Internal Labour Markets and Employment Systems

Abstract

There has been a historical shift in the employment relationship for many employees which is marked by an increasing insulation from the external market and the development of internal labour markets (ILM). Focuses on two important aspects which are indicative of an ILM, the mobility of labour within firms and the internal pricing of labour (use of standard wages for all employees). A number of salient factors are identified which relate to the presence or absence of ILMs, structural factors (industry type, size), unionization, and strategic HRM influences. These are tested using a survey of public and private sector companies in Ireland. Union recognition and a developed personnel function are found to be positively associated with mobility and the use of standard wages for manual workers. This relationship is even more pronounced when only small union and non‐union firms are considered.