COLS THESIS
Guy Wijnen
10016635
guy@gwtd.nl
Instructor: Johan De Deken | Co-reader: Agnieszka Kanas 14th of July 2016
Precariousness for all?
Employer perspectives on the labour market for
highly educated graduates
Words: 23.400
Graduate School of Social Sciences
Abstract
This study explores the labour market for highly educated graduates by interviewing different types of employers (i.e. LMCs and SMEs) and producing in-depth and thick descriptions. For several decades, both in the Netherlands and worldwide, social, economic and political forces have changed the nature and thereby the demands from the contemporary world of work. Technological advances have far-reaching consequences that changed workplaces, people’s work experiences, but also for many non-work individual, social and political outcomes (Kalleberg 2009). Various studies have been conducted using graduate perceptions or employee data to test theories about employment conditions and employers’ demands. Building upon theories about educational expansion and credential inflation (Hirsch 1976) this study departs by investigating the existence of an oversupply of highly skilled labour perceived by employers. Subsequently, it observes possible changes in demands and employment conditions. Lastly, it adds on the existing literature on the increasing pervasiveness of precarious employment, defined as uncertain, unpredictable, and risky from the point of view of the worker (Kalleberg 2009). The available data indicate most employers perceive an oversupply of highly skilled labour. As a consequence, the qualifying demands of highly educated graduates have increased. People need to show more than a diploma. Confirming the theories on the increased importance of soft skills, it was found that personality and personal attributes are seen as decisive factors in the hiring process. Above all, precarious employment has spread to workplaces for the highly educated. In contrast to the expectations, especially among small and medium-sized enterprises (SMEs) employers use flexible forms of employment such as hiring through temporary employment agencies and using zero hour and on-call contracts. Also, wages are lower and employment relationships less standardized in comparison to large multinational companies (LMCs).
ACKNOWLEDGEMENTS
This thesis would never have come to its potential without the help of the close collaborator and critical instructor: Dr Johan De Deken. He has inspired me to look further than my initial plans and dive deeper into the subject of employment precarity. This enabled me to add a more critical view to this thesis, which in the end made me realize it was a valuable one. Furthermore, co-reader Dr Agnieszka Kanas has done more than she was supposed to. In the beginning she supported me to structure the research. In the end she especially helped me to specify the hypotheses and formulate sharply. In a more personal sphere, my girlfriend Fleur pushed me back to the library and kept saying this may be the last research that you do, so go. That’s what I did. I went and tried to make the most out of it. I wish you an insightful reading and look forward to an interesting and fruitful discussion.
Guy Wijnen June’16
i) Acknowledgements p. 2
ii) Table of contents p. 3
1. Introduction p. 4
2. Theoretical framework p. 7
2.1. The market p. 7
2.2. The labour market p. 9
2.3. Two actors in the labour market: LMCs and SMEs p. 14 2.4. The erosion of the standard employment relationship p. 17
2.5 Non-standard employment relationship p. 20
2.6. Precarious employment p. 22
2.7. Skills p. 26
2.8. Educational expansion p. 30
2.9. Education as a positional good p. 31
3. Hypotheses and research design p. 33
3.1. Hypotheses p. 33
3.2. Research design p. 35
4. Macro level analysis: Describing the Dutch labour market p. 41 4.1. The structure of the Dutch labour market p. 41
4.2. Dutch labour market segmentation p. 44
4.3. Higher education in the Netherlands p. 47 4.4. The Dutch labour market for highly educated graduates p. 49 5. Micro level analysis: Employers’ perceptions and expectations p. 52 5.1. An oversupply of generally high-skilled labour p. 52
5.2. Increased demands p. 54
5.3. Employment conditions p. 60
5.4. Differences between LMCs and SMEs p. 66
6. Conclusion and discussion p. 70
7. Bibliography p. 76 8. Appendices p. 83 8.1. List of employers p. 84 8.2. Interview guide p. 85 8.3. Transcripts p. 86 8.4. Used quotes p. 143 8.5. Pilot interview p. 160 TABLE OF CONTENTS
1. Introduction
Work is a core activity in society. It is central to individual identity, links individuals to each other, and locates people within the stratification system (Kalleberg 2009). Work also reveals much about the social order, how it is changing, and the kinds of problems and issues that people (and their governments) must address (ibid). Accordingly, the study of work has for long been a central field in sociology, beginning with classical sociologists such as Durkheim (in his Division of Labour), Marx (in his theories of the labour process and alienation), and Weber (in his conceptualizations of bureaucracy and social closure).
For several decades, both in the Netherlands and worldwide, social, economic, and political forces have changed the nature and thereby the demands from the contemporary world of work. Technological advances have far-reaching consequences that changed workplaces, work experiences, but also many non-work individual (e.g. stress, education), social (e.g. family, community), and political (e.g. stability, democratization) outcomes (Kalleberg 2009).
Increases in knowledge-intensive work accompanied the accelerated pace of technological innovation (Kalleberg 2009). As the economy shifted from manufacturing-based production to an information-based economy, education has become increasingly important as a determinant of life chances. This thesis sets out to investigate the labour market for highly educated graduates.
In recent years, three major trends have been identified that affect the demands of higher education graduates (Allen & Van der Velden 2005a). One obvious trend is the increasing emphasis that has been placed on education and training, which is seen by many as the most important factor affecting economic growth (e.g. World Bank, 2002). The term ‘knowledge society’ has been coined to indicate not only the expansion of participation in higher education, but also a change in the characteristics of work under influence of the increasing importance of knowledge (Teichler 1999).
The second trend relates to changes in labour market processes in modern society. Schmid (2000) introduced the concept of the transitional labour market to indicate how the boundaries between work, leisure time and education have been blurred, leading to increased mobility and flexibility patterns, to de-standardisation of the life course and to an overall focus on employability. This holds especially true for those in transition from education to work (ibid). There is evidence that the transition is non-linear and chaotic (Hannan & Werquin 1999) and that many graduates and school-leavers find themselves in a precarious situation (OECD 2000; Ludovici & Semenza 2012).
The third trend relates to the internationalisation and globalisation of product and labour markets and their impact for higher education graduates (Van Damme 2001; Marginson & Van der Wende 2006). Characterised by increasingly diverse and interconnected populations, rapid technological change in the workplace and in everyday life, and the instantaneous availability of vast amounts of information (Rychen & Salganic 2003).
