Differences between Internal and external labor markets

Published: 2019-08-29 08:00:00
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Labor market is a place where willing workers offer skills to employer and in return they are given compensation in form of salaries or wages. Labour market can be either classified as an internal labor market or external labor markets. Both markets have distinct features as shown below;

Internal Labor Market External Labor Market

Company hires workers at entry level and higher levels are filled from within by way of transfer of experienced workers within departments or promotion. Company searches for qualified workers from outside the organization rather than hire from within to fill senior levels.

Labor wages are governed by a set of administrative rules. Wages are determined internally rather than be influence by market pressures. Wages are determined by forces of demand and supply and thus they are influenced by market pressures. Mostly workers prefer to work with the highest bidder.

It provides some form of incentive to employees to be committed ,continuously motivated to acquire new skills and productive so as to ensure they rise up the ladder Provides no form of incentive because employers find it hard to hire employees who already are in the organization.

What trend do you think in the domestic and international labor market presents the greater challenge to HR professionals?

The global value chain is the next trend where production process will be decentralized across different countries. This globalization will cause companies to restructure their operations through outsourcing and offshoring of activities. This is a challenge to the HR Professional because it will lead to layoffs of many low level workers. This will lead to cheap labor and increased unemployment rates (Piore, 1971).

How can stereotypes potentially influence decisions related to HR systems?

Stereotypes are bias that influence decisions thus leading to discrimination. Human resource systems should viewed as means of restoring the competitive position of companies however; stereotypes have proved to be a main factor that affects decision related to this system in various capacities (Piore, 1971).

In most Asian countries there is a persistent stereotype that females are not equal to men. This is also evident in Latin American countries where there exist negative stereotype about female being lesser to men and misguided perception on gender roles. These stereotypes have clouded most decisions made by HR such as; Women are not given equal privilege to battle out for competitive positions since they are deemed as less qualified (Piore, 1971).. They cannot be leader since in most of their culture its against the norm for women to lead. Women are deemed to be voiceless thus since they cant fight for their rights, its easier to oppress them than the male so decision mostly favor the men.

References

Piore, M., & Doeringer, P. (1971). Internal labor markets and manpower analysis: Lexington, Mass: Heat.

sheldon

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