7 issn 1822 – 8402 european integration studies. 2010. no 4 pROMOTIOn Of EMpLOYEES KnOWLEDGE BuILDInG VIA fLEXIBLE WORKInG TIME: THEORETICAL COnCEpTS AnD EVIDEnCE fROM latvia Ieva Brence, Biruta Sloka University of Latvia Abstract promotion of knowledge building and life-long learning are concepts set by the European Commission for several years already. Also flexible working time is an issue recommended to be applied in organisations within the Eu. Even more - as serious economic slowdown in the last years affect labour markets and most of the organisations and employers are forced to cut salaries or even numbers of employees, an alternative instead of finishing labour relations with employees, is introduction of flexible and especially part-time employment. It allows maintaining working places and in certain cases provides greater opportunities for employees’ knowledge building. The aim of the paper is to analyse theoretical concepts of flexible working time adjustment and its interaction with knowledge building and basing on the entrepreneurs and inhabitants surveys performed by the authors, discuss possibilities for flexible working time increase in Latvia that would allow knowledge building within organisations. The article reflects previous research works both on organisational flexibility and on employees’ knowledge building and research results of the surveys performed by the authors (entrepreneurs survey comprising of 1526 respondents representing private sector and employees survey comprising of 2194 respondents). It is discussed that there are both positive and negative aspects for applying flexible working time. Adjustment of flexible working time allows keeping employees with organisations and, even more – allows more free time for employees whose salaries rates are subject to decrease, providing them more free time that may be used for their capacity building. The most important negative aspect concerning flexible working time adjustment, basing on inhabitants opinion, is related to lower salary levels. At the same time one should consider that most persons due to economic slowdown are subject to wage reductions and even finishing of employment relations without flexible working time adjustment. Thus flexible working time, including shortened working hours is an option for the current economic situation. Besides, due to reduced economic activity employers may allow more free time for employees that can be used for knowledge building. The article concludes that there are huge possibilities for increasing organisational flexibility in Latvia, since most of the employers have not even thought on the possibility to adjust flexible working times. Keywords: Knowledge building, organisational flexibility, part-time employment, Latvia. Introduction Changing global environment requests new skills and competencies at organisational level. Besides, serious economic slowdown facing Europe and Latvia in the last years affects labour markets and organisations. Salaries for most of the employees are decreased and even more, unemployment level has exceeded 16% at the beginning of 2010 in Latvia. The authors suggest instead of finishing labour relations with employees to introduce part-time employment thus allowing maintain working places. Besides, flexible working time is an efficient tool for supplementing knowledge that is necessary for organisations and thus for most of the employees. There are several ways for knowledge increase – life-long education courses financed by the employers, courses financed by employee, learning without participation in courses, courses financed by the third persons, e.g. the state. Knowledge building may be limited due to the lack of financing of employers and employees. Nevertheless, providing more free time for employees may still allow possibilities for professional growth even without sufficient investments. There are number of research papers stressing the necessity for knowledge building (Alvesson 2004, Gorelick 2005, Kvande 2009, Nevo, Chan 2007, Wright 2001). Besides many research papers reflect the benefits from flexible working time (Bosch, Lehndorff 2001, ISSN 1822-8402 EUROPEAN INTEGRATION STUDIES. 2010. No 4 8 Drew 2007, Kerkhofs, Chung, Ester 2008, Khamkanya, Sloan 2009). However, not so many research works deal with the both issues. Knowledge building, thus, goes on throughout a knowledge society and is not limited to education. As applied to education, however, the approach means engaging learners in the full process of knowledge creation from an early age (Scardamalia, Bereiter 2003). The authors of the article consider knowledge building is may be applied to organisations in case learning of employees is coordinated and their knowledge gained is necessary for further organisation development. Besides, the term may be referred to any kind of learning – attendance of university (and other higher education courses), attendance of life-long learning courses, etc. Basing on the previously performed research the authors have elaborated their own definition on labour market flexibility – labour market flexibility is possibility of institution (both private enterprise, state institution or non-governmental organisation) to adapt itself on changing conditions, by providing efficient