These trends give rise to new demands on the competences with which individuals need to be equipped (Van der Velden 2005a). Higher education graduates have long been expected to become experts in their own professional domain (ibid). However, the changing labour market requires a higher degree of flexibility and the possession of broad generic skills to ensure employability in the long run of their career (ibid). This thesis sets out to explore these broad trends more in-depth by investigating the point of view of actual employers on the Dutch labour market for highly educated graduates. The following research questions will be investigated:
1. How do Dutch employers perceive the labour market for high-skilled labour? 2. What developments do they observe over the past ten years?
3. What are their demands of highly skilled workers and did they change?
4. To what extent do they take part in the predicament of flexibility and precariousness?
5. How do large multinational companies (LMCs) differ from small and medium-sized enterprises (SMEs) in terms of these questions?
Firstly, an elaboration of the theoretical framework will follow in chapter 2. The concept of ‘the market’ and consequently of ‘the labour market’ with the actors of focus for this thesis, i.e. LMCs and SMEs, will be depicted. A discussion of the sociological perspective on the concept of labour will be added. And accordingly a more critical view will be developed upon the labour market and the concept of labour as a commodity.
When the major concepts are defined a more descriptive approach will follow to illustrate the developments to both standardized and non-standardized employment relationships. Consequently the changing nature of work towards more precarious employment will be discussed. Lastly, the theoretical framework concludes with an elaboration of the increasing importance of skills and the changing demands of higher education.
In the third chapter, the major hypotheses that guide the research will be explained. Followed by an outline of the research design.
Chapter 4 starts with an introduction of the empirical investigation regarding the Dutch labour market and the Dutch educational system. This description will lead to an explanation of the comparative analysis between small and medium-sized enterprises (SMEs) and large multinational companies (LMC) in the Netherlands.
Chapter 5 presents the findings from the point of view of Dutch employers. Subsequently, it will elaborate on the developments in the labour market for highly educated graduates, following the empirical data.
Lastly, chapter 6 provides a summary of the empirical findings, with concluding statements. In this section, a critical reflection on the findings is made, as well as suggestions for further research.
2. Theoretical framework
In the forthcoming, the theoretical framework will be established by firstly introducing the concept of the market. This enables us to move from a broad scope to a more narrow focus on the labour market and labour as a peculiar commodity. Subsequently, developing a critical view by discussing the literature on standard, non-standard and precarious employment. Concluding with a refined focus on the labour market for highly educated graduates. Eliciting the specific demands and expectations that employers currently have from highly skilled workers.
2.1. The market
Investigating the labour ‘market’ for highly educated graduates, first demands exploring the central category of economic discourse: the market. It is the market that is supposed to produce harmonious results out of the clash of competing interests (Block 1990: 46). The past, however, indicates that the idea of self-regulating market mechanisms moving towards equilibria often bears little correspondence to actually existing markets. Financial crises have unmasked the false assumptions upon which this ‘belief’ in financial markets is based, when exposing the lives of many working people in the advanced societies to higher levels of economic uncertainty than they had been accustomed to experiencing in recent decades (Crouch 2015). Economist tend to respond to this observation by insisting on the idea that gains in economic efficiency have occurred only as the result of an institutional framework that has increased market freedom.
Generally, sociological research and theory maintain that markets are not really markets, in the sense of a universalistic and impersonal mechanism matching supply and demand (Streeck 2005: 254). In a similar vain Block (1990) argues that the vitality of capitalism has always rested on a particular mix of markets and limitations on markets and that the abandonment of the limitations reduces the vigour of a capitalist economy. Streeck (2005) points out that the progress of markets erodes traditional relations of solidarity that are essential for the stability and performance of societies. Nevertheless, the ideal of market self-regulation still has a powerful hold on the imagination of economists (Block 1990: 48).
The idea of the self-regulating market dates back to Adam Smith, but it was not systematized until the late nineteenth century, when the marginalists1 developed an integrated economic theory of product, labour, and capital markets (Block 1990: 47). In this model, all commodities – including land, labour and capital – are bought and sold on competitive markets, so that price changes bring supply and demand into balance (ibid).
Although a critical view on the market can be traced back to Marx’s Capital ([1867], (1976) and Polanyi’s work The Great Transformation ([1944], 2001), it is worth discussing it, as Block and Somers (2014) renewed the relevance of this study. The idea of a self-regulating market assumes certain premises. Firstly, it is essential that the price of a product is supposed to equal its marginal utility, just as the price of the worker is supposed to equal his or her marginal product. It is also a critical assumption that the preferences of the market participants are stable and formed outside of the transactions. Equilibration requires some fixedness in preference (Block 1990). Finally, the model requires that buyers and sellers have rough equality of information (ibid). This is necessary to assure that people get what they pay for. As one might expect these assumptions have been criticized regularly (e.g. Block 1990; Streeck 2005; Crouch 2015).
The appeal of this model rests on the promise of optimal use of resources and on the system’s capacity to respond to change (Block 1990: 47). When a shock such as a technological innovation occurs that makes it possible to produce with half the amount of labour, the market mechanisms works to restore order (ibid). For example, because of the combination of the fall in the price of the displaced labour and the reinvestment of the increased profits earned by the producers, some entrepreneurs will put the displaced workers back to work producing a different product (ibid). The equilibrium mechanism will be undermined if any of the above-mentioned premises is interfered, so is believed by the laissez-faire economists.
The elements on which neoclassical economists base their model suggest that the type of market is a spot market in which transactions occur on a one-time basis
among relative strangers where there are multiple buyers and sellers (Block 1990: 49). The actual markets that are closest to this description are contemporary stock markets, commodity2 markets and foreign exchange markets (ibid). It is striking, however that most economic transactions are not handled on spot markets that resemble a stock or commodity exchange (ibid). One peculiar market, which does not seem to resemble these characteristics, is indeed the labour market.
Before we take a closer look at this market, it is worthwhile to shed some light on the above-mentioned critique by Polanyi. He argued that markets are invariably embedded in social relations and that “to include labour as a commodity in the market mechanism, means to subordinate the substance of society itself to the laws of the market” (Polanyi, 2001: 75). Also Streeck (2014) warns for the negative effects of the expansion of capitalist market relations. As these have for good reasons been protected form marketization, because this deteriorates living and working conditions of the labouring class (ibid). However, the extent to which this critique is also relevant for the labour market for highly educated graduates remains to be seen.
