Flexibility and Rigidity in Labour Market:Towards a Balanced Perspective

Flexibility in labour market has come to be seen as aiding efficiency in business operations and thus advocated by neo-classical economists and business leaders. The see the labour market institutions such as trade unions as rigidities. Trade unions, on the other hand, oppose the introduction of flexibility practices on several grounds, the most important being dilution of union power and creation of unemployment. The pro-flexibility groups emphasize only the positive effects that flow from flexibility practices and largely ignore their unfavourable effects. The trade unions often perceive them negatively and fail to realize the positive role that flexible practices could play. This paper is an attempt to provide a balanced perspective on the issues involved in the debate.

'...many so-called "rigidities" in the labour market represent valued protection for the people concerned. It is clear that ...weight should be given to social and human as well as economic factors...'[Paye, 1995, p.7].