use of labour force, technological and financial resources. Labour market flexibility incorporates term of organisational flexibility. The research novelty is related to the fact that not many scientific papers analyse both organisational flexibility and employees’ knowledge building possibilities. Statistical analyses are built on original surveys’ results performed by the authors. Research object is Latvian organisations. The aim of the paper is to analyse theoretical concepts knowledge building and its interaction with flexible working time and basing on the entrepreneurs and inhabitants surveys performed by the authors, discuss possibilities for flexible working time increase in Latvia. The research tasks involve theoretical discussion on knowledge building and flexible working time aspects and analysis of employees’ and employers’ opinions concerning possibilities for flexible working time increase in Latvia. The research methods involve content analysis both on organisational flexibility and on employees knowledge building, analysis of the EU and Latvian policy documents on promoting organisational flexibility and employees skills building and statistical analysis of the surveys performed by the authors (entrepreneurs survey comprising of 1526 respondents and employees survey comprising of 2194 respondents). Theoretical concepts of knowledge building and flexibility Knowledge building and flexibility may be analysed both as self-contained and united terms interacting with each other. Thus we try to analyse the processes both as self-contained and interactive. Knowledge building is a comparatively complex issue. Knowledge building is essential for organisations to cope with changing market demands (Weiler 2009, Kvande 2009, Nevo, Chan 2007, DeJong, Den Hartog 2007, Gorelick 2005, Fontaine 2006, Alvesson 2004,, Scardamalia, Bereiter 2003). Knowledge building may be defined as the production and continual improvement of ideas of value to a community, through means that increase the likelihood on what the community accomplishes will be greater than the sum of individual contributions and part of broader cultural efforts. Knowledge building, thus, goes on throughout a knowledge society and is not limited to education. As applied to education, however, the approach means engaging learners in the full process of knowledge creation from an early age (Scardamalia, Bereiter 2003). The authors of the article consider knowledge building is may be applied to organisations in case learning of employees is coordinated and their knowledge gained is necessary for further organisation development. Besides, the term may be referred to any kind of learning – attendance of university (and other higher education courses), attendance of life-long learning courses, etc. Knowledge has long been considered an important organisational resource, and its effective management is therefore crucial to success (Nevo, Chan 2007). One way for organisations to become more innovative is to capitalize on their employees’ ability to innovate. Work has become more knowledge-based and less rigidly defined (DeJong, Den Hartog 2007). Life-long learning is essentials for organisations in order to keep up to date with rapidly changing knowledge (Dealtry 2009, DeJong, Den Hartog 2007, Gorelick 2005, Wright 2001). Knowledge work is the concept used broadly for two types of knowledge intensive work: research and development organisations that are based on scientific knowledge, like biotechnology or high-technology engineering; and professional work, such as law and accounting (Alvesson 2004). Organisation of work, with the emphasis on individual responsibility and team organisation, together with the boundless time cultures, represent a set of strong structural forces in knowledge work. However, the disciplining processes of empowerment and individualization make the employees themselves the driving force behind the long- hours work culture (Kvande 2009). Even in case organisation, to its owners’ consideration, is not related to knowledge work, knowledge building may be necessary in future. Nearly in all industrialised countries in the west, there has been a rapid increase in the number of atypical jobs in the past few years (Valkenburg, Beukema 1996). Fulfilment of the tasks set within the new atypical jobs ISSN 1822-8402 EUROPEAN INTEGRATION STUDIES. 2010. No 4 9 requests continuous learning and skills development. Knowledge building is essential, since a decade or so ago expatriation strategies began changing to emphasize filling local positions with local managers because local managers were more familiar with the local staff, clients, markets, and cultures, were less expensive to support, and doing so assuaged a variety of political, image and ethical concerns (Fontaine 2006). Necessity for knowledge building is stipulated in several EU policy planning documents as well and has become of special importance within economic slowdown. The majority of policy interventions are aimed at improving job placement and investing in training and lifelong learning, improving matching processes and facilitating labour market transition, and stimulating labour demand (Committee of the Regions 2008). With regard to the policy formulation of the European Employment