2.2. The labour market
Following the definition of the market among economist, the labour market rests on the basic institution of the ‘free’ labour contract (Offe & Hinrichs 1985: 13). In this manner, a type of ‘abstract’ standard employee is created, whose social position is no longer determined through inherited or ascribed group status, but solely through a
collective class position and anonymous market process, on the one hand, and
through the strictly individual characteristics of achievement and market success resulting from these premises and limitations, on the other (ibid). By explaining how the contractual exchange of labour power for money differs in reality, Offe (1985) criticizes the idea of the ‘free’ labour contract.
He mentions three facts in particular that empirically demonstrate that the institution of the individual worker and the corresponding institution of the employment contract have not lived up their promise of equal non-discriminatory
treatment as it would follow from neoclassical economic models. He states: First,
there is a characteristic ‘lumpiness’ in the social distribution of labour market risks…we find a high degree of overlap between the social groups differentiated according to separate labour risks. Second, these features may be closely connected not only with each other, but also with social characteristics that are not ‘acquired’ (such as education, income, place of residence), but are socially ‘ascribed’ and connected with certain fixed and internationally unchangeable qualities (age, sex, physical condition, ethnicity)…The third fact significant…is that since the 1960s…a group specific disaggregation of policies regarding the labour market can be observed. Labour market policies and their legal foundations are no longer directed only at the global goals of employment, qualifications and mobility. Additionally, and increasingly, they seek to positively influence the market situation of specific, often very finely differentiated occupational, sectoral, age, gender and regional segments of the entire workforce (Offe 1985: 12-13).
Taken together, these three facts suggest that the labour market risks are distributed in a highly uneven, sharply structured way, and that this distribution pattern corresponds to ‘ascriptive’ qualities. As an illustration Offe mentions that Western European capitalist economies have been faced with and are facing not only high, but also distinctively structured unemployment, which affects different groups in a highly differentiated manner. Whether and to what extent this plays a role for the group of analysis in this thesis – the highly educated graduates - will be examined later on. In addition, all three facts are of evidence, that a work- and production- oriented society, one which rests on the basic institution of the ‘free’ labour contract (i.e. the labour market), leads to the erosion of particularistic features of social life in the framework of universal equality of opportunity and freedom of contract and, furthermore, emancipates market participants from the rigidity and unchange-ability of the conditions of individual existence that was characteristic of pre-market societies (Offe 1985).
On this basis alone, given the problem of unequal and group-specific distribution of labour market risks, Offe asserts: this model of an abstract and largely homogeneous group of ‘employees’ (a ‘working class’), in which quasi-feudal and
other inner principles of group organization are meant to play at best a subordinate or diminishing role, is in need of at least a certain amount of revision (Offe 1985: 13). In order to come to a more complete understanding, it is valuable to add some more sociological insight to examine the dynamics and social consequences of that most peculiar market, to which we refer as ‘the labour market’.
In capitalist societies the labour market is the main institutional solution to a dual allocative problem that must be solved in all societies: on the one hand, the production system must be supplied with the labour inputs it requires; on the other, labour power must be provided with monetary (income) and social (status) means of subsistence (Offe & Hinrichs 1985: 14). The labour market solves both of these allocative problems simultaneously, while in non- or pre-capitalist societies one finds predominantly institutional forms in which the type and level of the means of subsistence provided to individuals depends on factors other than the individual’s contributions to social production (ibid).
Block (1990) describes the labour market, in 1850, by stating it was underdeveloped because most people were self-employed, and those who were employees, such as skilled artisans in manufacturing, tended to be hired on a long-term basis at wage levels that were shaped by non-market considerations such as gilds, custom and union power. He illustrates how it is theoretically possible to systematically compare the degree of marketness of different economies at different points in time as a way of evaluating how near or far those economies are from the economists’ model of self-regulating markets. He concludes that the idea that allowing greater market freedom will invariably increase economic efficiency is a purely ideological one (Block 1990: 73).
Important is that the labour market organizes production and distribution as an exchange relationship of wages and labour inputs, and that here, as in all other markets; suppliers and buyers of ‘labour’ stand opposed (Offe & Hinrichs 1985: 14). A further similarity is that in all markets the relationship of competition is given: supplier and buyer compete with other suppliers and buyers against whom they must assert themselves if, respectively, their offer is to be successful or their
demands are to be satisfied (ibid). The authors continue by stating that this relationship of competition therefore also necessitates the pursuit of specific rational strategies of supply and demand.
On the supply side, these strategies involve specifying, as fairly as possible, the type, quantity, location and timing of the labour inputs offered, as well as adjusting the price demanded (wages) to the willingness of the demand side to pay. Conversely, for the actors on the demand side, the aim is to reduce the specificity of their demands for the type and quantity of labour needed or, if necessary, to raise the price offered (wages) in such a way that the demand of the individual employer can be satisfied from the available supply (Offe & Hinrichs 1985: 14).
An important adaptive strategy for both sides of the market is for them to free themselves from their respective dependencies upon the other side by putting themselves in the position of finding substitute sources for the satisfaction of this need (Offe & Hinrichs 1985: 14). The labour market – like every other market – requires both sides to engage in continuous and complementary strategic adaptations (ibid). The forced adaptation arising form market relations, the authors state, is often viewed as a powerful source of the social processes of rationalization, which are especially reflected in continuous productivity, increases. What strategies are pursued in the labour market for highly educated graduates will be investigated. There are however more strategic options – associated with the results of market processes – which are not exhausted by individual strategies of particular suppliers and purchasers of labour. A further important strategic option for both sides consists in reducing the intensity of the relations of competition on one’s own side of the market relative to the intensity of competition on the ‘other’ side (Offe & Hinrichs 1985). This occurs primarily through forming coalitions and engaging in other types of collective action (ibid). The authors add that internal solidarity and external (possibly violent) discrimination are thus rational strategies for attaining market advantages on the supply side. Clearly the same holds for the demand side.
Hirsch (1976) also criticizes the view on the distribution of reward as a free market process. He distinguishes two ways of distributing rewards. On the one hand he depicts the ‘direct’ form, within the market, in which individual rewards result
from opportunities exercised in a competitive market, flowing from some combination of physical productivity, scarce talents, good contacts scarce information, and good luck (Hirsch 1976: 154). On the other hand, Hirsch describes the economic power that is external to the competitive market resulting in a distortion of free market forces. This is the case when individuals or groups use either monopolistic advantages or political means of explicit organization to subjugate others to their own influence and/or to secure additional resources for themselves (ibid: 153). However, this may have ensured the highly educated of jobs in the past, the former shortage seems to have turned into an oversupply nowadays.
