Friday, January 24, 2020

Regulating Recruitment

The advantages employers have during recruitment and how they should be regulated by both competition and labour laws in order for labour market fairness to prevail, is studied globally.

Employer Monopsony Power

Employers want to control wage and working conditions. This means they decide on how jobs are given and how much they should pay. In the same way firms can collude on the price of bread, they can collude on wages.

While employers need workers to provide services or produce products, they often advertise vacancies as if making grudge purchases.

Job adverts are market signals that can promote or deny inclusion. Adverts containing wage information attract a greater pool of applicants, particularly women. Yet many employers purposefully leave out the most important factor for workers, a salary range.

Employers want to minimise their costs and only attract those willing to subject themselves to a passive aggressive, unfair wage negotiation.

Its time for legal tools to combat inequality and unfair employer power.

Exploitative employers in South Africa enjoy excessive labour market freedoms while job seekers and ethical employers rights are systematically obstructed and denied.

Unfair Labour Market Competition

Labour market competition must be advocated by the Competition Commission as it falls within the realm of the Competition Act.

A Roosevelt Institute study concurs that Competition Law prevents employers from colluding to suppress wages and from deliberately creating monopsony power through mergers and other anti-competition acts.

Mergers remove competition, as such, their impacts on wages must be studied.

Does Inequality exist because of Recruitment?

A study in South Africa found that while unions and government had a unique alliance during the rise of democracy, inequality in labour earnings has widened.

Labour market power is more easy to exploit than consumer or product market power and evidence suggests employers are aware that they can make profits by obtaining and exploiting labour.

The South African Competition Commission focuses predominantly on consumer related markets, ignoring the balance of power in labour markets to the detriment of women and black people.

Three specific behaviours systematically institute employer information advantages, placing them in control of wage negotiation processes.

One: Job adverts contain no pay range.

Two: Job applicants are asked about pay expectations and pay history without the employers offer being disclosed.

Three: Job seekers are instructed to submit cost to company or rival employer payslips.

These three acts result in women and black people perpetuating old statistics of inequality to be paid less.

The system is designed to limit women and black people in particular, ultimately to constrain everyone’s aspirations and economic rights.

Unfair Employer Power Causes Economic Harm

  • low wages forces workers out the workforce
  • employers can block entry into markets, making it exclusionary and hostile
  • lack of competition suppresses economic growth, it reduces wages and employee opportunities
  • when employers stop competing for labour they can limit worker mobility and options
  • an unfair competition for talent harms ethical companies who need to hire
  • racism and sexism is perpetuated
  • social harm is instituted
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