Strategy in the post-Lisbon period, a closer look at the effects of the recession, national policy responses and future approaches to prevent or cushion the impact of economic recession on employment in the (EU) is on the agenda (Weiler 2009). Previous experience supports the fact that knowledge building issues will be of high importance in the agenda mentioned. Also several other institutions stress the necessity for knowledge building in Latvia. In 2002 Latvia became signatory to the ILO’s Life-long (Learning) Memorandum intended to promote human resources in terms of skills, knowledge and employability (ILO 2004a). Necessity for knowledge building and flexible working time increase is stressed in the OECD Jobs Strategy as well (OECD 1994). Work experience interaction with knowledge building is analysed from different perspective as well, stressing the necessity for pupils and students to gain practical skills. Time management skills learned from work, and from combining work and school, are likely to be hugely beneficial to their schooling as well as their postschool life (Staff et al. 2004). Necessity for knowledge building is indisputable and we consider it is of special importance, since economic slowdown started. At the same time possibilities for knowledge building may be limited –due to the impossibility to combine working and learning lives. Solution for promoting knowledge development, not fully used in Latvia, is application of flexible working time. There are more advantages on organisational flexibility and flexible working time. Many scientists argue that labour market flexibility enhance productivity, competitiveness, economic growth as well as entrepreneurship development (Botero, Djankov, La Porta, Lopez-de-Silanes, Shleifer 2004, Siebert 2006, etc.). Flexible working has emerged as a modern concept for managing office resources more effectively, efficiently, and economically (Khamkanya, Sloan 2009, Siebert 2006, etc.). Basing on the previously performed research the authors have elaborated their own definition on labour market flexibility – labour market flexibility is possibility of institution (both private enterprise, state institution or non-governmental organisation) to adapt itself on changing conditions, by providing efficient use of labour force, technological and financial resources. Labour market flexibility incorporates term of organisational flexibility. Flexibility issues are supported within the EU level. The European Commission holds, has to be less rigid in terms of its institutions, regulations, culture and policies in effectively addressing the radical impacts of accelerated processes of globalisation, increased competition and rapid changes in the demand and supply dynamics (Kerkhofs et al. 2008). Flexible labour contract forms involve different factors, e.g. changing working time (flexible working time), annual working time (hours to be worker per year), unsettled labour contracts (employees agree working on when it is necessary and not exact amount of hours of working time is set in the contract), time accounts (additional free time is provided in case extra hours are worked or employee pays by working the days he didn’t come to work, e.g. due to illness), restructured/ concentrated working time (e.g. 10 hours per day, 4 days per week, etc.). Unpaid vacations are also adjusted by organisations recently (Employers Confederation of Latvia 2009). Kerkhofs et.al (2008) distinguished between six different flexibility profiles within the 21 EU countries including Latvia, concluding that life-course flexibility dominates in Latvia (28/100), followed by the firm-oriented (24/100) and low flexibility (22/100), worker-oriented (13/100), overtime (9/100), and day-to day flexibility (5/100) (Kerkhofs et.al. 2008). Also negative aspects of working time flexibility are often discussed in literature. The previous research results show that a suppression of the 24 and the 168 h (seven- day) components (absence of periodicity) in the work schedules predicts reported social impairment. Even if there are relatively strong 24 and 168 h components left in the work schedules, their interference with the social rhythm (using the phase difference between working hours and the utility of time) further predicts impairment (Wirtz, Giebel, Schomann, Nachreiner 2008). The authors consider that the most efficient form of labour market flexibility to be introduced in Latvia for enterprises willing to promote knowledge building is part-time employment. According to the definition elaborated by the Statistics Office of the European Union (EUROSTAT) and used by the Central Statistical Bureau of the Republic of Latvia ISSN 1822-8402 EUROPEAN INTEGRATION STUDIES. 