It has become clear that “the” market as defined by neoclassical economic models, barely resembles reality. The various markets – for land, goods, capital and labour – differ fundamentally according to the criteria of whether, and to what extent, buyers and sellers can actually utilize this ‘in principal’ symmetrical catalogue of rational market strategies (Offe & Hinrichs 1985). Should one or other side of the market find itself in a position of having exhausted its reservoir of strategic options to a greater extent than the other side, an asymmetrical power relationship would be evident in the market process itself (ibid).
Central to sociological analyses of the labour market is the insight that labour is a commodity with very special characteristics, and perhaps not really a commodity at all (Streeck 2005: 262). On the surface, Streeck describes, this is indicated by its perverse, or backward-bending supply function. Not only may the supply of labour decline as the price of labour increases, due to preferences for leisure over income in economic terms or, in sociological terms, to worker traditionalism in communities where work effort is determined by fixed needs, rather than needs expanding with growing opportunities (Marx [1867] 1984; Weber [1904] 1987; in ibid). The supply of labour may also increase as wages decline, as a result of social physical dependence of workers on a minimum level of income; if wages fall, workers cannot opt for leisure and wait for an improvement in relative prices since in between they need to pay their bills. Offe (1985: 20) notes that unequal participation is created between the buyers and sellers of labour as the competitive strategies available to the owners of
capital or the demand side of the labour equation far outweigh the competitive strategies available to the property-less or supply side of the labour equation.
The fact that the suppliers of labour are in fact actual persons, Offe argues, places limits on their ability to compete in an open market insofar as they are unable to control the “quantity, quality, and timing of supply”. As more and more people are participating in higher education this changes the dynamics of the labour market. The relative strategic rigidity of the supply side of the labour market, Offe argues, distinguishes the labour market from other commodity markets. Because the individual seller of labour power cannot, for structural reasons employ market strategies, they must compensate for these strategic handicaps through a drop in the rate of pay demanded for labour. Exploitation results from the asymmetrical strategic capacity of supply and demand (Offe 1985: 20).
A last aspect of the social, personal, and physical embeddedness of labour is that its seller must be present in person while it is being used by its buyer, and indeed must actively collaborate in its use. The site of such collaboration is the firm as a social organization designed to extract labour from employed workers (Streeck: 2005: 262). As will be explained below there are different types of firms. Moreover, Streeck mentions labour is not a homogenous good, as we have seen above, and the labour of one person cannot always and easily be replaced with that of another. This gives rise to a subdivision of the labour market in more or less separate segments, forcing economists reluctantly to give up the simplifying assumption of one big market in which labour is competitively traded (ibid). In this view it can be argued that there is a separate market for highly skilled workers. Although, due to the increased participation in higher education (which will be elaborated later on) the advantages of the highly educated might be of less impact than in the past and have made the labour market far less segmented. Hence, chances increase on precariousness for all.
As stated, this thesis will evolve into a comparison of two meaningfully different actors (SMEs and LMCs) in the labour market for highly educated graduates. Whereas graduates may have had a quasi-monopolistic position due to the relative
shortage of their skills. The balance of power has shifted to employers and especially to the most popular employers among graduates, i.e. those who face the biggest amount of applications. As will be illustrated below, this picture seems to apply particularly to large multinational companies (LMCs). Due to an oversupply of highly skilled labour, they presumably are in a position of increased power to determine their terms of employment and pursue the market strategies that increase the chances of exploitation and precarious employment.
2.3. Two actors in the labour market: LMCs and SMEs.
In the global labour market several actors participate (i.e. employers, trade unions, non-governmental organizations, governments, self-employed and workers). As this research focuses on the employer’s perspectives, two contrasting types of employers will be elicited: large multinational companies (LMCs) and small and medium-sized enterprises (SMEs). This comparison becomes meaningful, because more university graduates choose for a career in LMCs, as they are better known among graduates (Sijde et al. 2013) and perceived of as more favourably compared to SMEs (e.g. Teo and Poon 1994; Belfield 1999; Moy and Lee 2002). Hence, the expectation is that LMCs face the biggest supply of highly skilled labour.
LMCs operate globally, with points of presence in multiple cities across the world (ILO 2015). The extent of their multinational activities can vary in terms of the number of countries in which they operate (Smelser & Baltes 2001). The authors define a LMC by operating in more than one country. However, they add that a large multinational company can operate in 100 countries, with hundreds of thousands of employees located outside its home country. For this research a LMC is defined by: more than 2500 employees and businesses in more than two countries. Also it is noted that LMCs are characterised by operating separate business departments such as: Finance, Administration, HR, Sales and Marketing.
SMEs are classified by their size, including employee head-count, assets, and financial turnover below certain limits. The European Union defines SMEs as follows: "The category of micro, small and medium-sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual
turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro. This definition will be followed in this research.
Sijde et al. (2013) find that job opportunities in SMEs (however they are seen as less favourable) are growing faster than in LMCs. Ahmadi and Helms (1997) state that SMEs move rapidly to do the work left by LMCs. A study by the Gallup Organization (2007) indicates that 5% of job vacancies in SMEs remained unfulfilled in 2006. SMEs account for two-third of the jobs worldwide (ILO 2015); and roughly one-half of the turnover of European businesses outside the agricultural sector (Oxford Analytic, 2005).
As has been shown, while the many opportunities for opportunism offered to employers by pure labour markets make such markets ‘inefficient’ from an economist’s point of view, they make them ‘unfair’ from the perspective of workers, due to a fundamental imbalance in the power of the two parties in the labour market. While employers can wait until workers accede to their terms, workers cannot, or not as long. In a similar vain Esping-Andersen (1990) argues that workers are not commodities, because they must survive and reproduce both themselves and the society in which they live. As commodities they could easily be destroyed by such minor contingencies as illness, and by macro events like the business cycle. Therefore, de-commodification is a precondition for a tolerable level of individual welfare and security (Bosch 2004).
One of the institutions aimed at the de-commodification of labour are of course: trade unions. As the focal point of this research lies at the demand side of the labour market – i.e. with the employers – no further attention will be given to unions as such. Only to the results they have booked by trying to control the supply of labour, by enforcing standardized contractual conditions on workers and employers.
2.4. The erosion of the standard employment relationship
Trade unions were major contributors to the transformation of employment from a spot market contract to an on-going organizational relationship, or from a contract of work to a contract of employment (Streeck 2015: 265). This development was
supported in most countries by the evolution of labour law as a subarea of contract law, spelling out special rights and obligations of the parties to an employment contract, and of the welfare state and its rules of eligibility to social insurance, for example, unemployment benefits (ibid).
