Since the 1980s, social scientists and economic geographers have stressed that ‘standard’ forms of employment and internal labour markets (ILMs) which characterized Fordism have declined and have been displaced by post‐Fordist non‐standard and contingent employment arrangements. However, some researchers are critical of the assumptions of a universal decline in ILMs and stress that although ILMs have been significantly restructured, they remain an important part of firm employment strategies. On the basis of a postal survey and interviews conducted with ninety firms and institutions in Kitchener‐Waterloo and Sault Ste. Marie, Ontario, in 1995–1996, I assess the role of ILMs. Although shifts towards non‐standard arrangements are evident, employers are clearly aware of the need to maintain if not develop ILM structures. Finally, I argue that geographers need to reconceptualize the relationships between ILMs and external labour markets (ELMs) as integrated phenomena. Thus firms do not use contingent or ELMs and ILMs in exclusion to each other but as part of a continuum of strategies leading to increased blurring of the ILM and ELMs.