Labor market information
DIFFERENT TYPE OF LABOUR MARKET (Labor Markets Segregated )
In labor markets, labor is supplied by households and demanded by firms. A typical organization is drawing members from several different labor markets. The labor market can be divided or segregated in different forms, such as
i) National and local labor markets;
ii) Internal and external labor markets;
iii) Primary and secondary labor markets;
iv) Different sociological labor market;
National and local labor markets
A national labor market is one in which most job search by employers and firms takes place on a national level. Most job search takes place at a local level in a local labor market. The markets for college professors, top management positions in large corporations, and similar occupations are national labor markets. Secretaries, carpenters, truck drivers, electricians, and lathe operators are employed through local labor markets. A national labor market exists only when there are few employers and employees in most geographical regions. Local labor markets exist when there are many employers and employees in most geographical regions.
Internal and External labor markets
An internal labor market is said to exist within a firm if the firm fills higher level positions in the firm primarily by promotion from within the firm. Firms often rely on internal labor markets because:
o this reduces hiring and training costs,
o it improves employee morale and motivation, and
o it reduces the effect of uncertainty (since the firm has already observed worker productivity.
Internal labor markets are those where workers are hired into entry level jobs and higher levels are filled from within. Wages are determined internally and may be quite free of market pressure.
External labor market refers to the market from where company hires an external person to take over a position within their organization. Examples include some directorships, CEOs, some marketing positions, consulting and contractual appointment in government services. External labor markets imply that workers move somewhat fluidly between firms and wages are determined by some aggregate process where firms do not have significant discretion over wage setting. Positions are filled by hiring outsiders at all levels of the typical firm. Many analysts believe that job mobility is limited by institutional factors, external forces limit firms’ ability to set wages. The external forces are likely to reflect both centralized wage bargaining and market factors that take the form of substitute workers available outside the firm.
Primary and secondary labor markets
Another distinction that is often used to categorize jobs is that between the primary and secondary labor market. Jobs in the primary labor market are characterized by high wages and stable employment relationships. Workers employed in the secondary labor market receive low wages and experience unstable employment relationships. Examples of jobs in the primary labor market include: accountant, lawyer, teacher, carpenter, and plumber. Workers in restaurants, gas station attendants, construction workers, private tutor, short term consultant etc. are employed in the secondary labor market. While primary labor market jobs have obvious advantages, the secondary labor market offers job opportunities that would not be available in the primary labor market to college and university students, adults engaged in extensive child-care activities, and retired individuals. students are not Different Type of Labour Market 5.2 For Class Room Use Only/2 likely to find primary labor market jobs during vacations or for part-time work during the academic year. Those adults who are "stuck" in secondary labor market occupations because of limited job skills and education, however, are not as pleased with finding their only employment prospects in this sector.
Sociological Division of labor Market
Sociologists study labor markets and occupations in order to show the different expectations of different occupational groups and the social forces that create these expectations.
Bureaucratic Labor Market:
The bureaucratic labor market is a useful benchmark in comparing sociological labor markets because bureaucracies are assumed to fill all jobs but the entry one from within the organization. A bureaucracy is a rationally organized hierarchy of positions designed without reference to the individuals who occupy the positions. It is insulated from external labor markets because its labor supply is recruited at the bottom of the hierarchy and promoted from within through training and experience. The labor supply problems in bureaucracies involve primarily the individuals it cannot train itself – professionals, for example. Labor demand is also controlled by the bureaucracy.
Professional Labor Market:
Once it becomes apparent that few organizations can operate as closed bureaucracies, the characteristics of sociological labor markets from which the organization must recruit members become important. Perhaps the market that differs the most from the bureaucratic labor market is the market for professional services. In theory, each professional is unique and the value of his or her service is immeasurable. Supply is fixed in the short run and may decrease with increased demand if professional societies increase admission standards. Demand is highly variable. This fixed supply and varying demand permit professionals to fix their price and determine its basis.
Craft Labor Market:
Next to the professional market, the labor market least within the control of the organization is the craft labor market. In theory, the labor supply of a craft is fixed and the demand is variable. Identification is with the craft rather than the employer. Because fluctuating labor demand and a fixed labor supply could mean fluctuating wages and aggressive competition, craft unions emerge to distribute work, control labor supply, and bargain the price. Craft control of the conditions of sale of craft labor serves to preserve the system of selling labor in standardized units and to prevent the employer from modifying either the system or the attractiveness of work. The crafts determine the contents of craftwork, decide who is qualified to do it, and try to collect a standard rate for all levels of it.
Craft markets are essentially local, and craft controls operate locally. This feature of the craft labor market is the most useful distinction between it and professional labor markets. The building trades, with their tradition of apprenticeship and often a highly homogeneous membership in terms of ethnic, racial, and religious backgrounds, represent the best fit with the craft model.
