Understanding and improving labour mobility: a scoping paper

The dynamics of labour mobility is a tricky subject, one that is afflicted by limitations in the information available and one which can also pose dilemmas for social policy-makers who are concerned to ensure both a well-functioning labour market and people's welfare.

This paper is one of three commissioned by the National Centre for Vocational Education Research (NCVER), at the request of the Department of Education, Employment and Workplace Relations, to tease out some of the issues connected to mobility in the Australian workforce. The related papers are:

• The mobile worker: concepts, issues, implications by Richard Sweet
• Does changing your job leave you better off? A study of labour mobility in Australia, 2002 to 2008 by Ian Watson.

Amongst some employers, especially those in the Australian mining industry, there is concern that mobility in the labour market is a problem. It is commonly asserted by leaders in this sector that their demand for labour is often unmatched by a suitable number of applicants. They argue that this is a market failure that requires government intervention. The unstated assumption is: improve the flow of labour, and orderly, sustainable growth will follow.

In this paper, researchers from the Workplace Research Centre, University of Sydney Business School, paint a more complex picture. They argue that the structure of industries, their occupational profiles, wages and other conditions contribute to greater or lesser mobility. This paper provides a preliminary assessment of the key issues relating to labour mobility and identifies ways to best generate new knowledge to inform the development of more effective public policy in this area.

Tom Karmel
Managing Director, NCVER

How is mobility changing and what can be done to improve it? This paper identifies the key issues that must be considered in designing an effective research project to answer this question — especially as it concerns the character of flows of workers between jobs.

In recent years overseas demand for Australian raw materials has triggered a 'resources boom'. While the mining industry still only employs fewer than 200 000 people — or less than 2% of employment — its demand for labour has triggered something of a 'moral panic' amongst policy-makers. This industry regularly claims its capacity to prosper is constrained because too many Australians are not prepared to move to where the jobs are. This country, it seems, has a 'labour mobility problem'.

One of the key challenges policy-makers face is the lack of systemic analysis of this issue. This paper does not provide the answers; instead, it outlines how a better understanding of the nature of Australia's 'labour mobility problem' can be generated. It does this by:

• providing a brief overview of the insights generated by previous researchers who have analysed the structure of labour flows in modern market economies
• distilling the significance of recent qualitative analysis of labour flows in three contrasting sectors: red meat-processing, early childhood services and mining
• deepening insights from this source by locating them in an analysis of labour flows available from a large-scale longitudinal study of the evolution of labour flows and the labour contract (that is, the Australia at work study)
• identifying how best to undertake further policy-relevant research on this topic.

Useful literature on the topic of mobility dates from the 1950s and 1960s. The 'neoclassical realists' of that era explored and documented the nature of job-to-job mobility with great empirical sensitivity. In the 1970s and 1980s important research on this topic was undertaken by Goldthorpe and other industrial sociologists in their work on social mobility. In the 1980s and 1990s Marsden and other researchers in the 'societal effects' tradition of labour economics/industrial sociology generated new insights. These showed the importance of understanding labour flows in the context of employment systems defined primarily as different types of internal and occupational labour markets.

To help identify the key issues requiring closer analysis in contemporary Australia, synoptic case studies of three contrasting sectors were undertaken. The sectors were: mining, red meat-processing and early childhood services. Cross-case analysis reveals:

• There is not one, common labour mobility problem.
• The changing role of women in the workforce affects the labour supply strategies of increasing numbers of households and consequently labour market flows.
• The roots of many mobility problems are as much related to the structure of jobs as they are to any alleged immobility of labour.
• The nature of mobility dynamics has changed dramatically in recent decades. The clearest case is that of mining, where labour flows were previously built around mining towns but now rely considerably on fly-in, fly-out arrangements.

Material from the first three waves of the Australia at work study of 8300 workers between 2006 and 2011 was examined to see how labour flows have changed over the latest phase of the business cycle, including during the Global Financial Crisis, especially in the three contrasting case study sectors. This reveals:

• As with previous business cycles, labour mobility rose during the up-swing and fell during the downturn.
• There were qualitative as well as quantitative changes in these labour flows. In particular, people changing jobs were less likely to move to jobs with paid leave.
• Those who changed jobs were more likely to experience a drop in earnings and hours of work.

Data from this source also indicate that:

• Patterns of labour mobility differ between sectors over the cycle. While mining conformed to aggregate trends, early childhood services experienced greater flows in and out during the downturn.
• Preliminary scrutiny of particular work histories reported in the data indicate that workers probably move in distinct 'streams'; for example, high-skill manual, elementary manual and undervalued care/low-paid business services.

To contribute further to our understanding of labour mobility, this project identified the following topics for research:

• Clarify what needs to change, that is, have better mapping of labour flows.
• Identify the pre-conditions for successful interventions by comparative analyses of labour mobility policy and practice in Sweden, Norway and select sectors and regions in the United States.
• Learn from local failures as well as nascent successes. This material can provide important leads for better labour market policy and the nurturing of inter-industry workforce development and deployment agreements.

This paper should be read in conjunction with two others commissioned by NCVER. One explores the current nature of labour mobility in Australia using the ABS's Labour Mobility Survey (Sweet 2011). The other is based on the Department of Families, Community Services and Indigenous Affairs and the Melbourne Institute's Household, Income and Labour Dynamics of Australia (HILDA) dataset (Watson 2011).