor market is often a characteristic of
best practice models of HRM as represented by
the emphasis on employment security and high
levels of investment in training.

External labor market

An external market represents its external supply
or available stock of labor.
Both the types of labor that the firm requires the
potential
pool
of
workers
available
are
determined by the industry sector in which the
organization operates, its central activities, its
location, size and scope and its competitive HR
strategies
Labor markets can be analyzed according to the
distribution of skills, knowledge, educational
achievement and occupational group.

External labor market

We can also view the labor market as being
segmented according to worker characteristics
Such as age, gender, ethnicity, disability, cultural
background or attitude.
It is important to acknowledge that unemployed
labor represents an integral element of the
external labor market.
Which People that are out of work but actively
seeking employment.

Mehwish Hayat
11-102

Unemployment
It is important to acknowledge that unemployed
labor represents an integral element of the
external labor market.
The unemployed or surplus labor in any given
market plays a role in determining the cost of
employed labor.
where there is a large surplus of labor then this
will result in greater competition for jobs.
There are a number of types of unemployment
1. Structural unemployment
2. frictional unemployment

Unemployment
Structural unemployment
Structural unemployment exists where there is a
fundamental mismatch between the supply and
demand for labor.

Frictional unemployment
Frictional unemployment reflects a temporary
mismatch in the demand and supply of labor
which is always present in an economy.

Labor market change

labour market is shaped by a range of processes.
Labor market changes by some factors
1. government policy
2. shifting social attitudes
if the government alters the supply of particular
types of labour to the market through education
and training policies, firms will change their demand
strategies
It is important to note that some elements appear on
both sides of the table stressing the reflexive
relationship between the supply and demand for
labor.

Labor market change

changes to the availability of specific forms of
labour in one part of the world can influence the
relative demand for labour in another.
Labour markets are in a continuous state of
change
not
least
because
of
longterm
demographic trends shaping the composition of
the labour supply.
A further influence on labour market composition
is the long-term trend of increasing female
participation in the workforce.

Beenish Rafaqat
11-104

Economic change and the labor market

Recent developments in the broader economic
context of employment are also altering both the
demand for and supply of labour.
advanced capitalist economies are argued to have
entered an era of post-industrialism (Bell, 1973)
associated with the development of a knowledgeintensive economy.
Watson (2008: 65) defines the Post-industrial
society as a type of economically advanced social
order in which the centrally important resource is
knowledge, service work has largely replaced
manufacturing employment

Emotional labor
Emotional labour as a result of the shift to greater
service sector employment.
EI is defined as the individuals ability to develop
and express a range of skills such as awareness
of the emotions of others, self-awareness,
empathy and influence.

The flexibility of organizational structure

One implication of the changing organizational
context is that as markets become more
unpredictable and dynamic.
changing organizational context
increase the
flexibility of organization.
changes
in
organizational
structure
have
profound implications for workers in terms of job
content, employee motivation, job security and
organizational commitment.

The flexibility of labour

One key determinant of an organization's ability
to respond effectively to a changing and
uncertain business environment is the flexibility
and adaptability of its workforce.
Flexibility of labor is reflected in an employers
ability to: recruit or dispose of labor as required;
alter labor costs
in line with market needs; allocate labor
efficiently within the firm; and, fix working hours
to suit business.
the ultimate objective of flexible labor is the best
utilization of labor to minimize labor costs.

Humaira Ashraf
11-105

Theoperationsof the labour market

Theoperationsof the labour market include
1. Labour exchange searching for workers,
offering people
jobs, hiring activities
2. Government policies and activities created
to help reduce the number of people who do not
have jobs

Labor market failures

Like product markets, labour markets can also fail.
The main types of labour market failure are the existence
ofskills gaps,poaching, labourimmobilityandinequality.
1. Skills gaps, training and poaching
in free markets, there is likely to be askills gap,
because insufficient levels of general skills, such as literacy,
numeracy and IT skills, will be provided by private firms.
Remedies
1. Providing vocational training by sponsoring college and
university courses that are less academic and more focused
on jobs and job skills.

Labor market failures

2. Adding a skills component to academic
courses, such as Keys Skills and Functional Skills
in theNational Curriculum.
3. Giving financial assistance, such as training
grants or subsidized training loans, such as
career development loans.
4. Providing special training via the internet, such
as theLearn Directscheme, which is a recently
established internet training service sponsored by
the UK government.

Labor market failures

2. Labour immobility
Labor immobility means that labour does not
move to where it is in greatest demand.
There are three types of labour immobility.
1. Geographical immobility
2. Industrial immobility
3. Occupational immobility

Komal Javaid
11-107

Labor market failures

1. Geographical immobility
Geographical immobility occurs when
workers are not willing or able to move from
region to region
2. Industrial immobility
Industrial immobility occurs when workers
do not move between industries, such as moving
from employment in the motor industry to
employment in the insurance industry.
3. Occupational immobility
Occupational immobility occurs when
workers find it difficult to change jobs within an
industry

Labor market failures

Remedies
1. Training and re-training schemes to enable
labour to develop their general skills and become
more employable in a variety of occupations or
industries. General skills include transferable
skills like numeracy, literacy and IT skills.
2. Moreinformationabout job vacancies so that
searching for work is easier
3. Subsidies to labour or firms, such as help with
re-location expenses, and subsidized housing.

