Employment Futures: Reorganization, Dislocation, and Public Policy. - book reviews

Business Horizons, March-April, 1990 by Alfred Diamant

Employment Futures: Reorganization, Dislocation, and Public Policy

The reviewer, Alfred Diamant, is a professor of political science and West European studies at Indiana University, Bloomington.

This work will not attract a wide readership. It should, however, for it deals with one of the more intractable problems of the U.S. political economy. Moreover, Osterman examines crucial issues of the American educational system by stressing links among that system, its outputs, and the labor market. He does so in good part by a careful comparative study of labor-market functioning in Sweden and the Federal Republic of Germany.

The reason this book will not get the readership it deserves is twofold. It is a book for specialists, so that even social scientists fluent in other branches of these disciplines, such as this reviewer, find the going tough. Readability is further reduced by an uncompromisingly tight focus on the issues, with little effort to lighten the nonspecialist reader's task. At the same time, the author works hard at summarizing preceding arguments and taking the reader over terrain that had previously been covered in the book. These might seem to be contradictory complaints, but they are not; the summarizing of earlier arguments is just as difficult to manage as their original presentation.

Yet, for the determined reader, the results are worth the effort, and anyone with serious concern for the continued well-being of the American political economy needs to tackle this book. It deals with central social concerns of the political economy: the human participants, especially those who seem to be getting the "short end of the stick." Osterman's book should be required reading for all the Pollyannas who consider such problems of minor significance in this seventh year of our "unprecedented peacetime bull market."

One of the principal virtues of this study is that it seeks to link labor markets and public policy. This linkage might seem obvious and well established in just about all West European industrialized countries (or, more broadly, in all OECD member countries). But it is far from obvious and unproblematic in the U.S. In other industrialized countries, such as the two examined closely in this book (Sweden and the Federal Republic), public policy encompasses virtually every aspect of labor markets. In the U.S., however, public policy has been limited to addressing problems of marginal workers, and only in a haphazard and unsatisfactory manner. For Osterman the labor market-public policy linkage is a central concern. He draws very effectively on the Swedish and West German experience to fashion proposals that would advance U.S. public policy beyond its past and present marginal position concerning the shaping of labor markets, both within firms and in the broader economy.

At the outset Osterman articulates four themes: the dislocation of laid-off workers; the reorganization of work within firms; the persistent problems of low earnings and poverty; and the possibilities of an expanded and aggressive public policy to deal with these problems. These themes are developed in a series of chapters beginning, after an introduction, with the author's treatment of the general dimensions of labor market problems (Chapter 2). He seeks to explain why the labor market fares so poorly in finding comparable work for experienced employees (Chapter 3). The model developed in that chapter specifies an interaction between internal labor markets and the supply side of that market. For nonspecialists, it should be pointed out that the term "internal labor market" refers to conditions within firms.

Chapters 2 and 3 rest on an analysis of individual data; Chapter 4 turns to a consideration of internal labor markets in the aggregate. Here we are presented with a careful examination of the changes internal labor markets are just now undergoing, triggered by technological advances and product-market developments. It is these developments that have given rise to the more dramatic features of labor market change: increasing reliance on casual part-timers surrounding a diminishing core of permanent skilled operatives, as well as the radical shifts in these internal labor markets brought about by the swiftness of change in product markets. All of these factors contribute to increasing uncertainty facing employees across the entire economy. Chapter 5 turns our attention from labor markets to public policy. The author reaches, not surprisingly, pessimistic conclusions about current policy and offers little optimism regarding the chances for transformation.

The last two chapters, 6 and 7, provide a well-informed and illuminating examination of labor markets and public policies in Sweden and the Federal Republic. The author is careful to stress that he does not advocate a transfer of German or Swedish practices to the United States. But he insists nevertheless that in a variety of ways these practices, though at face value unacceptable to Americans, lead to results that the U.S. would want to achieve. For example, he points out that "in both countries the employment and training system is integrated into the private economy. In particular, it helps support an internal labor market structure much like the one toward which many American firms would wish to move" (p. 109). In the concluding chapter the author draws on these comparative observations to suggest his own recommendations for a coherent labor market public policy. He finds that there are three trends already working in that direction. First, some firms are already attempting to expand and strengthen employment security. Second, in union-management negotiations, employment security has become a - if not the - central issue. Third, growing public policy efforts are clearly discernible, having become so even under the auspices of the Reagan administration. Although the author thinks that each of these three thrusts is flawed in some way, each represents a move in the direction he has advocated. But only a comprehensive set of public policies for the labor market will bear the sort of fruit the author considers most desirable.