Issues contingent workers create

Core employees: The small group of full time employees of an organization who provide some essential job tasks for the organizations.

Temporaries and the flexibility they foster present special challenge for managers. Each contingent worker may need to be treated differently in terms of practices and policies. Managers must also make sure that contingent workers do not perceive themselves as second class workers. Because they often do not receive many of the amenities such as health and paid leave benefits that full time core employees do, contingent workers may tend to view their work as not being critically important. Accordingly they may not be as loyal, as committed to the organization, or as motivated on the job as permanent workers. That tendency may be especially relevant to those individuals who have been forced to join the temporary workforce. Today’s managers must recognize that it will be their responsibility to motivate their entire workforce, full time and temporary employees, and to build their commitment to doing good work.

Cyclical labor trends are difficult to predict. The world economy in the late 1990s, for instance, was generally quite robust and labor markets were tight. For most employers it was difficult to find skilled workers to fill vacancies. Then in 2001 most developed countries suffered an economic recession. Layoffs were widespread and the supply of skilled workers became much more plentiful. In contrast, demographic trends are much more predictable. And were facing one that has direct implications for management: Barring some unforeseeable economic or political calamity a labor shortage will be the reality for at least another 10 to 15 years. We’ll discuss the problem using US statistics, but this shortage of skilled labor is also likely to be just as prevalent in most of Europe due to a graying population and a declining birthrate.

The US labor shortage is a function of two factors – birthrates and labor participation rates. From the late 1960s through the late 1980s, American employers benefited from the large number of baby boomers (those born between 1946 and 1965) entering the workforce. Specifically, 76 million baby boomers are part of the workforce, with 30 million fewer gen-Xers (those born after 1965) to replace them when they retire. Some boomers have already retired early. The problem will become severe about 2010-2012, when the major exodus of boomers from the workplace is in full force and an anticipated 6 million jobs will be unfilled. And this shortage will not be relegated to one or two industries. It will encompass most industries: health care, government, construction, engineering, finance, energy, and information technology. Importantly, in spite of continued increases in immigrants, new entrants to the workforce from foreign countries will not do much to correct the supply shortage. Moreover, repercussions from the events of September 11, 2001, in the United States may potentially restrict this immigration, further reducing the supply of skilled labor.

The labor shortage problem is compounded by the fact that the latter part of the twentieth century benefited from a huge increase in the number of women entering the workforce. That provided a new supply of talented and skilled workers. This source has now been tapped. Moreover, interest by older workers to stay in the labor force is declining. In 1950, nearly 80 percent of all 62 year old men were still working. Today, only slightly more than half are. Improved pension plans, expanded Social Security benefits and a healthy stock mar6ket have led many workers to retire early especially those whose jobs were stressful or not challenging. So the combination of the smaller gen-X population, already high participation rate of women in the workforce, and early retirements will lead to a significantly smaller future labor pool from which employers can hire.

In times of labor shortage, good wages and benefits aren’t going to be enough to get and keep skilled employees. Managers will need sophisticated recruitment and retention strategies and will need to understand human behavior. In tight labor markets, those managers who don’t understand human behavior and fail to treat their employees properly risk having no one to manage.