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

Abstract

AbstractThis 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.