Labor Market Liberalization and Market-Like Structures - Case Study Example

Name Professor Course Title Date Assignment 2: Alternative A (a).two market-like arrangements Introduction The labor market refers to the whole population of workers who have the potential and ability to work in the job market at a given time. This population must be willing and able to work meaning that they should have the qualifications and skills to work (Trachtman 2009). The labor market comprises of all these workers with the qualifications and willingness to work with the available jobs and wages. There are some forces that effect laborers in the labor market. They include such factors like wages and labor laws that exist at that time in the market. These laws may negatively or positively affect workers in the labor market. Labor market liberalization and market like structures Labor market liberalization refers to labor laws that govern the labor market in a certain country and at a particular point in time. Labor market liberalization laws ensure that there is free market within the labor market in a country. It is through this market liberalization that the labor market has become free and made policies that favor the workers (OECD 2006). This means that there are fewer regulations by the government regarding workers and the market is becoming more open than before. There has been removal of regulations regarding workers making it better and easier for both workers and organizations. This includes such matters like wages of employees, hiring and laying-off and firing workers from an organization. Labor market liberalization means that there is free movement of workers between organizations both within the country and outside the country without controls (OECD 2009). This has brought about benefits to the workers, organizations and countries because of the training of employees to ensure that they have the necessary skills to work in different organizations. These laws have also led to an increase in the wages and salaries of employees and an improvement in their working conditions to comply with them. Market like structure means the arrangements in organizations regarding workers. They are mechanisms that organizations use to ensure that workers deliver the best services and products in the organization. They are also known as tools that an organization can use to attain a certain goal, that is, the delivery of best services by the employees (World Bank 2008). Some examples of these tools include the use of competition among employees in the organization or provision of incentives for employees with the aim of motivating them to deliver their best in the organization. These market-like arrangements also lead to competition among organizations in the market because workers will opt for the organization that offers the best mechanisms in their favor. The implementation of these mechanisms varies from an organization to another depending on its policies on such matters (Trachtman 2009). However, there are some mechanisms that are common to many organizations like providing training of workers and giving the employees certifications. It also includes giving workers incentives so that they are able to deliver the best in the organization. These mechanisms are given to the employees within the terms of employment whether for a contract or for the permanent employees. For this case, we shall look at two market-like arrangements in use in our organization. They include pricing and work-based incentives which have had impacts in the products and services that we offer. Pricing arrangement This arrangement is where the organization uses pricing as a way of encouraging and motivating employees to give their maximum output. Some of the contents in this mechanism include the payment schemes for the employees (Berg & Kallerberg 2011). This is the payroll of employees depending on the rank that a worker hold in the organization or on the level of education that a worker has. Employees who hold greater ranks in the organization get more pay than those who hold lower ranks. This motivates the employees to work hard and get promotions so that their salaries rise. Workers with higher levels of education get higher payments than the others. This is because they are seen to have more experience and skills than those with lower education levels. They give deliver more quality services than the rest, therefore, get more payments (Rodrick & Rosenzweig 2009). This challenges those employees with little education to acquire more skills through education so that they get an increase in their payments. There is a direct association between the level of education and the quality of output in the organization. Pension schemes are also part of the pricing mechanism that our organization uses to ensure maximum delivery of services. These scheme aims at attracting employees and creating loyalty among them because of the monetary benefit they get through working for us (Berg & Kallerberg 2011). The pension scheme of the pricing mechanism provides security for the employees after they leave our organization on retirement. Our organization has a rich pension scheme for our workers where they get payments after they reach the retirement age and ceases to work in our organization. These two schemes works in such a manner that former employees of the organization are given some amount of money as a way of appreciating their efforts in the organization for the time they were with us (Rodrick & Rosenzweig 2009). They can use this money to continue developing themselves by opening business or other projects so that their lives are still comfortable. This scheme attracts employees and creates loyalty among our employees because of this appreciation that they get from the organization. Another scheme that we use to pay or reward our employees is the time-wage scheme and the piece-rate scheme. This is a scheme under the pricing arrangement in the labor market where payment of workers is on the basis of the work they perform (Berg & Kallerberg 2011). The time-wage scheme works in such a manner that the employee who works extra time gets more payments. For instance, working hours in an organization per day are 5 and incases where an employee works for more than 5hours a day then he gets extra earnings from the extra hours. This motivates employees to work extra time to give more output so that they have an increase in their payments which means increase in their salaries. The piece-work scheme works in a way where employees get extra earnings for giving extra output than the quantity given. This means that workers strive to work harder and produce more levels of output so that they get extra earnings. The