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This was necessary due to international competition generated by trade liberalization and the free movement of capital. To reverse the trend towards more insecure, unstable, unprotected and low-paid work currently affecting many workers all around the world, the solution must also take account of the broader context of power relations within the global economy.

This is becoming even more important as, at global level, economic power relations are pushing workers more and more in the direction of job insecurity. Many may not yet be in a situation that qualifies as precarious, but they face a near future of increasingly insecure, unstable, unprotected and low-paid work. Many commentators argue that economic globalization is one of the drivers behind changing employment relations, one trend in which is the increase in precarious work and another is job polarization.

In other cases, workers had to move to jobs in the non-tradable service sector, where not only is the pay lower, but the work is generally irregular, unstable and insecure.

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This is supported by evidence from the US that workers in the auto industry are forced to accept lower wages and insecure work when other auto plants relocate some of their operations abroad. However, most firm relocations are to developing countries and exert downward pressure on wages and working conditions. This means that firms that find it easier to relocate to regions with lower labour costs have an advantage in bargaining with trade unions on lower wages for the remaining workers and use this situation to change the relationship between employer and employee.

In short, foreign competition has an impact on wage-setting and other labour practices, at least in the US. Although most research comes from the US, however, there is a substantial body of evidence showing that foreign competition from low-wage economies can displace low- and medium-skilled workers in all advanced economies, particularly those performing high routine tasks with a low service component and that require little abstract thinking.

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Even in export economies like Germany, for example, a large percentage of the workforce in the manufacturing sector is engaged in precarious work, specifically temporary and agency work, which can at least partly be accounted for by increasing international competition. One specific aspect of economic globalization is the financialization of the economy.

Due to financial liberalization, financialization is a global trend without borders, where money is moved from one country to another. Rather than being invested in productive sectors or in human capital, profits have been used to get the highest profit for investors and shareholders, mainly in speculative capital markets. In other words, within the logic of financialization, labour — and particularly in lower skilled jobs — became more and more an excessive cost.

To achieve higher profits, labour costs had to be kept as low as possible, which impacted not only on wage levels, but also on the formal relationship between employer and employee. It was better to subcontract work, which would make it more flexible, create more temporary, unprotected and insecure jobs within a triangular relationship, where employment agencies mediate between employers and employees.

Furthermore, in the debate on the rise of self-employment in the countries of the European Union, it is increasingly argued that self-employment is both low paid and highly insecure. Most self-employed people do not have enough work to work full-time. Self-employment has less to do with creativity and entrepreneurship and more with precarious work; it is better to have at least some income rather than nothing and being dependent on social benefits.

As such unemployment is declining, but precarious work is on the rise, hidden in rising self-employment figures. On the other hand, senior positions, management and more creative jobs are seen as investments in quality. Not all these jobs in the top segments are based on permanent contracts, but even if they are subcontracted, the pay remains significantly higher. Financialization therefore generates not only an increase in income inequality, but also a strong push towards precarious work for workers who cannot compete at a higher level.

Indeed, while the formation of a global financial class could be described as a new integrating and collectivizing element in the global economy, the shadow side is the emergence of a global precarious work society. It would be easy to conclude from all this that the rise of job insecurity and low wages affect only part of the workforce, those who are losing out in the process of economic globalization. Insecure and flexible work, for example, pushes up mental health and security costs.

In the US, for example, according to economist David Autor, the costs of all kind of benefits outpace the benefits of cheaper imports due to free trade. There is increasing evidence suggesting a link between precarious work and income inequality. Significantly, wage differentials between workers with a permanent contract and those with unstable and temporary contracts are particularly high in OECD countries among low earners, while earnings remain almost the same among high earners. The link between precarious work and rising income inequality ties in with the current hot debate on inequality.

For a long time, income inequality was not an important topic in economics and politics. Inequality is now seen as a problem that cannot be addressed by the market alone. High income inequality is recognized, also by economists at the World Bank and IMF, as a major threat to future well-being and sustainable economic growth that cannot be solved by the trickle-down effect. Berg and Jonathan D. Ostry, for example, found that inequality leads not to sustainable economic growth but interrupted growth of a relatively short duration.

It is safe to conclude that there is now a growing consensus that assessments of economic performance should not focus solely on overall income growth, but also take account of income distribution. And arguably, this pushes precarious work higher up the political agenda. This is where trade unions step in. The weakening of the labour movement in the last quarter of that century has had a significant impact on the ability of working people to influence their standard of living and quality of life.