2010. No 4 10 part-time employees are persons who usually work less than 40 hours per week, excluding those who consider themselves to be employed full-time irrespective of the number of their working hours (EUROSTAT 2010). The OECD considers part-time fact in case person works less than 30 hours. Several other definitions of part-time employment exist as well (OECD 2010). Employers often decide to adjust part-time employment for maintaining employees during the time when enterprise incomes are not high (Polachek, Siebert 1993). Besides, in case work is optimally organized, it may be ensured that employees don’t decrease their productivity, but are able to reach better results in shorter working time (Buruiana, Ioan 2009, Bosch, Lehndorff 2001, ILO 2004b). The situation is proven by several examples – e.g. Unilever’s margarine plant in Purfleet, which was becoming increasingly vulnerable to both external and internal competitors, with spiralling labour costs and low productivity. The company responded by introducing annualised hours, abolishing overtime and moving to seven-day continuous shift working resulting in increased employees’ leisure time and dramatic improvements in operational efficiency, the report stated (Buruiana, Ioan 2009). Thus introduction of part-time employment don’t enable decrease in labour productivity. Part-time employment may be organised in frames of reduced-time working day (e.g. employee works for four hours only, but five days per week) or in frames of reduced- time working week (e.g. employee works three full days per week). Introduction of part-time employment depends on the branch, enterprise specifics, cooperation partners and clients, as well as other important factors, however, taking into account the person’s capacity curve, as well as other aspects, reduction of working days instead of working hours per one day are supposed being more efficient tool (Bryson, Forth 2007). There are certain particularities for managing flexible and part time employees (Riley 2009, Schweitzer 2009, Brence 2010), however in general employers may benefit from introducing part-time work. There are advantages and disadvantages on flexible working time and in particular part-time employment, they have been summarised in Table 1. Table 1. Advantages and disadvantages of flexible working time – view of employees and employers Advantages of flexible working time (view of employees) Disadvantages of flexible working time (view of employees) At least minimal income are maintained Work place maintained, thus not entailing depression and other symptoms related to unemployment Possibilities for maintaining qualification Possibilities for gaining additional education/ attending additional courses In case two jobs are combined (person works in two jobs in frames of part-time) possibilities for gaining additional experience Possibilities for choosing the most appropriate time for employee (morning hours, evening hours, etc.) Possibilities for integrating into labour market persons who are not willing to work full time (due to family, personal or other reasons) Greater satisfaction for work may be obtained (by excluding monotonous actions as well as necessity to remain in the working place when it is not actually necessary) Easier possibility to arrive in working place (excluding the necessity to come to work during peak hours) Possibilities for division of working tasks (in cooperation with the other person employed part-time in the same position) Income level may not correspond to the previous level, besides it might be proportionally lower in comparison to the full-time employees Additional bonuses are not provided for part-time employees (e.g. insurance) Part-time employment may create inconveniences (e.g. necessity to share working table/working place with another employee) Stereotype in society often exists that only persons holding lower qualification are employed part-time Less security for keeping the working place (in case number of employees is reduced the first ones losing their jobs are part- time employees) Smaller possibilities for training provided by employer and/or smaller possibilities for promotion Problems related to extra-hours payment may occur Advantages of flexible working time t (view of employers) Disadvantages of flexible working time (view of employers) Higher employees productivity, since less time for providing relaxation is necessary Greater possibilities for using the employees strongest qualities Not necessary to provide plausible free time for solving problems during working time (e.g. visiting doctor or state institution) Economy of scale, when production or provision of services outside the regular working time is necessary (increased payment for additional hours work is not necessary to ensure) Experience gained of employees, e.g. when working in additional job Problems possible in frames of part-time employees work coordination Time may be necessary for employee to fully integrate into the part-time work model and thus to guarantee efficient work Problems possible concerning working time coordination among part-time employees (e.g. most of them are willing to work in the mornings, etc.) Part-time model is not always possible to adapt for specialists of higher rank and qualification Part-time work may provide not full load of working premises, thus not fully providing the fixed costs for rent of premises, etc. ISSN 1822-8402 EUROPEAN INTEGRATION STUDIES. 