The economic outlook is sometimes strongly influenced by what people expect to happen. In the late summer of last year, prospects for the British economy worsened partly because people had become more pessimistic about the world economic outlook. Among other things, it was feared that this would lead to postponement of investment projects and extra precautionary saving which would dampen demand, weaken output and so justify the greater pessimism.

Flexibility, quality and competitiveness are all hallelujah words in current debate about national economic performance. The achievement of more flexibility or higher quality or greater competitiveness, it is said, will help the UK become a more successful economy. At the same time increased labour market flexibility and deregulation has been seen by UK governments since the early 1980s as a means of creating jobs and tackling unemployment. In following this line the UK government has looked to the North American example, and has suggested on numerous occasions that overregulation and inflexibility in most European countries' labour markets has worsened unemployment. While the record of enhanced labour market flexibility in boosting employment is not the focus of this article (for details of the debate, see Solow, 1998; Walwei, 1998), this job creation aspect of flexibility is important because it has coloured discussions of flexible forms of employment in the UK and has often led to our conflating flexibility with deregulation. As will be argued below, the evidence from Europe in fact suggests that the use of some forms of flexible employment are not incompatible with relatively high degrees of labour market regulation.

“I do not know what the word ‘flexibility’ is. Rarely in international discourse has a word gone so directly from obscurity to meaninglessness without any intervening period of coherence. Some people when they talk about labour market flexibility are talking about the freedom of employers to fire workers, the freedom of employers to reduce wages. I tell you something. That kind of freedom is not going to lead to higher standards of living in any of our countries.” Robert Reich, speaking at the International Labour Organisation, 10 June, 1994.

Labour market reform has become a central policy issue for many European countries, and there are lessons to learn for the further development of the New Deal in the UK. We discuss reforms in Denmark and the Netherlands, and look at their implication for employment and earnings. The Dutch started a sequence of reforms in the early 1980s based around wage moderation. Real wages per person hour rose less rapidly than elsewhere in Europe, and employment rose more strongly. Other reforms made the labour market more flexible, and many part-time jobs were created. The Dutch can claim to have succeeded in improving their labour market preformance. The Danes started serious reforms in the 1990s, and individuals on social benefits have a right and a duty to be activated. Registered unemployment has fallen sharply as a result of these New Deal style policies, but only some of these individuals have moved into employment. Increased flexibility, moderate real wage growth and active support for job-seekers all seem to help reduce unemployment and raise employment. Evidence from Denmark and the Netherlands suggests that making work relatively more rewarding helps to reduce inactivity and unemployment.

The emphasis in recent research on family-friendly practices has been on the determinants of their use rather than on the nature of this usage. Yet within the institutional-based organisational adaptation perspective, adopted in recent research, the existence of a family-friendly management cannot be automatically assumed from the use of certain practices. This article explores through latent trait analysis whether there is any pattern to the use of family-friendly practices, and then, having found there is, uses regression analysis to assess the determinants of family-friendly management.