Institutional Aspects of Youth Employment and Training Policy in Britain

Public policy towards youth employment and training in Britain during the past decade has been dominated by two themes: the quest to reduce youth relative pay, as part of a wider deregulation of the labour market, in order to increase access to jobs and training: and the neglect of apprenticeship in favour of the Youth Training Scheme. This paper analyses these policies in an institutional framework informed by the results of a recent research project on youth activity in industry in major EC economies (Marsden and Ryan 1986, 1988, 1989, 1991).
The policy debate in Britain has tended to focus upon the effectiveness of lower youth pay at improving youth access to jobs and training (Wells 1983; Jones 1985; Junankar and Neale 1987). We accept the efficacy of lower youth pay but question its institutional viability. Youth employment and training policies must be well grounded in labour market institutions in order to achieve success. We argue that neglect of the institutional context accounts for the lopsided and partial success resulting from current policies in Britain, and that the revitalization of apprenticeship, either as such or in the equivalent form of a strongly upgraded public training scheme, has a great deal to offer.
We begin with an outline of the relevant institutions. We trace their implications for outcomes in the youth market, contrast the divergent institutional directions taken by West Germany and the UK, and finally assess contemporary British policy towards youth activity in general and apprenticeship in particular.     

Trade Union Policies towards the Youth Training Scheme: Patterns and Causes

The Youth Training Scheme presented British unions with a mix of opportunities and threats. Patterns of interest in and policy towards YTS among the 42 largest unions are studied for 1983–8. Most unions showed interest in YTS but they divided sharply on whether or not to oppose it. Statistical analysis indicates a role for both economic and political factors in determining differences between unions in interest and policy. Opposition proved most intense and widespread among unions that represented the lower-grade occupations in the public sector. Such unions were heavily affected by trainee-employee substitution and in addition were relatively well placed to enforce its exclusion. Left-wing political orientation was also associated with opposition to YTS, but at the level of principle rather than action.     

Institutional Aspects of Youth Employment and Training Policy: Reply

The central issue in dispute is the relative merit of occupational and internal labour markets for youth opportunities, and for skill retention and employee motivation in general. We stress the critical importance of 'rate for job rules' in ILMs in regulating youth entry in Western countries, and suggest some reasons consistent with our basic argument why ILMs may avoid these in Japan. ILMs in Europe and the USA have generally produced lower-quality training and created serious problems for redeployment, without necessarily enhancing efficiency. We suggest that, under YTS, the transfer of government subsidy to trainees was more apparent than real.     

Recent Developments in the German Apprenticeship System

After passing through a period of relative crisis in the first half of the 1980s, by the end of the decade the 'dual system' appeared once again capable of providing Germany with the highly skilled work force it needed to meet the challenges of the twenty-first century. This paper reviews the changing nature of apprenticeships and apprentices that has taken place over the last decade and the responses of government, the training authorities and employers to the sharp decline in the number of young people entering the labour market in recent years. Particular attention is given to the process of reforming and updating training regulations — a major concern of the parties involved in training over the last two decades. Finally, the paper suggests that unification of the two Germanies makes the future of the youth labour market and the labour market for skilled workers very unclear.     

Profit Sharing for Increased Training Investments

This article investigates whether paying a profit‐related wage stimulates training investments. The results point to increased worker effort and wage flexibility as two channels through which profit sharing enhances investments in training. While both effects are found for young workers, for older workers, profit sharing mainly affects training investments through greater worker effort. The results suggest that profit sharing can be especially useful for stimulating training among older workers, a growing group in the labour force with a relatively weak labour market position due to a lack of training.     

Skills shortages and training: a forgotten dimension in new technology

Skills shortages and training problems are forgotten by many companies when they adopt new technology. 52 engineering firms in a 'traditional' industry in a single local labour market were interviewed to examine their attitudes to new technology and the skills and training implications of technology adoption. Skills and training issues were often forgotten or misjudged during the new technology appraisal process. It was these same areas which created most problems for many companies after adoption. Misjudgements concerning the level of labour force flexibility and training requirements for staff often created problems after the adoption of new technology. Skills shortages for adopting firms are most acute at the skilled level, this predominantly concerns the 'local labour market'. Most firms adopted a short term response to skills shortages. Relatively low utilisation of policy initiatives and 'formal' avenues of assistance prior to new technology adoption were also identified.     

