In the area of employment relations the pattern delineated in earlier chapters may be summarised as follows. From the nineteenth century onwards British employers relied to a large extent on market mechanisms and externalised their employee relations; they hired and fired as demand dictated; they provided minimal training; and wages were related in various ways to market criteria, such as the ‘going rate’ for labour or the selling price of the product. The attachment of the worker to the employer was limited and internal employment systems were rudimentary. In some firms this pattern was tempered by vestiges of traditional paternalism of an ad hoc, personal nature. However, this was of decreasing applicability to the large, multi-plant enterprise which emerged during the course of the twentieth century. Yet in only a few such large firms had more complex internal employment systems developed by the end of the interwar period.

In the post-Second World War years, economists have identified and analysed so-called internal labour markets. By this, they mean that employment systems can exist within firms which are relatively insulated from the external market and are regulated by a complex set of internal administrative rules and procedures. Thus firms hire workers into a limited number of entry jobs and then rely upon training and promotion to fill the majority of higher level jobs. To this end, jobs within the firm are ordered into something like a promotional hierarchy and, in competing for these jobs, employees are not subject to strong competition from workers outside the firm.