Trade unions above all pressed for standardization of employment contracts, to protect workers from uncertainty, simplify collective regulation, decouple the economic situation of workers from that of their employing organization, and suspend as much as possible competition between workers, so as to enable them to act in solidarity. Standardization involved explicit and agreed definitions of normal effort, normal hours, and normal pay, guaranteeing employers reliable performance of predictable routine tasks at an average level of effort (Bosch 1986; in Streeck 2005). Standardization was also associated with strict distinctions between work and non-work, making work effort easy to measure for employer and employee alike, as well as for the union as the guardian of the wage-effort bargain.
Generally unions tried to make explicit and formalize as many of the implicit and informal elements of the contract of employment as possible, so as to make employer demands on workers predictable and worker performance easier to measure, leaving as little space for employer judgment as possible (Streeck 2005). Hereby protecting labour from complete commodification and society from the vagaries of the market (ibid). Making labour markets both socially legitimate and less than completely flexible.
Bosch (2004) examines the concept of the standard employment relationship (SER) – i.e. the employment relationship of the traditional full-time core worker. He outlines what is understood by the SER and identifies the traditional SER as a ‘stable, socially protected, dependent, full-time job of which the basic conditions are regulated to a minimum level by collective agreement or by labour and/or security law (Bosch 1986: 165; in Boulin et al. 2006). The full-time nature of the job, its stability, and the social standards linked with permanent full-time work are the key elements. Only full-time employment guarantees a family wage and an adequate level of social protection,
while a stable job places the relations between employer and employee on a long-term footing (Bosch 2004: 619).
In the SER, in contrast to day labour, workers are paid not only for the days they work, but also for times when they are not working or are investing in their capacity for work (Bosch 2004: 619). The focus of the contract is not only on today but also on tomorrow, with many mutual obligations enshrined therein (ibid). These obligations may include, on the employee’s side, exclusivity of employment with one organization, and, on both sides, a commitment to a minimum period of employment and rules for terminating the contract (ibid).
The various social protection measures create buffers between the market and employment relationships that guarantee workers an income, at least for a transitional period, when they are not working because of illness, accident, unemployment, short-time working, etc. (Bosch 2014). At the same time, employees’ capacity for work is maintained over the long term by protecting workers from excessive demands, for example establishing maximum working times and holiday entitlements.
Private life is made easier to plan by establishing a standard working time and rules that have to be adhered to when deviations from that norm are necessary (payment of premia, notice of changes to working time) (Bosch 2014). Thus, the SER enables employees to plan for the long term. This applies not only to the planning of everyday life, such as the use of leisure time, but also to workers’ investment, and that of family members, in their own capacity for work, for example through education and training (Bosch 2014: 619).
When social scientists today debate the employment relationship of the SER they speak almost exclusively of erosion and crisis rather than of change (Bosch 2004). The predominant notion is that the SER of the past is breaking up in favour of a diversity of non-standard, atypical employment relationships that are no longer held together by any common bond, so that it no longer makes any sense to assume that there is any dominant form of employment relationship (ibid). In his monumental work on the information society, for example, Castells writes: ‘the traditional form of work,
based on full-time employment, clear-cut occupational assignment, and a career pattern over the lifecycle is being slowly but surely eroded away’ (Castells 1996: 268).
At the time when those supplying labour power were more unionized than they are nowadays and the standardization of the employment relationship still proceeded, questions were already asked whether socially regulated labour markets were flexible enough to adjust in time to changes in demand and technology (Streeck 2015). Some authors suspect that regulated employment in the “primary” labour market is possible only when complemented by unregulated, non-standard, and contingent employment in a “secondary,” nonunionized labour market, with “dualism” restoring the flexibility that social regulation had ended (e.g. Berger & Piore 1980). The implication is that in a market economy, reduction of economic uncertainty for some will inevitably increase uncertainty for others in weaker positions (ibid). Whether this assumption can be proven for highly skilled workers remains to be argued and corroborated by empirical evidence.
Today, those advocating liberalization of labour markets doubt that workers, especially those with advanced human capital, are necessarily at a disadvantage in relation to employers and therefore stand to benefit from collective regulation and standardization of employment conditions (Streeck 2005). Building on theories of labour market dualism and segmentation, social protection of the employed is blamed in European welfare states for long-term unemployment and the growing gap between the employed and the unemployed (ibid). Advocates of liberalization (see for example Hayek 1979; Friedman 1980; Weitzmann 1984) support, together with de-standardization and flexible employment conditions, a reallocation of economic risk between employers and workers. Hence, transferring risk to the workers. Supportive evidence for this thesis has however only been found for the manufacturing sector where employment variability is relatively high (Kruse 1993). Whether employers in the highly skilled segment of the labour market adopt a similar strategy with the intended transferring of risks remains to be seen.
By the end of the twentieth century, Western economies were significantly more liberal than they had been at the beginning of the crisis in the 1970s (Streeck 2005). The old institutions still hold, with the support of the state and legal order, less standardized types of employment beyond the categorical distinction between employees and employers emerge outside of them. Within work arrangements one finds a partial return of the spectrum of employment relations that was suppressed at the height of industrialism; external labour markets gain importance and become increasingly flexible, while internal labour markets become less institutionalized and more like external labour markets and economic rewards are governed less by entitlement than by market fluctuations, less by status rights than by contingent economic results, and more by individual effort or luck than by collective regulation (Osterman 1994).
As discussed above collective action in pursuit of fairness and security protects labour from complete commodification and society from the vagaries of the market, making labour markets both socially legitimate and less than completely flexible (Streeck 2005: 263). How much flexibility is left, and must be left, for adjustment of firms and industries in a modern economy is a matter of debate—one that ultimately reflects the fundamental tension between the dynamism of a capitalist economy and the need for stability of social relations (ibid). Whereas neoclassically inspired economists tend to believe the best rigidities to be no rigidities, sociologists insist that there cannot be economic flexibility without social rigidity (ibid).
From the 1980s onward, a more knowledge-intensive, flexible accumulation regime began to transform Fordism (Gottfried 2014: 2). With the turn away from mass production to a more flexible labour process, companies have sought a new quality of flexible non-standard labour (ibid). The literature (e.g. Bosch 2004; Streeck 2009; Ludovici & Semenza 2012; Gottfried 2014) depicts growing trends and tendencies towards increasing non-standard employment, decreasing job stability and security. Kalleberg (2000: 342) states that the major rationale behind the strategy of flexible employment has been to ease the labour hiring and firing for the employers by diminishing related costs and making necessary legal amendments.