Labour Adjustment Implications of Service Offshoring: Evidence from Canada

About one‐fifth of Canadian employees are in jobs that are vulnerable to service offshoring. Despite this figure, both theory and our empirical evidence (based on a variety of methodologies and datasets) suggest that the offshoring of business services is not likely to lead to large adverse employment effects. We also conclude that existing active labour market adjustment policies (e.g. increased labour market information, job search, mobility and training) developed for other adjustment pressures such as technological change and free‐trade in goods are just as appropriate (perhaps even more so) to deal with the consequences of service offshoring.     

Job Mobility in Europe,Japan and the United States

Evidence about job mobility outside the United States is scarce and difficult to compare cross‐nationally because of non‐uniform data. We document job mobility patterns of college graduates in their first three years in the labour market, using unique uniform data covering 11 European countries and Japan. Using the National Longitudinal Survey of Youth, we replicate the information in this survey to compare the results with the United States. We find that (a) US graduates hold more jobs than European graduates, (b) contrasting conventional wisdom, job mobility in Japan is only somewhat lower than the European average, and (c) there are large differences in job mobility within Europe.     

Never Say Never? Uncovering the Never‐Unionized in the United States

This paper analyses individuals who never hold a unionized job and are never represented by a union ('never-unionized'). Using 21 waves of the National Longitudinal Survey of Youth 1979 data to track individuals starting at age 15 or 16, we show that by the time workers are 40 or 41 years old, one-third of them are never-unionized, and a convex never-unionization trajectory suggests that most of them will remain never-unionized. An analysis of the demographic and labour market characteristics of the never-unionized further suggests two types of never-unionized workers — those who lack opportunities for obtaining unionized jobs and those who lack the desire to obtain unionized jobs.     

Gender Discrimination in Training: a Note

Existing research evidence generally leads to the conclusion that females are disadvantaged in terms of access to job-related training. This paper reconsiders the evidence for Australia using data collected as part of the 1993 Survey of Training and Education. The findings indicate that, while men could be expected to receive more training as a result of their labour market endowments, this is more than compensated for by a gender effect in favour of women. Comparison with results from an analysis of similar data for 1989 suggests a marked change in the pattern of training in favour of women.     

The Swedish Model: Relevant for Other European Countries?

By the late 1970s, supply-side theory had become something of a new economic orthodoxy. From the supply-side perspective, labour market inflexibility explains mass unemployment. In this context the presumably greater flexibility of the labour market in the USA was seen as an explanation of its superior employment record relative to European economies. Unlike most European countries, Sweden, which is highly regulated, does reasonably well in employment terms. The authors conclude that the Swedish model has proved its value with regard to labour market policy, especially with regard to the duration of unemployment, and that the Swedish model still contains relevant characteristics for other European countries. Active labour market policy is a way out of the unemployment trap. The active labour market policy may serve as an alternative for deregulation in order to augment the flexibility of the labour market.     

Local perspectives on new process technology and employment

This article examines the introduction of new process technology into a local labour market in the late 1980s and relates variations in adoption rates to establishment characteristics. The authors highlight the contrasts in the employment outcomes and training requirements in adopting and non-adopting establishments and find that 'adopters' expect more changes in employment, more skills shortages and have a greater awareness of future training needs.     

Instruments of adjustment in recession: The case of R and D personnel

This paper examines the implications for the management of the stock of labour under recession conditions. First a labour market model which contrasts that model with a 'normal' commodity market is developed. A central feature of a labour market model is that it is characterised by wage fix-employment flex policies due in no small part to the 'peculiarities' of the commodity labour. Secondly, we examine how following falls in revenues, wages and employment are brought back into alignment with product market conditions. We find that policies on the management of labour under these conditions are product market driven but with attention being paid to both objective business variables, such as markets, products, revenues, labour costs and productivity and more subjective elements such as the firm's 'reputation' as a 'good' employer. These two possibly conflicting elements are reconciled by policies using 'instruments of adjustment' to reduce and restructure the labour stock while holding wage levels relatively fixed.     

