Evaluating Labour Market Flexibility Using the TOPSIS Method: Sustainable Industrial Relations

Anna Galik,Monika Bąk,Katarzyna Bałandynowicz-Panfil,Giuseppe T Cirella

doi:10.3390/su14010526

Abstract

This study evaluates labour market flexibility using the Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS), a multi-criteria decision analysis (MCDA) method. TOPSIS is employed by comparing spatial (i.e., different countries) and temporal (i.e., long-time horizon) terms. Sustainable industrial relations processes are considered in shaping the flexibility of the labour market in 15 European Union Member States from 2009 to 2018. Countries are grouped into classes to provide a basis for benchmarking results against social and employment policies implemented at the national level. A five-step quantitative MCDA method is formulated using published data from the Organisation for Economic Co-operation and Development. The results indicate that the TOPSIS method is an appropriate approach for measuring labour market flexibility internationally. Moreover, in relation to workforce phenomena, the findings show that the method offers the possibility of examining the impact of particular factors related to social and employment policies of a country in terms of sustainable development and socioeconomic growth. The lack of precision tools to forecast the development of national and transnational labour markets—particularly during the COVID-19 era—highlights the importance of such a method for workforce planners and policymakers. Developing sustainable industrial relations in terms of associated national externalities is the motivation of the research.

Highlights

One of the needs of a modern knowledge-based economy is a flexible labour market.Dynamic technological progress and information and communication technology (ICT)development can affect the labour market and contribute to the reduction of inequalities in different labour-oriented activities
The use of tools to allow for an ex-post benchmarking of flexibility across countries and, at some point, the examination of the effectiveness of public policies to aid in best practices across markets will be crucial in building sustainable industrial relations in a post-COVID-19 era
Documents from the European Union (EU), International Labour Organization (ILO) and strategies outlined by individual countries indicate the flexibility of labour markets as priority aspects of social and economic development

Summary

Introduction

One of the needs of a modern knowledge-based economy is a flexible labour market.Dynamic technological progress and information and communication technology (ICT)development can affect the labour market and contribute to the reduction of inequalities in different labour-oriented activities (e.g., wages, income, working conditions, job security, career prospects and other work-related circumstances). In the context of the current pandemic and its effects on the workforce, the concern of labour market flexibility is of particular importance. The use of tools to allow for an ex-post benchmarking of flexibility across countries and, at some point, the examination of the effectiveness of public policies to aid in best practices across markets will be crucial in building sustainable industrial relations in a post-COVID-19 era. The importance of flexibility for a smooth functioning labour market is emphasised in several studies. Documents from the European Union (EU), International Labour Organization (ILO) and strategies outlined by individual countries indicate the flexibility of labour markets as priority aspects of social and economic development. Numerous international organisations are making efforts to study how labour markets, in particular businesses, adapt to reforms and external factors (i.e., the current pandemic) to evaluate the importance of the labour market flexibility process [1,2].

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