Bosch (2004) sets out to check whether these assumptions are justified. He observes that the hours worked by full-timers and part-timers are beginning to converge as a result of an increase in part-timers’ hours and a reduction in those of full-timers (Bosch 2004). Also, Bosch expects that the differences between full-time and part-time employment are becoming more fluid. Besides Bosch, several other authors perceive the trend of increasing insecurity. Among which Bauman (2000), who even speaks of ‘liquid modernity’, because the ‘solid’ labour contract with its corresponding institutions melt into fluid, flexible forms of work. Bauman states:
“We live in a world of universal flexibility, under conditions of acute and
prospectless – Unsicherheit -, penetrating all aspects of individual life. […] ‘Flexibility’ is the slogan of the day, and applied to the labour market it augurs an end to the ‘job as we know it’ announcing instead the advent of work on short-term contracts, rolling contracts or no contracts, positions with no in-built security but with the ‘until further notice’ clause. Working life is saturated with uncertainty.”
(Bauman 2000: 135, 147).
Bosch (2000) however distinguishes between the economy of low-skilled workers in which firms can still survive with flexible ways of hiring and firing on the one hand. On the other, Bosch depicts knowledge-intensive forms of work, with increased pressure of deadlines in project work due to the demand for fast innovations. In the latter employers supposedly are increasingly dependent on highly skilled workers. Which they, dependent upon the specific sector, wish to retain even in times of crisis in order not to lose the considerable investment they have made in their know-how. Consequently, they seek to increase internal flexibility, which results in stability in job tenure, despite the increased turbulence of markets (Bosch 2004: 627). Whether this counts for the whole labour market of highly educated graduates deserves further investigation.
Kalleberg (2009) gives an overview of the different precarious work patterns that are part of flexible employment consisting of part-time work, temporary agency work, short-term and contingent work, independent contracting, job-sharing and
home-based work, which have gained prominence in different countries and in changing degrees. By “precarious work”, he means employment that is uncertain, unpredictable, and risky form the point of view of the worker (Kalleberg 2009).
2.6. Precarious employment
Kalleberg (2009) argues precarious work has existed since the launch of paid employment as a primary source of sustenance. Nevertheless, he also observes the growth and obviousness since the 1970s. As stated above, precarious work, in his definition is uncertain, unpredictable, and risky from the point of view of the worker. Despite of the ideological promise of the global market economy that would raise living standards everywhere; it has brought economic insecurity to many (Standing 2011). The author even speaks of “the precariat” a class that has been growing and has come to the surface in the wake of the 2008 crisis.
Precarious work was often described in the past (for a review, see Kalleberg & Sørensen 1979) in terms of a dual labour market, with unstable and uncertain jobs concentrated in a secondary labour market. Kalleberg acknowledges that precarity and insecurity were used to differentiate jobs in the primary as opposed to secondary labour market segments. However, now, precarious work has spread to all sectors of the economy and has become much more pervasive and generalized. Kalleberg (2009) argues professional and managerial jobs are also precarious these days. Precarious work has far-reaching consequences that cut across many areas of concern to sociologists (Kalleberg 2009: 2). Creating insecurity for many people, it has pervasive consequences not only for the nature of work, workplaces, and people’s work experiences, but also for many non-work individual (e.g. stress, education), social (e.g. family, community), and political (e.g. stability, democratization) outcomes (ibid: 3). Kalleberg therefor states it is important to understand the new workplace arrangements that generate precarious work and insecurity.
Standing (2011) finds the cause of the creation of a global precariat in the desired increase in ‘labour market flexibility’. Unless labour markets were made more flexible, labour costs would rise and corporations would transfer production and investment to places where cost were lower; financial capital would be invested
in those countries, rather than ‘at home’ (Standing 2011: 6). Flexibility has many dimensions and not all forms of flexibility necessarily imply precariousness. However, wage flexibility meant speeding up adjustments to changes in demand, particularly downwards; employment flexibility meant easy and costless ability of firms to change employment levels, particularly downwards, implying a reduction in employment security and protection. The major result of these dimensions of flexibility is that more and more people are in a temporary status of some kind (Standing 2011: 7).
In essence, the author states, the flexibility advocated by neoclassical and neoliberal economists meant systematically making employees more insecure. Union decline and deregulation reduced the countervailing forces that enabled workers to share in the productivity gains that were made, and the balance of power shifted all the more heavily away from workers and towards employers (Kalleberg 2009: 6). This meant weakening a traditional source of institutional protections for workers and dissolving the post-war business–labour social contract (Kalleberg 2009: 3).
Part of the changes occurred in the work process during this period (Kalleberg 2009). Increases in knowledge-intensive work accompanied the accelerated pace of technological innovation (ibid). Service industries continued to expand as the principal sources of jobs as the economy shifted from manufacturing-based, mass production to an information-based economy organized around flexible production. However, Crouch (2015) states, the question at stake is not a functionalist one about which technical means best provide working people with security, but instead is deeply conflictual. He goes one step further and states, ‘in principle, the employers of labour seek the most flexible possible workforce, one whose anxieties about uncertainty are of no more relevance than that of a piece of machinery’ (ibid: 2).
That was often the reality of the relationship in the early years of industrialization Crouch (2015) states; and it has returned to twenty-first century capitalism in increasingly popular forms among employers, such as the zero-hours contract (ibid). Here, workers are paid only for those hours when the employer calls on their labour; but they have to be in a state of readiness whenever that call comes
and therefore cannot easily take on additional jobs to cover them for periods when the employer does not want them and their income sinks to zero (Crouch 2015: 2). The author elaborates that this by no means is the only type of labour contract that employers want (ibid). For many kinds of work they value experience, accumulated skill and loyalty. Then there is a coincidence of interest between employers and employees in continuity and security. However, in a competitive market individual employers will always be seeking ways in which they can maximize flexibility by reducing their commitment to particular kinds of workers (Crouch 2015). If all firms competing in the same product market face the same patterns of labour needs, Crouch argues, there will be no market disadvantage to those who decide to grant security of employment to certain kinds of workers. But it must be assumed that all firms are constantly seeking ways of achieving their production goals with more flexible workforces (Crouch 2015: 2).