The Effects of Working Time, Segmentation and Labour Market Mobility on Wages and Pensions in Ireland

Most research on pay and benefit differences between full– and part–time work focuses on characteristics of part–time workers and part–time jobs. However, part–time jobs are more open to labour market 'outsiders', and such labour market mobility can influence wages. We analyse the effects of working time, gender, segmentation and mobility on wages and pension benefits in Ireland. Both segmentation and mobility influence wages directly, and controlling for segmentation in a wage model eliminates the negative effect of part–time working. The wage effects of labour market mobility differ by gender and labour market segment. Pension entitlement is strongly influenced by gender, working time, labour market segment and mobility.     

Training and Labour Market Flexibility: Is There a Trade-off?

This paper explores the nexus between work-related training and labour market 'flexibility' (which we proxy by contract type, part-time employment and lack of union coverage), using the first five waves of the British Household Panel Survey (BHPS) conducted over the period 1991–5. Our results show that workers on short-term employment contracts, who are working part-time or are not covered by a union collective agreement, are significantly less likely to be involved in any work-related training to improve or increase their skills. These findings suggest that there is a trade-off between expanding the more marginal forms of employment and expanding the proportion of the work-force getting work-related training.     

Labour Market Incentive Structures and Employee Performance

Abstract : This paper uses data from the International Social Science Programme Work Orientations Module to investigate whether there is empirical support for Soskice's (1990, 1991) hypothesis that there is a difference in labour market incentive structures between northern European 'flexibly co-ordinated' systems and the 'uncoordinated' or 'deregulated' systems of the UK and the USA, which generates improved employee co-operation and performance in the former. Labour markets in 'uncoordinated' systems are found to generate the better employee work performance. Little support is found for the existence of a 'flexibly co-ordinated' type of labour market incentive structure. Instead, labour market incentive structures are found to be heterogeneous.     

There is power in a union? Union members' preferences and the conditional effect of labour unions on left parties in different welfare state programmes

This article studies the effect of labour unions on policy-making in six different parts of the welfare state (passive and active labour market policy, employment protection, old-age pensions, health care and education) in OECD countries after 1980 with a two-level strategy: At the micro-level, we investigate union members’ preferences. Ordered logit regression analyses indicate that union members favour generous social policies more strongly than non-members. Moreover, this effect is stronger for programmes closely related to the labour market than for programmes without a strong labour market link. At the macro-level, we investigate the conditional effect of unions on left parties expecting the former to push the left towards more generous labour market-related (but not towards less-labour market-related) programmes. Regression analyses essentially provide evidence for such a relationship. Overall, unions have been powerful in promoting their members’ social policy preferences via left parties in government but their power is recently vanishing.     

Oligopsonistic Cats and Dogs

This paper examines strategic investment behaviour when firms have oligopsony power in the input market. Focusing on the labour market, we study how a firm’s labour supply augmenting investment affects the equilibrium when oligopsonistic firms set wages. Relative to a non-strategic benchmark, optimal investment strategies involve boosting investment that leads rival employers to cut wages, but involves cutting back on investment that causes the latter to increase their wages. Implications of existing labour market policies for strategic investment are also discussed. Finally, the model is generalised to nest wage and employment competition and is extended to include other types of investment.     

Economic integration and new firm formation: Britain's impact on Irish enterprise

The paper examines the impact of economic integration on enterprise in a small open economy. The paper analyses large, small and total new company registrations in Ireland. It examines the impact of spill-overs from the United Kingdom labour and product markets on Irish firm formation. The study finds that negative labour market spill-overs dominate positive product market spill-overs so that a net negative effect results from Irish-British economic integration. The results indicate that enterprise in peripheral economies may be more vibrant if product market integration is introduced before labour market integration. The paper also finds enterprise to be positively affected by the number of university graduates in the labour force. House prices are found to have a net negative impact on enterprise.     

Sharing Risks of Labour Market Transitions: Towards a System of Employment Insurance

The increasing polarization of the labour market is closely related to the spread of non‐standard employment relationships that largely results from poor risk management of critical transitions over the life course. The question, therefore, arises whether labour market regulation, in particular unemployment insurance, is still properly designed for the new world of work. This article argues for an extension of unemployment insurance towards a system of employment insurance by summarizing the concept of transitional labour markets, indicating the risks that challenge current and future labour markets, laying the theoretical groundwork, and discussing the main features of an employment insurance system.