2 In what ways could having temporary employees make an organisation less flexible? In Japan In Japan there is an erosion of the social contract that Japanese workers viewed as sacred for half a century. This contract was exemplified in a job for life in return for dedicated loyalty to the company. Nowadays there is a trend in Japan reflected in a decrease in the number of full-time workers and a substantial increase in the number of part-time and contract workers.

Japan has not yet reached the stage where workers can move easily from one job to another.

But the labour market has become segmented between relatively highly paid permanent staff and low paid temporary and contract workers with few prospects of joining the full-time labour force. Interestingly, the growth of the latter has affected the level of consumer expenditure.

The stark reality is that the labour force is much more mobile than it was a decade ago.

Source: based on Pilling (2004).

In Germany Volkswagen (VW), the German carmaker, seems to be adapting to the legislative framework in the EU and acting flexibly. Not only has the company adapted to Germany’s rigid labour market, but it has also introduced new working arrangements held as examples of good practice for others to follow. Redundancies have been avoided through high degrees of flexibility.

Rather than dismissing workers, they were put on a four-day working week. Another measure allows extra hours worked earlier in one’s employment with the company to be banked and cashed in later, allowing workers to work part-time or take early retirement. VW has maintained its reputation for defending the social consensus on which German postwar economic success was built, and for working with the unions through Workers’ Councils on ways to increase productivity. However, investors do not regard VW as favourably now as they once did, because its recent financial performance has been lacklustre.