organization sets the quantity of output to be like 20 units per hour (Rodrick & Rosenzweig 2009). When an employee produces more units per hour then he earns more money because of the extra units. This encourages workers to produce more units of products within a given period of time in terms of hours or days. The two schemes are under pricing mechanism because they are in terms of monetary payments for the employees. Work-based invectives arrangement Incentives are benefits that are given to employees in an organization as a way of rewarding them and motivating them to deliver their best in terms of the products they produce and the services that they offer (Savych 2005). The management of our organization embraces this policy so that our workers get incentives that will motivate them so that this will improve our organization and the delivery of our services and products. The basis for providing incentives in our organization is on several factors like their output, experience and level of education that our employees have. We carry out a research from our customers of the delivery of services and which employee best relates with our customers. Our incentive scheme also includes improving the morale of employee in our organization so that there is motivation to work. We also offer certification of workers in the organization by giving budges and T-shirts with their logos for recognition. Another incentive that we give is the health insurance for our workers so that their families and they are safe in terms of their health. We also offer travel for our employees through retreat trips and holidays away from the normal working conditions so that they relax (Delfgaauw 2006). These incentives also aim at improving wellness and improvement of workers within the organization so that they are physiologically willing and able to work with the working conditions in the organization. The loyalty of employees also improves because they feel comfortable with the working conditions in the organization; therefore, they do not have to move to other organizations. Some of the incentives that our organization offers to our employees include such benefits like training employees to acquire more skills and improve on their current skills. We hold seminars and workshops where we train employees on skills on the basis of the kind of jobs they perform in the organization (Berger & Berger 2008). To ensure that this mechanism gives the maximum output, our organization ensures that these trainings improve their skills by analyzing their outputs. Another incentive that we give to our employees is rewarding them with other benefits like trophies and gifts by holding functions for showing recognition of the performing employees. This shows recognition of the employees who win in the draws that we hold every month which motivates employees to continue delivering the best services. Impacts of pricing and work-based incentives in our organization There are impacts of using the two mechanisms in our organization both positive and negative impacts. However, the positive impacts are more than the negative effects which means that our organization continues to use the two mechanisms to ensure maximum delivery of services. Below are both the positive and negative impacts of the two mechanisms in our organization in details. b) (Evaluate the impact of each on the quality and value of the services your workplace provides). There are benefits that our organization gets from using these market-like arrangements which encourage us to continue using them. They include benefits such as attracting more customers to our organization. This is because the motivation of the employees encourages them to deliver their best which means that customers get the best services (Delfgaauw 2006). This factor pulls more and more customers to our organization and helps in retaining the already existing customers which creates loyalty to the organization. This leads to popularity of the organization to other such organizations meaning that customers also purchase more of our services than before because they are better than before. Another benefit is increase in the revenues of the organization which has led to an increase in the turn over. The increase in customers has led to an increase in the purchase of our goods and services which means that the revenues are more. Profits in our organization increase from one financial year to another (Savych 2005). The purchase of more of our services means realization of more funds to the organization hence; increase in the revenues. There is also a good relationship between the employees and our management because they feel that the support from the top management and the lower level is free with the top managers. This good relationship comes about because each member of the organization is relating with each other in the aim of achieving the objective of maximum delivery of services. The pricing mechanism has led to an improvement in the living standards of all our employees which motivates them. This is through the increase in their salaries which means that they can now live better lives than before (Berg & Kallerberg 2011). This is a benefit to the employees because they also get higher positions in the organization which comes with the benefit of an increase in their salaries. That means that they are able to meet their needs with the increase in their wages. This means that they are comfortable to work hence; giving maximum delivery of services because they are comfortable. The negative impact that the two mechanisms have in our organization is an increase in the funds that we put in them. This is because of the extra cost by the organization to implement these mechanisms and ensure that they are working effectively. This is to mean that we are spending more on motivating employees than before. This is because more funds are being put in the process of providing incentives to the employees to reward them. The organization is also incurring an extra cost in implementing the mechanism of pricing because of the increase in the salaries of the employees. Therefore, our organization embraces the use of two market-like arrangements above because they are more beneficial. Our organization extracts more benefits from the use of the arrangements than it was getting before their implementation. Our organization also uses them because it gets more benefits than the negative impacts that the two arrangements have on the organization. The arrangements are beneficial to organizations hence; they should embrace them to improve on the delivery of their services. Retrospective commentary on the research This research has been of much help to me because of the