Internal labour markets in Australia: evidence from the survey of education and training experience

In recent years there has been important debate on the changing nature of the employment relationship, with some scholars claiming a significant weakening of the bond between employers and employees. An associated implication is that internal labour markets (ILMs) are becoming less prevalent in the economy. This paper uses data from the Australian Bureau of Statistics’ Survey of Education and Training Experience 1993-2005 to explore whether the bonds between employers and employees are weakening, and hence whether ILMs are being dismantled. Measures of job tenure, training expenditure and earnings are examined. Results indicate little or modest change in the first two measures. In addition the paper finds no evidence of a change in the average return to job tenure in earnings functions. On balance, the paper does not find a weakening in the relationship between employers and employees in Australia. This in turn suggests that ILMs are not of declining importance in the Australian labour market.