2010. No 4 11 Taking into account the theoretical concepts possibilities for flexible working time adjustment in Latvia and its impact on knowledge building are further analysed. possibilities for flexible working time increase in Latvia Flexible working time may promote knowledge building. Taking into account the issue, possibilities for flexible working time increase in Latvia are analysed. Number of flexible and especially part-time employees is not high in Latvia. According the Central Statistical Bureau – in 2008 6,3% employees were working part- time, out of them 15% – due to studies, 5% – due to illness or impossibility to work more, 27% – since they couldn’t find full-time job, 18,6% – becase they didn’t want full time job, 5,5% – due to necessity to take care of children, 30,1% 0 due to other personal reasons. Data for earlier years reflect comparatively similar trend and prove that approximately 1/3 of the persons working part-time would be willing to find a full-time job. Part-time employment levels are much lower if compared to the EU-27 average (18%). Thus inhabitants and entrepreneurs opinions for part-time employment increase possibilities in Latvia were analysed. Entrepreneurs survey involved 1526 respondents (interviewed by the phone interviews) and employees survey – 2194 respondents (surveyed by internet, selected on data base principles). Results of the entrepreneurs’ survey reflect that the biggest part of them have not thought or have rejected to possibility to apply part-time employment in their institution. More than half of the entrepreneurs, if subject to wage reduction in enterprise, would reduce wages without reducing the working time. More detailed results are reflected in Figure 1. 51% 25% 20% 4% Reduce wage Introduce part-time employment Fire 10% of the employees Other figure 1. Entrepreneurs opinion on their action in case financial resources are decreased by 10%, 2009 The main reasons for not applying part-time employment are reflected in Figure 2 and basing on entrepreneurs, are mostly related to the work specifics. Threats on too low wages for employees was the second most important, however proportionately three times more seldom selected. More detailed survey results are reflected in Figure 2. 51% 17% 17% 12% 3% Work specifics Employees would receive too small wage Only the less productive employees are fired Haven’t thought on the possibility Other figure 2. Reasons for not applying part-time employment in Latvian enterprises, 2009 ISSN 1822-8402 EUROPEAN INTEGRATION STUDIES. 2010. No 4 12 Most of the employers noted work specifics being the main obstacle for impossibility to reduce working time. However, taking into account the EU countries experience (part-time employment exceeds 40% in the Netherlands) all the possibilities for restructuring working time in Latvia has not been used. Opinions for possibility to increase part-time work in Latvia were gathered also in the inhabitants’ survey (persons’ aged 18-30). Answering the question concerning their reaction in case employer applies them part time – 6% of the respondents working full time noted they would be satisfied with the offer, 36% would accept the offer and devote more time for studies, 7% indicated they would try to find another job, 46% answered they would try to find additional job. Since most of the respondents noted that in case part-time employment is assigned, they would look for additional work or try to comprise the work with another one, adjustment of part-time work may not promote knowledge building. At the same time it is possible in case employees have expectations for possible carrier prospects in future. The authors consider the main problem for flexible working time and especially part-time increase in Latvia is mostly related to the aspect of low wages employees would earn. Evidence for this argument was got in frames of other inhabitants’ survey question. Inhabitants were asked to note the main reason for high youth unemployment. Even considering the persons work full time, results of factor analysis reflected the main reason for youth unemployment to be low wage levels. Since the surveys were performed in summer 2009, when economic crisis in Latvia was actual, wage factor was still noted to be the main one, despite expectations that reasons concerning current economic situation, lack of job experience or lack of education would be noted firstly. Factor analysis is a statistical method used to describe variability among observed variables in terms of fewer unobserved variables called factors. The information gained about the interdependencies can be used later to reduce the set of variables in a dataset. The basic task of the factor analysis is to practically divide or form such k complex factors that are linearry dependant from the basic factors, but are not correlated within each other. It may be considered that initial r factors have been selected, out of whom k complex factors may be formed (r = 1, 2, ....., m, where k < m).Basing on the afore mentioned complex factor model may be designed: k Zij= ∑ lir Fr+di Ui , where [1] r=1 Zij – i standartysed initial variable, Fr – r complex factor, lir – i variable load on factor r di – i variable load on factor Ui Basing on the previous formula, the following model may be elaborated. k Zij= ∑ lir Frj+di Uij, where [2] r=1 i=1, 2,...,m j=1, 2,...,m Frj – complex factor Fr value for the object unit j Answers obtained in frames of the survey are reflected in Table 2. Table 2. Reasons for young persons high unemployment levels in Latvia, 2009 Complex factors 1 2 3 Low wage that doesn’t motivate young persons to search work ,711 -,143 -,244 Lack