lessons learnt from which will also be beneficial to other sectors like organizations. Organizations can use this research to analyze the importance and impacts of labor market liberalization. This research can also help the government to change the labor market by introducing laws that have fewer controls so that the labor market becomes a free market (OECD 2009). It will also help organizations to select the most appropriate market mechanism for its employees so that they have motivation to continue working because of the benefits that they derive by doing so. Those are all benefits that other parties can get from this research other than me and our organization. Below are the lessons from the exercise of carrying out this research. There is complication of reforming the labor market policies to make them free and liberalize them. This is because some policies may favor the laborers but may not be economical enough for the country’s economy (OECD 2006). Therefore, governments in various countries are finding it difficult to change and implement some of these policies regarding the labor market. From this exercise, I have also learnt that there so much that it takes for the liberalization of the labor market. This is because there is the use of so many resources to enable shifting to the free labor market. Studies show that it involves training of many workers so that they gain enough skills and experience to be in a position to compete in the labor market. The workers also get training for many skills so that they have diversity in the kind of work that they perform in various countries or various organizations. Another lesson is that different countries have different policies on the liberalization of the labor market hence; becomes difficult when labor force migrates from one country to another because of the free trade. Liberalization of the labor market encourages free market of laborers so that they are free to get employment from any organization or any country of their choice. This is different from before where workers could not get employment opportunities from another country except in their country (OECD 2009). I have learnt that sometimes workers move to another country in search of job opportunities but they later find out that the policies in the other country do not benefit them at all. This is because countries have somewhat different policies regarding the labor market, therefore, sometimes difficult to fit into the policies of another country. Organizations adapt to different market-like arrangements those that they deem suitable for them. Employees may find the arrangement unsuitable for them, therefore, the need to move to another organization with policies that suit them. I have also learnt that an organization cannot adapt many forms of market-like arrangements because of the cost that they incur in implementing them (World Bank 2008). This means that they only use less complicated arrangements that will not cost them so much so that they do not run into losses. It is also costly for organizations to implement some of these arrangements because they drain many resources from the organization. Another lesson form this exercise is that the implementation of these arrangements by an organization has been of so much benefit to the employees, the top management and the organization as a whole. This is because when the employees get motivation they work harder to deliver their best to the organization. That means that the organization as a whole benefits because there is the increase in sales due to the increase of customers and the quantities that they purchase (World Bank 2008). The whole organization also benefits because customers become loyal to them because of the quality of output and services that they get from the organization due to the motivation that employees get. That shows that the arrangements benefit the employees and the whole organization in the long run. Therefore, managers should find it worth to adapt the market-like mechanisms for their organizations. During this exercise, I found out that there are laws that govern the implementation of the market-like arrangements in regard to the employees. These laws state that any market-like arrangement that an organization plans to implement must get approval from the relevant authorities (OECD 2006). This is because the authority has to carry out an analysis to ensure that the arrangement suits that organization and is to the benefit of employees. The reason why they do this is to avoid situations where organizations choose an arrangement without considering its effects on the employee in the organization. The authority with such mandates also carries out regular check ups to organizations to ensure that the market-like arrangements are in accordance to the law. Another lesson from this research is that there are standards set for employees to ensure that they get what they work for in the organization. For instance the lazy employees do not benefit from any incentives that the organization offers to the employees (OECD 2009). This is a strategy to ensure that all employees work hard to get rewards or incentives from the organization by locking out the lazy employees. It also helps the organization to reward the employees from the returns of the extra work that they work for. Therefore, the organization cannot run at losses because of giving incentives or rewarding employees through such things like trips and holidays. Therefore, it becomes a mutual relationship between the employees and the organization because employees give to the organization and they get it back through the benefits that they get. Conclusion In conclusion, this exercise has beneficial to me because of the lessons above. This report will also help organizations that plan to implement market-like arrangements in their system to enable them get the guidelines on which mechanism to use. They will also get the benefits of using the mechanism that they use with guidelines of the two types of mechanisms from this research. Organizations will also use this report to analyze the impacts that these structures may have on it, both positive and negative impacts. This will assist them to make the best decision regarding the mechanism to adopt for its employees basing their opinions on this research. References Berg, I. E & Kallerberg, A. L. (2011): Source of labor markets: evolving structures and processes: Springer. Rodrick, D & Rosenzweig M. R. (2009): Handbook of development economics: Elsevier. Autor, D. H & National Bureau of Economic Research. (2009): Studies of labor market intermediation: University of Chicago press. Houseman, S. N & Osawa, M. 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