The link between inequality and the power of trade unions has been analyzed in many ways, and there appears to be a clear correlation between the increase and decrease in trade union power and the fall and rise of inequality within nations see figure 5. There is broad consensus in qualitative and quantitative international research that increases in inequality have been associated with declining unionization rates in developed and developing countries alike.

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Though there is sufficient evidence to prove that there is a link between rising inequality and declining trade union power, a direct link between the declining power of unions and an increase in precarious work has not been found. However, it seems safe to conclude that the declining bargaining power of workers has also impacted negatively on job security, labour protection and permanent contracting. One of the main causes of these problems is that powerful corporations have been able to successfully lobby for economic policies that reflect their interests, especially tax cuts for the rich which have contributed to rising inequality.

How can this be achieved? Different approaches have been suggested over time to find a balance between a competitive and dynamic labour market and continued job security and protection for workers. One such approach has been pushed by trade unions working globally. These global union federations actively negotiate Global Framework Agreements GFA with transnational companies, based on voluntary compliance and enforcement. In , Volkswagen signed an agreement limiting temporary work at their plants and setting principles for the use of temporary contracts in the entire Volkswagen Group worldwide.

Reportedly, since the s, fewer workers have joined or continued their membership with trade unions, according to the ILO an indication of an increase in global insecurity and inequality. The ILO finds that, without workplace empowerment through trade unions and collective representation, legal provisions and regulations for this group of flex workers often do not materialize in practice.

Corporations that largely rely on subcontractors should be urged to take steps to decrease this rate of flexibility and make no distinction between employees and subcontracted workers. This could can be achieved through negotiations with global or local trade unions, but can also be encouraged by governments.

However, as UK think tank the Policy Network finds, traditional social protection systems are often poorly equipped to negotiate such demands following the structural changes in labour markets. As precarious work was legally created and allowed to develop, there are remedies to reverse these trends.

First of all, there must be a legal framework regulating the relationship between employers and employees. Governments should encourage companies to take steps to improve the contracting of workers, with a minimum level of flexible work hours, differentiated by sector. It is therefore important that the bargaining power of workers improves.

Trade unions should be empowered to act, especially on a global scale, to deal directly in negotiations with international corporations. What this paper aims to add to this debate is that the broader global economic context must be included in measures to combat insecure work.

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Measures on wage-led growth, inclusive growth, redefining the ownership of capital, and regulating the financial sector must be all part of an effort to rebalance the economy in favour of creating more secure jobs. This is not only the domain of labour market policy.

Job insecurity and low wages should therefore not be the sole domain of labour economics and policy. Reversing the vicious cycle of mutually reinforcing elements of the current globalization regime, in which precarious employment is a key element, will require a comprehensive set of policy responses that reach far beyond labour market policies. Monetary, fiscal, financial, social, economic, labour, gender and environmental policies need to be geared towards reducing inequality, strengthening democracy in the workplace, and providing income security, good working conditions and employment opportunities.

For example, an alternative trade regime should be designed that gives governments more tools to increase job opportunities and encourage investment in productive sectors rather than for speculative purposes.

The Insecure Workforce (Routledge Studies in Employment Relations)

Trade and investment policies must stimulate and protect sectors that can become the job-generating motor of the future. The obsession with reducing production costs to compete internationally must be refocused, away from the current fixation on lower labour costs, which includes the incentive to change forms of relationships between employers and employees.


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Instead, policy should support innovative attempts to reduce other production costs. Minimum wages globally, basic income security through a universal Social Protection Floor and policies to combat the erosion of the employment relationship are indispensable to limit precarious employment, indecent working and living conditions.

And the debate on precarious work can benefit from the current political debate on inequality. High income inequality is nowadays accepted as a damaging force for economic development. As there are many indications of a causal link between precarious work and income inequality, this could push precarious work higher up the political agenda. Figure 1. Growing prevalence of temporary work in OECD countries, Figure 2.

Incidence of temporary employment, transition economies, and In: Rani, Uma Impact of changing work patterns on income inequality pdf. ILO discussion paper , p. Figure 3. Incidence of part-time employment, transition economies, and Figure 4. Share of employees in low-wage work, Schmidt Touch Stone Pamphlet TUC, p.