It is however not right to equate the precariat with the working poor or with just insecure employment (Standing 2011), although these dimensions are correlated with it. The precariousness also implies a lack of a secure work-based identity, whereas workers in some low-income jobs may be building a career. The difference is, states Kalleberg (2009) that precarious work has now spread to all sectors of the economy and has become much more pervasive and generalized, even in: professional and managerial jobs. An important aspect of this lack of identity is a lack of control over ones labour. This is however complicated, since there are several aspects of work and labour over which a person may have control – e.g. skill development and use, amount of time required to labour, the timing of work and the labour intensity.
As stated above precarity influences non-work aspects of life as well. The uncertainty and unpredictability of future work opportunities make it hard for students to plan their educations (Kalleberg 2009). The author states the growth of precarious work has made educational decisions more precarious too. Education has become increasingly important as a determinant of life chances due to the removal of institutional protections resulting from the decline of unions, labour laws, and other
changes discussed above (ibid). The growing salience of education is reflected in the growing polarization in job quality associated with education and skill (Sørensen 2000). For example, what is the best subject to major in to ensure occupational success? Moreover, economically precarious situations (even for those employed full-time) may make parents less comfortable investing in their children’s education. Opportunities to obtain and maintain one’s job skills to keep up with changing job requirements are also precarious (Kalleberg 2009). Many workers are hard pressed to identify ways of remaining employable in a fast-changing economic environment in which skills become rapidly obsolete. Unlike workers of the 1950s and 1960s, today’s workers are more likely to return to school again and again to retool their skills as they shift careers (ibid).
In conclusion, employees today are better and, more importantly, more broadly educated and are therefore more versatile (Bosch 2004: 627). For this research it is relevant to take a closer look at the demanded skills of highly educated workers. The future development of the SER, if there is any, depends very much on the dominant form of work organization in a country (Bosch 2004: 628). Especially in the case of high-skilled work, Bosch argues, employers will opt for a strategy based on skills, flexible work organization and internal flexibility (ibid: 629). Arguably this depends very much on the specific sector and the corresponding skills that are demanded.
2.7. Skills
In recent years, technological innovations created a skill bias. Following Tinbergen’s pioneering work (1974; 1975), the relative demand for skills is linked to technology, and in particular to the skill bias of technological change (Acemoglu and Autor 2011). This perspective emphasizes that the return to skills is determined by a race between the increase in the supply of skills in the labour market and technical
change, in the sense that improvements in technology naturally increase the demand for more “skilled” workers. Thus, shifting employers’ demands for labour away from lower skilled towards more highly skilled workers.
Several authors argue there has been an accelerated increase in the demand for highly skilled workers (e.g. Acemoglu 1998; Autor, Katz and Krueger 1998). Irrespective of whether there has been acceleration in skill bias, there is widespread agreement that technical change over the past 30 years has been skill-biased (see for example Katz and Autor, 1999, Acemoglu, 2000). Skill upgrading, driven by new technologies in the workplace, such as computerization and new communication technologies, requires employees with improved know-how through education, training, and work experience (Adams 1999). Skill biases are especially pronounced in information-intensive industries, where firms seek competitive advantages by identifying critical knowledge, embedding it in new products and services, and integrating it into their business processes and practices (Krueger and Rouse 1998) Technological innovations that require employees to learn how to use computers and telecommunication equipment should induce employers to provide training programs to avoid obsolescence by keeping their workers’ job skills up-to-date (ibid).
Before moving towards a more specific approach of the skills that employers could demand from highly educated graduates it is worth noting the classical work by Gary Becker (1962) on human capital investments. Following his article economists advanced a classical hypothesis regarding the types of job skills that firms would provide to employees through on-the-job training programs designed to increase their job performances and productivities. The argument goes: No company would rationally invest in increasing its workers’ general skills - which by definition are useful to other firms - because rival employers could simply raid or poach those trained employees and thereby harvest all the productivity gains from the training investment. However, a company logically should pay the full costs of any training program to improve its workers’ firm-specific skills (ibid). Because firm-specific skills have absolutely no value to competitors, the trained employees necessarily remain at the firm. Hence, a company recoups its full investment in specific-skills
training and earns profits during the post-training period because it enjoys productivity gains from its trained workers’ improved job skills (Becker 1993: 34).
More recently, employers are proclaiming the need for highly educated employees if their businesses are to be successful in a rapidly evolving, global economy. Tomlinson (2013) finds that employers are not satisfied with the employability of graduates leaving university. From several surveys (a.o. Association of Graduate Recruiters 2009; CBI 2011) the message tends to be fairly straightforward: graduates are not fully fit-for-purpose and there is a general mismatch between the skills they acquire through university and those required in the labour market.
Several authors (see for example Andrews & Higson 2008; Tomlinson 2013) state that increasing pressures have been placed on universities to adjust their curricula in order to meet the needs of the labour market and nurture the types of skills that higher education graduates need to draw upon in their future employment. Tomlinson (2013) concludes that higher education does not seem to be in tune with the flexible and fast-changing economic context in which graduates work. Various other researchers (Archer and Davison 2008; Mason et al. 2009) have shown that there is unlikely to be any clear compatibility between skills acquired in university and those required in the job market. This is partly due to the broad profile of skills that employers demand and the fact that skills are highly dependent on context. It would, therefore, appear that whatever skills are formally taught and practiced in an educational setting, they are not necessarily easily transferred into employment. Tomlinson (2013) depicts it has become very clear that employers demand more than the traditional academic skills associated with a degree, although precisely what skills, appears to be unclear.
Here it becomes useful to make a distinction between ‘hard’ and ‘soft’ skills. As defined by Andrews and Higson (2008) soft skills are described as social and interpersonal competencies, like for instance reliability, strategic thinking and communication skills. Hard skills, refer to more tangible job related knowledge and skills. Research over time has indicated that employers generally want graduates to demonstrate a wide range of ‘attributes’ relating to the various interpersonal,
communicative, behavioural, and decision-making dimensions of their jobs (Harvey et al. 1997; Hesketh 2000). These are likely to encompass attributes such as self-motivation, confidence, resilience and risk taking (ibid). Both studies have however been conducted in the UK. Significantly, Tomlinson (2013) finds that employers place considerable value and emphasis on graduates’ behavioural and personal qualities. These, rather ‘soft’ skills, have been taken to be as important, if not more, than technical or ‘hard’ skills (ibid).