Semiskilled Labor Market: The market for semiskilled labor, in theory, is a close fit with the bureaucratic model. Labor supply depends on the local labor force. Demand and competition for workers are determined by employers, who design the jobs, provide training, and promote from within. In practice, however, many semi skilled workers are represented by unions, and thus labor supply and wages are determined by collective bargaining.
Unskilled Labor Market:
The market for unskilled labor, if such labor is defined as requiring no skill or training, has almost disappeared. But casual labor is still employed. The supply of unskilled labor is highly variable. Demand is fairly constant in the long run but highly variable in the short run. Minimum wage laws and public opinion prohibit the wide Different Type of Labour Market 5.2 For Class Room Use Only/3 range of wages that could be possible in this labor market. The secondary labor market is analogous to the unskilled labor market.
White–Collar Labor Market:
The market for white–collar workers has some similarities to the bureaucratic model. The organization designs the job often hires at the bottom and promotes from within. Workers are typically affiliated with the employer. But the requirement for impersonal and organizationally rational decisions is no more likely here than it is with semiskilled workers. In fact, many clerical workers today have jobs hardly distinguishable from semiskilled factory jobs. They run machines to produce a product, and their contacts are limited to other employees and supervisors. One possible difference for these workers is that a good portion of their basic skills is acquired in school. A second type of white–collar worker – receptionists and salespeople – have contacts with customers and clients. This seems to be the type that is expanding. Because social interaction is a large part of these jobs and success or failure depends on the way the interaction is handled, such jobs are difficult to standardize.
Managerial Labor Market:
The market for managers is the most diverse of the sociological labor markets. In some ways, it is a close fit with the bureaucratic model. Affiliation is with the organization, and success is defined by the organization. There is a strong tendency to hire at the bottom and promote from within. Pay is geared to status in the organization. But the rational–impersonal dimension of the bureaucratic model is not met, especially at higher levels of the organization. Although the organization designs low– level managerial jobs, above this level the manager is expected to have a voice. Like the second type of white–collar worker, managers must interact with various publics. Interactions with superiors, peers, and subordinates also influence the definition of managerial work.
Unique Services Labor Market:
Although there is a strong tendency to fill managerial positions by hiring at the bottom and promoting from within, higher levels of management may be treated as a market for unique services. In such markets, the supply is one individual and the value of the service is difficult to measure. This market is only partially like the market for free professionals, in that the price is set by individual bargaining. Sociological analysis of various labor markets emphasizes the different forces operating in each. The typical large employer deals with all these markets and must reconcile their various forces in designing compensation policies and programs.
In labor markets, labor is supplied by households and demanded by firms. A typical organization is drawing members from several different labor markets. The labor market can be divided or segregated in different forms, such as
i) National and local labor markets;
ii) Internal and external labor markets;
iii) Primary and secondary labor markets;
iv) Different sociological labor market;
National and local labor markets
A national labor market is one in which most job search by employers and firms takes place on a national level. Most job search takes place at a local level in a local labor market. The markets for college professors, top management positions in large corporations, and similar occupations are national labor markets. Secretaries, carpenters, truck drivers, electricians, and lathe operators are employed through local labor markets. A national labor market exists only when there are few employers and employees in most geographical regions. Local labor markets exist when there are many employers and employees in most geographical regions.
Internal and External labor markets
An internal labor market is said to exist within a firm if the firm fills higher level positions in the firm primarily by promotion from within the firm. Firms often rely on internal labor markets because:
o this reduces hiring and training costs,
o it improves employee morale and motivation, and
o it reduces the effect of uncertainty (since the firm has already observed worker productivity.
Internal labor markets are those where workers are hired into entry level jobs and higher levels are filled from within. Wages are determined internally and may be quite free of market pressure.
External labor market refers to the market from where company hires an external person to take over a position within their organization. Examples include some directorships, CEOs, some marketing positions, consulting and contractual appointment in government services. External labor markets imply that workers move somewhat fluidly between firms and wages are determined by some aggregate process where firms do not have significant discretion over wage setting. Positions are filled by hiring outsiders at all levels of the typical firm. Many analysts believe that job mobility is limited by institutional factors, external forces limit firms’ ability to set wages. The external forces are likely to reflect both centralized wage bargaining and market factors that take the form of substitute workers available outside the firm.
Primary and secondary labor markets
Another distinction that is often used to categorize jobs is that between the primary and secondary labor market. Jobs in the primary labor market are characterized by high wages and stable employment relationships. Workers employed in the secondary labor market receive low wages and experience unstable employment relationships. Examples of jobs in the primary labor market include: accountant, lawyer, teacher, carpenter, and plumber. Workers in restaurants, gas station attendants, construction workers, private tutor, short term consultant etc. are employed in the secondary labor market. While primary labor market jobs have obvious advantages, the secondary labor market offers job opportunities that would not be available in the primary labor market to college and university students, adults engaged in extensive child-care activities, and retired individuals. students are not Different Type of Labour Market 5.2 For Class Room Use Only/2 likely to find primary labor market jobs during vacations or for part-time work during the academic year. Those adults who are "stuck" in secondary labor market occupations because of limited job skills and education, however, are not as pleased with finding their only employment prospects in this sector.
