Labour Market Outcomes Among Retrenched Workers in Australia: A Review

In any one year perhaps five per cent of the workforce experiences retrenchment in Australia. Retrenchment causes people shock and loss of income; they become socially isolated and their psychological health deteriorates. A large number of studies has examined the subsequent labour force experience of retrenched workers, depending on conditions in the labour market, retrenchment practices, hiring practices, state policies and the personal characteristics of the workers. This paper reviews the evidence about the factors that influence the prospects of retrenched workers, identifies some flaws in the design of studies in which that evidence has been collected, and points to ways in which more comprehensive evidence can be collected. An informed interpretation of evidence requires appropriate methods for identifying cause and effect, should rest on a clear identification of the forms of employment that exist, and needs to be sensitive to the manner in which personal characteristics are used by employer as hiring markers.