Problems with Human Capital Orthodoxy: Labour Market Intermediaries and Socio-Economic Disorganization in Wales

Current academic and policy prescriptions based on supply-side human capital theory assumptions are inadequate for understanding and adjusting to deindustrialization and associated labour market unpredictability in regional economies like Wales, in the United Kingdom. This paper discusses alternative more integrated institutional approaches that match supply and demand in regional labour markets. The role of regional Labour Market Intermediaries (LMIs) in facilitating labour market adjustment, performing this matching function and brokering employment relationships is an important research issue (Benner, 2003, Benner et al., 2007; Autor, 2008; Goldstein et al., 2012). LMIs have been defined by Autor (2008:1) as ‘entities or institutions that interpose themselves between workers and firms to facilitate, inform, or regulate how workers are matched to firms, how work is accomplished, and how conflicts are resolved’.

The paper addresses the research question: do LMIs address the challenges of matching supply and demand in regional labour markets? The contribution is to advance theoretical and empirical understanding of the operation of regional labour markets, especially the role of LMIs. Here, one specific LMI in North West Wales called Shaping the Future (StF) with a remit to assist nuclear power workers facing into redundancy is explored empirically using qualitative ethnographic methods. The results suggest that StF primarily followed human capital theory orthodoxy in terms of retraining/reskilling workers made redundant but paid less attention to the demand-side of the labour market, in terms of matching re-skilled workers with actual (quality) job opportunities. StF was evidently in the business of helping workers adjust to disorganized and uncertain labour markets associated with deindustrialization and trying to mitigate the effects of redundancy. But StF did not, and was not equipped to, play a more expansive role in regional re(development). In this regard, such small-scale labour market interventions like StF (and LMIs generally) do not resolve the glaring structural demand-side problem of paucity of quality jobs in deindustrialized regions like Wales. This would require coordinated state intervention on a much grander scale, notably a long-term industrial strategy involving multiple stakeholders as ‘social partners’. But policy-makers from all sides have consistently failed to address the massive socio-economic problem of creating new (decent) jobs in the aftermath of deindustrialization.

 

References:

Autor, D. (2008), ‘The Economics of Labor Market Intermediation: An Analytical Framework’. Institute for the Study of Labor, IZA Discussion Paper, No. 3705.

Benner, C. (2003) ‘Labour Flexibility and Regional Development: The Role of Labour Market Intermediaries’, Regional Studies, 37(6-7):621-633.

Benner, C. Leete, L. and Pastor, M. (2007), Staircases or Treadmills? Labor Market Intermediaries and Economic Opportunity in a Changing Economy. New York: Russell Sage Foundation.

Goldstein, H., Lowe, N. and Donegan, M. (2012), ‘Transitioning to the New Economy: Individual, Regional and Intermediation Influences on Workforce Retraining Outcomes’, Regional Studies, 46(1):105-118.