Drawing from the classical work of Hall and Soskice (2001), Estevez-Abe, Iversen and Soskice examine the relationship between particular varieties of capitalism and social-policy regimes, emphasizing the way in which different type of social policies encourage workers to develop specific or general skills. As the research above has been conducted in a typical LME (i.e. the UK), characterized by a more fluid market3, the expectation is that economic actors are encouraged to acquire switchable assets, such as general skills. Whether this counts for the more diffuse or also called hybrid4 country, the Netherlands has not been empirically proven.
The demonstration of ‘soft skills’ and values, including commitment, motivation and self-efficacy appear to be given significant weighting in the labour market (York and Knight 2006). Research by Hinchcliffe and Jolly (2011) on employer’s values and demands clearly illustrates that organizations look to engage with the broader identities of graduates. Employers clearly expect graduates to be able to ‘perform’ successfully in the operational sense. But they also appear to want graduates’
3 These markets make it relatively easy for firms to release or hire labour in order to take advantage of new opportunities but less attractive fort hem to pursue production strategies based on promises of long-term employment (Hall and Soskice 2001).
4 Esping-Andersen (1990) originally assigned the Netherlands to the social-democratic type, whereas Korpi and Palme (1998) see it as liberally oriented; the basic security type. However, most authors place the Netherlands in the second category of corporatist/continental/ conservative welfare states. This is also the choice of Visser and Hemerijck (1997). Recently, Esping-Andersen has called the Netherlands the ‘Dutch enigma’ because of its Janus-faced welfare regime (1999: 88). The Netherlands is indeed more a hybrid case than a prototype of a specific ideal-type (Arts and Gelissen 2002).
performance to be underpinned by broader personal and identity-related dispositions that positively reflect company goals and values. This research, conducted in the UK, shows that graduate recruiters are particularly keen to examine the values, ethical awareness, political interests and intellectual make-up of the graduate. These tend to be referenced against the specific context of their organization and the values and modes of practice that are embedded in them (ibid).
Other research on graduate recruitment has illustrated the various cultural dynamics that underpin employer decisions to recruit graduates. Brown and Hesketh’s (2004) research explored the various criteria that employers use to inform their recruitment decisions. In an increasingly competitive graduate labour market, graduate recruiters have extended the remit of their recruitment decision in the quest to win the ‘war for talent’. Significantly, Brown and Hesketh’s (2004) research illustrates that employers favour graduates who can project a dynamic set of ‘employability narratives’. These narratives not only encompass their hard currencies in the form of academic credentials, but also a broad range of experiential, interpersonal and behavioural assets; what they term as graduates’ ‘personal capital’.
The earlier mentioned study by Harvey (2000) delivers an interesting point of view. However this study entails the graduate perspective of the story - and this thesis focuses on the employer’s side – it highlights an hypothesis which supports a need for flexible graduates (accepting part-time and short-term contracts, outsourcing and home working), who are able to work in project teams and accept a lack of career progression. This perspective is different from the demanded match of skills and qualification, as it seems to demands a willingness to accept poor employment conditions. Until now this point of view has not been further developed. As discussed earlier, much has been written on the poor employment conditions of lower educated workers. In this regard, this research might shed some new light on the conditions that highly educated graduates are facing or are about to face. Also it might give a renewed focus in the current climate of wider labour market uncertainty. But firstly, an important development, which has changed the dynamics
in the labour market for highly educated graduates, needs to be examined: i.e. the expansion of higher education.
2.8. Educational expansion
In the last decades, European countries have gone through a process of educational expansion, an important part of which has taken place in higher tertiary education (Barone and Ortiz: 2010). Kelsall et al. (1972) showed that employers demand a highly educated labour force with the requisite intellectual capabilities, and the flexible and adaptable skills and qualities, which were once only associated with the small graduate elite. The expansion of higher education during the 1990s was a government response to this demand. Nowadays education still seems to be the most important determinant in the hiring process. This matches with the belief that higher education will provide access to the labour market.
The process of educational expansion is often regarded as intrinsically good; even necessary, in order to meet an increasing demand for skills that would be naturally associated with the advent of ‘knowledge society’ (ibid).
“In today’s knowledge society, a good education increasingly serves as an entry ticket to the labour market.” Gerhard Bosch (2004: 629).
In most countries, the employment rate for highly qualified men and women is significantly higher than that for the less well qualified. For the more highly skilled, the influence of educational level on their labour market position is now greater than that of gender (Bosch 2014).
Moreover, it can be argued that it is always good to have better educated people, not the least because education exerts positive effects on active citizenship (Bosch 2014). There are however also authors stating educational expansion is not always positive. Hartog (2000: 134) suggests that ‘the strong expansion of participation has outpaced the increase in the demanded levels of education’. According to this view, the risk of devaluation of diplomas, and therefore of social
demotion of tertiary graduates, is real. Buchmann (1989: 135) states the rapidly rising demands for higher education and increasing investment in educational credentials have led to an inflation of education titles and a consequent decline in their value on the labour market.
As more and more highly educated graduates are entering the labour market, competition has become fierce and employers are in a position to increase their demands. It is therefore especially relevant to gain further understanding in what it is that employers look for when hiring highly educated graduates. Before diving into the Dutch labour market it bares fruit to have closer look at the process that underlies the transition to the so-called knowledge society.
2.9. Education as a positional good
Hirsch (1976) contributed to the understanding of the process of what could be called ‘credential inflation’. He explains how education may be considered a ‘positional good’. Starting with the earlier discussed neoclassical economic models, in which it is assumed that an individual’s desires, preferences and behaviour are determined independently of social institutions, culture and the behaviour and well being of others. Hirsch viewed demand for positional goods as being consistent with standard economic theory’s assumption of the rational pursuit of self-interest.
For Hirsch, education is partly a positional good since its value depends on both the absolute and relative levels. Considered in isolation, Hirsch (1976: 4) states, the individual’s demand for education as a job entree can be taken as genuinely individual wants, stemming from the individual’s own preference in the situation that confronts him or her. Acting alone, each individual seeks to make the best of his or her position (ibid). But satisfaction of these individual preferences itself alters the situation that faces others seeking to satisfy similar wants (Hirsch 1976: 4). A round of actions aimed at personal wants therefore leaves each individual with a worse bargain than was reckoned with when the transaction was undertaken, because the sum of such acts does not correspondingly improve the position of all individuals taken together. This is what Hirsch calls the “adding-up” problem. Opportunities for economic advance, as they present themselves serially to one person after another,
