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Secondary labour market refers to those occupations which tend to be located in the most competitive areas of the economy and are more labour intensive. Secondary labour market occupations tend to pay lower wages, have insecure employment, be less unionized, and provide less opportunity for advancement.
In the theory of Labour Market Segmentation, there exists important differences on the demand side which imply differences in compensation and labor market segmentation theory splits the aggregate labor market into the primary labor market and the secondary labour market.
Secondary labour market industries are restaurant and hotel services, cashiers and retail sales. The secondary labor market may also refer to part-time or temporary work performed by students. Secondary labour market includes jobs in fast food and retail. A major part of service sector jobs are considered to belong to secondary labor market.
A labor market is seen as segmented if it consists of various sub-groups with no crossover capability. Labour Market Segmentation leads to different groups receiving different wages. John Elliott Cairnes referred to these groups as noncompeting groups. A similar concept is that of a dual labour market. Secondary labour market has been dominated by women and minorities, while the primary labour market has been dominated by white males.
The term Secondary Labour Market was originally part of what was referred to as dual labour market theory. The term Labour Market Segmentation is now used but studies continue to find a significant dualism to the labour market and this continues to be useful for understanding women's occupational location and their low wages relative to men.
The secondary labor market for call centre agents could be characterised as a secondary labour market of insecure, poorly paid jobs without any career opportunities (Dekker, De Grip and Heijke, 2002).
American economists Doeringer and Piore noticed that the labour market seemed to be segregated into a primary labour market sector and a secondary labour market sector. They labelled this the dual labour market. The authors found that jobs in the primary market were characterised by relatively high salaries, status and responsibilities, career mobility and good working conditions.
Jobs in the secondary sphere had negative qualities like poor pay and working conditions, little or non-existent promotion opportunities and low levels of job security. Jobs in the secondary sphere were frequently filled by women, ethnic minorities and people from disadvantaged backgrounds and upbringings.
Analysis of the dual labour market asserted that secondary sector workers either chose those kinds of jobs or were there because they weren’t as reliable or skilled as those who worked in the primary sector. The dual labour market analysts believe the market is split into far more than two sectors. The informal economy, is the ‘cash in hand’ economy, which operates outside traditional legal and administrative frameworks.