flexibility of labour can be associated with a higher level of job security if firms seek to
retain the high level of firm specific human capital that is involved. External flexibility
will in general have an adverse effect upon employment security, although again cases
can be found where, for example, high levels of subcontracting stabilise the level of
production.
In such an industry, skilled workers will typically be required to move frequently from
task to task and from job to job. However, this is not usually associated with long
periods of unemployment. Unskilled labour, on the other hand, whose wages are
generally low, often face considerable employment instability. Thus, although flexible
production methods have been an important response to changing international
conditions, and seem to have played a crucial role in the success of the footwear
industry in Italy, there are significant implications for labour, primarily unskilled labour,
in terms of employment security.
Flexibility in production often results in rapid increases or decreases in labour input and
has led firms to increase the number of workers, temporary or part-time, who enjoy
lower levels of employment security. This results in income variation for workers over
time due to their changing access to employment. Finally, workers with lower levels of
employment security are likely to have less bargaining power than more secure workers.
Thus, production and labour flexibility may have played an important role in widening
wage differentials between skilled and unskilled workers.
Flexible production methods result from the fragmentation of the production process
into many specialised units linked together in a network of supplier-buyer and
subcontracting relationships. It is also apparent that the close inter-relations between
suppliers entails that many firms tend to be located in close proximity which has led to
the development of industrial districts. Rabellotti (1995) provides evidence of the nature
of footwear districts from two Italian regions; Brenta and Marche. Of fundamental
importance to these districts is the presence of strong backward-linkages. That is, the
existence of a well-developed system of suppliers and subcontractors which can provide
a wide variety of products with short delivery times. This has a number of advantages
including, smaller stocks of inputs for producing final shoes, the progressive reduction
of the time between order and delivery, and an increase in the capacity of final shoe
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