of work experience -,055 ,221 ,737 State economic situation ,091 ,800 ,191 Unwillingness of employers to pay adequate wages ,819 ,197 -,037 Impossibility of employers to pay adequate wages ,667 ,066 ,374 Uncompetitive education ,012 -,357 ,714 There are large possibilities for young people to find job in case they are really willing it -,006 -,716 ,163 As the result of factor analysis three complex factors may be driven concerning high unemployment levels of young people: Wage factor (too low the wage offered); • State economic situation; • Lack of education and job experience. • The authors don’t suggest the situation may be referred to all the young people in Latvia; however draw attention to the trend and believe it may be attributed to people of other age groups as well – employees expect high wage, however employers consider employees often haven’t deserved it. Apart from unemployment levels, number of persons leaving Latvia for working in another countries providing higher salary levels should be considered. Average salary levels in Latvia are low at the same time increase in salaries in recent years was higher than increase in productivity levels (EUROSTAT, 2010). ISSN 1822-8402 EUROPEAN INTEGRATION STUDIES. 2010. No 4 13 Thus the authors believe flexible working time increase in Latvia may have impact on many indicators – it may compensate the low salary levels, decrease unemployment level, provide free time for knowledge building (although the factor depends much on employees personal motivation), as well as increase productivity that often improves due to reduced working times. There are several possibilities for knowledge building via flexible working time, especially in case flexible working time is applied at current stage, until economic slowdown comes to an end: 1) employees who study in higher education institutions may use the reduced working times for devoting themselves more to studies, 2) promotion of knowledge building is supported by state institutions (State Employment Agency) allowing to participate in training courses for professional growth and life-long education of persons working part-time and being subject to unemployment threats for total value of 300 – 500 Ls (approximately 430 – 710 EUR), 3) in case person is interested in personal growth, adjustment of flexible (and especially reduced) working time may promote his own motivation for further knowledge building that may be used after economic development will start. Taking into account the afore-mentioned the authors consider there is still space for flexible working time as well as knowledge building increase in Latvia. The terms are widely united, since flexible working time allows increasing employees’ knowledge. The aspect should be used in the current situation, when working possibilities for number of persons are limited. Knowledge building often result in higher productivity and salary levels, thus the current economic situation should be used for allowing higher financial returns in future. Conclusions Knowledge building and flexibility issues have • become an important tool for organisational development. They are supported both in theoretical research papers and in the EU and other international institutions planning documents. Knowledge building and flexibility may be analysed both as self-contained and united terms. The authors believe the best results may be achieved within interaction process – flexible working time promotes knowledge building, and vice versa. Knowledge building is a complex issue, not only • limited to education. The authors of the article consider knowledge building is may be applied to organisations in case learning of employees is coordinated and their knowledge gained is necessary for further organisation development. Besides, the term may be referred to any kind of learning – attendance of university (and other higher education courses), attendance of life- long learning courses, etc. Employees in Latvia often are not interested in • flexible working time since they consider salary levels in frames of flexible working contracts to be lower (it is really often the case). Besides, employers find it difficult to adjust flexible working times due to work specifics and often even have not thought on the possibility. Taking into account the world experience and • situation analysis in Latvia the authors believe there are possibilities for increasing flexible working time. Flexible working times would allow better possibilities for employees’ knowledge building that is actual in Latvia as well. The authors don’t suppose flexible working time • in Latvia will reach level of the Netherlands (more than 40% of labour force is employed part- time), however believe employers should consider possibility for flexible working time application in their organisation. References Alvesson, M. (2004), Knowledge Work and Knowledge-Intensive Firms. New York: Oxford University Press, 212 p. Bosch G., Lehndorff S. (2001), Working-Time Reduction and Employment: Experiences in Europe and Economic Policy Recommendations. In Cambridge Journal of Economics No. 25, pp. 209-243. Botero J.C., Djankov S., La Porta R., Lopez-de-Silanes F., Shleifer A. (2004), The Regulation of Labour. 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