Free Labour markets

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Do free labour markets yield better jobs?
What is a free labour market? Free Labour Markets refer to markets in which employees enjoy a great deal of freedom to manoeuvre. A free labour market is one which is flexible and can adapt quickly to fluctuations in economy, society and production. Free Labour Markets generally exist in Liberal Market Economies where hierarchies and competitive market arrangements exist. Britain, The US and Ireland all have Liberal Market Economies. On the other hand, there are Coordinated Market economies which I will go on to explain later. (Kleinknecht, A (2009) “Flexible labour markets: good for jobs, bad for innovation?” Lisbon Civic Forum, Available from: (http://www.lisboncivicforum.org/lisbon09/kleinknecht_pr.pdf)

So, do these free and flexible labour markets yield better jobs? I am of the opinion that they do not. I will firstly discuss the evidence to show that countries with Coordinated Market Economies and rigidity have better working conditions and thus yield better jobs. Secondly, I will go on to discuss the failure of free labour markets and highlight some of their disadvantages.
Coordinated market economies rely on formal institutions to regulate the market and coordinate the interaction of firms and firm relations with suppliers, customers, employees, and financiers. These exist in countries such as Denmark, Sweden and Germany. There are many benefits to this. Firstly, Coordinated Market Economies provide workers with a sense of security as there is very little hiring and firing. This allows firms to concentrate on long term goals and workers tend to stay in the firm for longer allowing them to be more innovative.
(http://www.answers.com/topic/coordinated-market-economy#ixzz28FUWljjY).
What really strikes me as a key difference between free labour markets and Coordinated Market Economies is the strong presence of Trade Unions in the latter. 74% of employees in Finland, 71% in Sweden and 67% in Denmark are



References: • Kleinknecht, A (2009) “Flexible labour markets: good for jobs, bad for innovation?” Lisbon Civic Forum, Available from: http://www.lisboncivicforum.org/lisbon09/kleinknecht_pr.pdf • http://www.answers.com/topic/coordinated-market-economy#ixzz28FUWljjY • L. Fulton (2011) Worker representation in Europe. Labour Research Department and ETUI Available at: http://www.worker-participation.eu/National-Industrial-Relations/Across-Europe/Trade-Unions2 • “Unemployment Rates, List by Country”, Trading Economics, New York. Available at: http://www.tradingeconomics.com/unemployment-rates-list-by-country • European Working Conditions Surveys (EWCS) http://www.eurofound.europa.eu/surveys/ewcs/index.htm

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