However labour flexibility can be further segmented in two types:
Functional labour flexibility: Functional flexibility can be defined as a situation that occurs when an employer or organisation is able to change or combine various jobs of its employees. It also includes activities such as labour mobility, or change of place where work is done. Functional labour flexibility is used by an employer for various types of work requirements.
Numerical labour flexibility: Numerical labour flexibility can be defined as a situation where an organisation is capable of quickly changing the working hours of an employee. This in turn impacts the number of hours for which an organisation needs to pay, ultimately based on the fluctuating level of product or service demand.
Thus organisations these days are using various methods to utilize the labour flexibility. For example, methods such as ‘Wage Guarantee Fund’ and ‘Voluntary Retirement Scheme’ allow employers to offer its employees an option to take voluntary retirement before their designated time frame. This happens, when there is less demand for a product, but availability of the human resource is more than the required level in the organisation. Similarly, there are other methods such as job security agreements, contracting and sub-contracting which enables an organisation to exercise its labour flexibility.
However, with internationalization of the business organisation, there are several challenges which have come in front of organisations. Especially in terms of management of human resource, it has become challenging for organisations to implement labour flexibility considering the fact that organisations today operate in an international regulatory setup (Almond, 2011).
The Changing Labour Market
Today labour market has been changing rapidly. Countries such as China, India, Canada, Brazil, United States, UK etc., are involved in several challenges posed by the change in labour market. Following are the forces of change which are making the gradual change in the labour market