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November 1994, Vol. 117, No. 11
Labor market flexibility: a changing international perspective
Melvin A. Brodsky
Member nations of the Organization for Economic Cooperation and Development (OECD) have experimented over the past 30 years with a variety of policies to promote flexibility in the labor market. Over this period, the term "labor market flexibility" has taken on a variety of meanings, prompting the observation that "rarely in international discourse has the [term] gone so directly from obscurity to meaninglessness without any intervening period of coherence"1 This article traces the evolution of labor market flexibility in the context of changing economic conditions.
Labor market flexibility: the early days
In the early and mid-1960's, low unemployment and tight labor markets prompted governments to use a variety of programs to make labor markets more flexible and efficient. (See table 1.)
Some were targeted at strengthening employment services. The United States broadened the functions of the employment service to include identification of current and long-range training needs and to work with training agencies for screening and selecting trainees. A number of countries made efforts to expand the coverage of the employment service. The United Kingdom established professional and executive registers, and Sweden expanded employment services for white-collar workers.
Others were aimed at strengthening worker training programs. Britain established tripartite industrial training boards to strengthen training activities and finance their operation with a levy on all firms. Canada, France, and Sweden expanded adult training programs and the former West Germany started a program for providing support to workers who wished to take training for further advancement.
Several countries also encouraged geographic mobility. Sweden and Norway expanded programs that provided payments to workers who were willing to leave areas of labor surplus and move to areas where jobs were expanding. France introduced a program of grants to encourage geographic mobility.
In 1965, the OECD Council approved a plan that encouraged member countries to adopt active labor market policies that would help their economies to better adapt to economic change. These policies sought to bring jobs to workers in labor surplus areas, help people of all ages to train or retrain for new occupations, or to move to places with better employment opportunities.
This excerpt is from an article published in the November 1994 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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1 U.S. Secretary of Labor Robert B. Reich, remarks, ILO High Level Meeting on the World Summit for Social Development, Geneva, June 19, 1994.
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