Sociological Division of labor Market
Sociologists study labor markets and occupations in order to show the different expectations of different occupational groups and the social forces that create these expectations.
Bureaucratic Labor Market:
The bureaucratic labor market is a useful benchmark in comparing sociological labor markets because bureaucracies are assumed to fill all jobs but the entry one from within the organization. A bureaucracy is a rationally organized hierarchy of positions designed without reference to the individuals who occupy the positions. It is insulated from external labor markets because its labor supply is recruited at the bottom of the hierarchy and promoted from within through training and experience. The labor supply problems in bureaucracies involve primarily the individuals it cannot train itself – professionals, for example. Labor demand is also controlled by the bureaucracy.
Professional Labor Market:
Once it becomes apparent that few organizations can operate as closed bureaucracies, the characteristics of sociological labor markets from which the organization must recruit members become important. Perhaps the market that differs the most from the bureaucratic labor market is the market for professional services. In theory, each professional is unique and the value of his or her service is immeasurable. Supply is fixed in the short run and may decrease with increased demand if professional societies increase admission standards. Demand is highly variable. This fixed supply and varying demand permit professionals to fix their price and determine its basis.
Craft Labor Market:
Next to the professional market, the labor market least within the control of the organization is the craft labor market. In theory, the labor supply of a craft is fixed and the demand is variable. Identification is with the craft rather than the employer. Because fluctuating labor demand and a fixed labor supply could mean fluctuating wages and aggressive competition, craft unions emerge to distribute work, control labor supply, and bargain the price. Craft control of the conditions of sale of craft labor serves to preserve the system of selling labor in standardized units and to prevent the employer from modifying either the system or the attractiveness of work. The crafts determine the contents of craftwork, decide who is qualified to do it, and try to collect a standard rate for all levels of it.
Craft markets are essentially local, and craft controls operate locally. This feature of the craft labor market is the most useful distinction between it and professional labor markets. The building trades, with their tradition of apprenticeship and often a highly homogeneous membership in terms of ethnic, racial, and religious backgrounds, represent the best fit with the craft model.
Semiskilled Labor Market: The market for semiskilled labor, in theory, is a close fit with the bureaucratic model. Labor supply depends on the local labor force. Demand and competition for workers are determined by employers, who design the jobs, provide training, and promote from within. In practice, however, many semi skilled workers are represented by unions, and thus labor supply and wages are determined by collective bargaining.
Unskilled Labor Market:
The market for unskilled labor, if such labor is defined as requiring no skill or training, has almost disappeared. But casual labor is still employed. The supply of unskilled labor is highly variable. Demand is fairly constant in the long run but highly variable in the short run. Minimum wage laws and public opinion prohibit the wide Different Type of Labour Market 5.2 For Class Room Use Only/3 range of wages that could be possible in this labor market. The secondary labor market is analogous to the unskilled labor market.
White–Collar Labor Market:
The market for white–collar workers has some similarities to the bureaucratic model. The organization designs the job often hires at the bottom and promotes from within. Workers are typically affiliated with the employer. But the requirement for impersonal and organizationally rational decisions is no more likely here than it is with semiskilled workers. In fact, many clerical workers today have jobs hardly distinguishable from semiskilled factory jobs. They run machines to produce a product, and their contacts are limited to other employees and supervisors. One possible difference for these workers is that a good portion of their basic skills is acquired in school. A second type of white–collar worker – receptionists and salespeople – have contacts with customers and clients. This seems to be the type that is expanding. Because social interaction is a large part of these jobs and success or failure depends on the way the interaction is handled, such jobs are difficult to standardize.
Managerial Labor Market:
The market for managers is the most diverse of the sociological labor markets. In some ways, it is a close fit with the bureaucratic model. Affiliation is with the organization, and success is defined by the organization. There is a strong tendency to hire at the bottom and promote from within. Pay is geared to status in the organization. But the rational–impersonal dimension of the bureaucratic model is not met, especially at higher levels of the organization. Although the organization designs low– level managerial jobs, above this level the manager is expected to have a voice. Like the second type of white–collar worker, managers must interact with various publics. Interactions with superiors, peers, and subordinates also influence the definition of managerial work.
Unique Services Labor Market:
Although there is a strong tendency to fill managerial positions by hiring at the bottom and promoting from within, higher levels of management may be treated as a market for unique services. In such markets, the supply is one individual and the value of the service is difficult to measure. This market is only partially like the market for free professionals, in that the price is set by individual bargaining. Sociological analysis of various labor markets emphasizes the different forces operating in each. The typical large employer deals with all these markets and must reconcile their various forces in designing compensation policies and programs.
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