Labor market failures

4. Incentives to overseas firms locate subsidiaries
in UK regions, such as in Wales or the North East.
5. Incentives to domestic firms to relocate to the
regions, including providing tax breaks and
investment grants.

Human Resource Management

is a function in organizations designed to
maximize employee performance in service of
their employer's strategic objectives. HR is
primarily concerned with how people are
managed within organizations, focusing on
policies and systems.

Muhammad Farooq
11-110

components/Functions of HRM
Recruitment and selection
Recruitment includes such elements such as
Developing job description
Advertising the job postings
Screening applicants
Conducting interviews
Negotiating salaries and benefits

components/Functions of HRM

Training and development

On the job as well as refresher
Measurement &monitoring
Training systems must be streamlined across all
locations in order to make communication and
sharing of resources a convenient task

Professional Development
Leadership training
Education
Encourage the employees with opportunities for
growth
Sponsoring
career advancement seminars,
corporate social responsibility
Provide equal importance to employee

components/Functions of HRM

Benefits and Compensation

Flexible working hours or workdays
Extended vacation time,
Paternity leave or childcare
Medical insurance,
Corporate gym membership discounts
Continuing education/skills development
Award & recognition programs

Tayyiba Ijaz
11-112

components/Functions of HRM
Ensuring Legal Compliance
Compliance with labor, tax and employment
laws is a vital part of safeguarding the
organizations continued existence. HR has to
be aware of all the mandate laws and policies
regarding employment practices, working
conditions, tax allowances, required working
hours, overtime, break times, minimum wage,
and discrimination policies as noncompliance
can affect productivity and ultimately,
profitability of the company.

HRM Issues and Challenges

Quality improvement
Changing workforce
Leadership development
Organizational effectiveness
Learning and development
Technology and training
Quality of working life (QWL)
Change management
Succession planning

Best HRM Practices

Best HRM practices measures
Employment security
Selective hiring
Use of teams and decentralization
(a) Team activities
(b) Interaction facilitation
Compensation and incentives
Contingent on performance
(a)Incentives to meet objectives
(b)Recognition and rewards

Best HRM Practices

Extensive training
(a) Training on job skills
(b) Training in multiple functions
Employee
involvement
and
internal
communication arrangements
(a) Employee involvement and communication of
strategy
(b) Feedback on performance
Internal career opportunities
Job descriptions

Mubashar Shahzad
11-113

Impact of labor market on HRM

The impact of labour market transformation on the human

resource management practices were analyzed by such
authors as Wilton (2010), Kalleberg (2003), Morris (2004),
and others.
These author single out 5 key factors
1. Changes in the composition of economically active
population.
2. The demographic situation.
3. Fluctuations in the rate of unemployment.
4. Legal restrictions.
5. The changing requirements for skill.
The economically active population consists of those who,
during the research period,were working or actively seeking
work (i.e. registered at the Labour Exchange / Job Centre).

Indicators
Key indicators of labour market
Unemployment
The research has revealed that the high level of unemployment
causes concern about not only the unemployed but also the
working population. The high level of unemployment allows
employers to ignore the material and social needs of employees
and to break labour laws.

TheGlobal Employment Trendsreport issued by the

International Labour Organisation (ILO) projected that
Pakistans unemployment rate 5.17% in 2013. For 2014,

ILO claimed unemployment rate will likely rise to 5.29%.

Legal restrictions
The lack of qualified employee

Legal restrictions
A number of laws contain provisions prohibiting child labour
or regulating the working conditions of child and young
person workers. The most important laws are: The Factories
Act 1934. The West Pakistan Shops and Establishments
Ordinance 1969. The Employment of Children Act 1991 The
Bonded Labour System Abolition Act 1992. The Punjab
Compulsory Education Act 1994.
Child labour remains one of the major problems afflicting
Pakistan and its children. Pakistan has passed laws in an
attempt to limit child labour and indentured servitudebut
those laws are universally ignored, and some 11 million
children, aged four to fourteen, keep that country's
factories operating, often working in brutal and squalid
conditions
Consequently, the senior management has felt pressure
while attracting and selecting new employees during
recruitment.

 The lack of qualified employee

The shortage of qualified employees is becoming
one of the key factors hindering economic
development in Lithuania. The labour force
qualifications frequently do not correspond to the
demands of the market, and the phenomena of
structural unemployment and low professional
mobility can be observed. In its turn, the system of
professional orienteering holds numerous flaws, the
quality of training is inadequate, and employers
allot too little attention and money to the training
of employees.

Summary Points
The labor market context of contemporary work
organizations is highly liquid and unpredictable,
shaped by a wide range of economic, social,
technological, legal and political factors.
Changes to the supply of labour, for example,
changing demography, education and social
attitudes, influence the approach an organization
takes to HRM, particularly employee resourcing
and the design of jobs.
Changes to the labour market and organizational
context
of
employment
have
significant
repercussions for Quality of Working Life (QWL)

Summary Points
An increasingly competitive and unpredictable
global economy are argued to require greater
flexibility of both organizational form and labor.