Future of work: Information disruption

Future of work: Information disruption

Phuah Eng Chye (28 July 2018)

Mathew Bishop (moderator): Now, I suppose at the moment there seems to be a loss of faith that there is much of a future for work, and there’s a sense that…we’re facing a world where vast amounts of existing jobs are going to be wiped out and machines will do all the work and we’ll have to – I don’t know what we’ll do, write poetry or something. And that – does that vision seem plausible to you as you start to contemplate the future?

Guy Ryder: Well, you haven’t surprised me asking that question because nearly every conversation we have on the future of work starts with the conversation about how technology is going to bring an end to work, you know, the workless future. I was very encouraged to hear some people…say there are a lot of silly predictions out there about how many jobs are going to be destroyed, where and when. And there seems to be a growing acceptance of something which I think is fundamentally important to the debate on the future of work; that is, that there is no predetermined course in the future on what work will look like in the future, how many people will do it. It’s not going to be technology. It’s not going to be globalization. It’s going to be policy decisions and policy settings that will form the future of work. The future is not written in the stars. Now, that is not to deny that technology is going to be fundamentally important. That is not to deny that the choices we make about the future of globalization, which today seem to be more uncertain than I’ve ever known in my professional career, will strongly influence the future direction that we take. But the future of work is a policy debate… we have a compass to navigate that future, and it’s the compass of social justice.

Mathew Bishop: So when you say a policy debate, I suppose the policies that really have dominated the first hundred years in terms of protecting and shaping the world of work, have been largely based on a notion of some degree of permanence in terms of the existence of the employer. You have big companies, some degree of stability in terms of the definition of jobs, so that you can write a whole bunch of rules around them; some sense actually that it’s – there’s a family unit, and the man for a long time is the person that’s the breadwinner and they should be supported; to some extent that trade union members should be supported, although I guess that battle was probably ended 30 years ago or so. But there was a sense all those factors are there, and that around that you can basically set rules on, you know, when an employer can hire and fire and what someone gets paid and what benefits they’re going to get from their employer and what they’re going to get from the state. Is it the same set of questions going forward in a world where employment – where firms don’t feel they can necessarily be guaranteed to be here in five or 10 years’ time, that women are the driving force in the labor market, that the family unit is breaking down, that the union movement seems to be in a death spiral, and that, you know, fundamentally we don’t even know what jobs are going to look like in 20 years’ time?

Guy Ryder: I think we all have in our mind’s eye that imagery of exactly that sort of template that you’re referring to. I tend to think of it in terms of the job that my father did or my grandfather did. And I have a bit of nostalgia about it, because, you know, left school, got a job, permanent contract, five days a week, pension at the end of it. It wasn’t that great. But we knew what life was like. And for 70 or 80 years, I think the International Labour Organisation (ILO) – there’s nothing written to this effect – felt that promoting social progress, getting its mandate delivered, basically consisted of getting people into that template of employment. That was what progress looked like. And in the developing world, that meant getting people out of informal jobs, getting them into a formal economy, getting the basics of a written contract, the pension, et cetera, et cetera. That was pretty easy and pretty one-size-fits-all sort of objective of the organization. That doesn’t apply any longer, does it, because we’re seeing a diversification of work forms. You know, if we take that standard employment form as a one-time objective, and the aim was a conveyor belt getting people towards it, well, now we’re seeing a divergence of conveyor belts taking us into a diversified labor market, very different forms of employment…the notion of a single and easily understood objective in work is sort of dissolving before our eyes. Now, my view on this matter is that we now have to reestablish a notion of what quality employment – decent work – looks like in a diversified labor market. Now, the evidence today is if you’re in a part-time job, if you’re on a temporary contract, if you’re in any other forms of nonstandard jobs – which there may be nothing inherently wrong about – you still incur a penalty. A penalty in terms of wages. A penalty in terms of access to training and career development. A penalty in terms of social protection and pension rights. So if we accept this diversification of workers as the inevitable, necessary, or, indeed, desirable future of the world of work, what types of policies, institutions – what types of measures do we need to introduce to ensure that this diversification still leads to decent work, quality jobs, in all of its different aspects? That’s not impossible. I think it’s entirely possible. But it does mean that we’re going to have to look for new tools of labor market engineering. I see too much of an approach in some of our debates of trying to put the genie back into the bottle. That is to say, to reinstate that standard employment form…That won’t work…We have now to try to put the yardstick of quality into the diversification of job forms.

David A. Morse Lecture: The future of work – A conversation with Guy Ryder (20 September 2017)

The changing organisation of work is changing the nature of work, disrupting employment relationships, wage regulation, causing wage stagnation, worsening inequalities and diluting social protection. In response, there have been efforts to repair the dilapidated parts of the traditional labour framework. But these efforts have not made much headway because these reform proposals are mainly rooted in an industrial paradigm.

The landscape has indeed changed. Manufacturing is just a small part of the economy. It does not seem feasible to bring back manufacturing jobs, revive trade union membership, stem the shift from permanent employment to contingent labour nor reverse the decline in the size of the middle class. More extreme measures such as stopping the use of robots, subsidising the existence of plants for the sake of preserving well-paid jobs and clamping down on imports and immigrants can, at best, momentarily relieve the pressure on domestic production and employment but they are not sustainable solutions.

“The American corporation has been undergoing dramatic and puzzling changes. The shift from careers to jobs to tasks correspond to a change in the shape of the corporate economy. Corporate careers only make sense when you have corporations that last a long time…In the 20th century, the American economy was dominated by major corporations. In the 21st, that will no longer be true…Today we face a set of challenges similar to those at the turn of the last century: rising inequality, lower mobility, a ragged social safety net, and politics dominated by the wealthy. But this time the cause is not the growth of the corporate sector, but its collapse”Gerald F. Davis (2016) The vanishing American corporation: Navigating the hazards of a new economy

The effect of information processing on work has also changed. In the past, expanding information needs were met by employing more humans because information was collected and processed mostly manually which necessitated a centralised and hierarchical organisation. Firms were happy to provide life-time employment as the value of their employees grew with experience. This is no longer the case. Information is now managed real-time through algorithms, sensors and machines. Technological advances have radically changed organisational structures and reduced the need for human intervention to process information.

Kerstin Jürgens, Reiner Hoffmann and Christina Schildmann explain company structures “are being opened up to outsiders and everything is connected, which is made possible by Internet platforms… Ultimately, the boundary between the inside and the outside is defined by the rights of access to the cloud platforms – and these rights can be reassigned as required. A company’s permanent employees may work with employees of supplier companies, with independent contractors and self-employed workers and even with crowd workers and customers in a shared value adding process…The company is not disappearing…Rather its form and organisational principles are changing, and with them its risk structure. More and more risks are being shifted to market participants, who previously worked as dependent employees and were protected by this status.” They suggest the “notion of the localised company is being replaced by a definition of the company as a functional unit…This is of great significance for labour law and codetermination because the various rights to information, consultation and codetermination are linked to the company.”

Hence, governments find themselves in an increasingly unfamiliar landscape. The information effects such as intangibility, concentration-fragmentation, transience, modularity, autonomy and transparency are making work formless, transient and transactional on a global scale.

Policy interventions to defend the legal boundaries of employment runs into the problem the lines dividing home and office, work and leisure and production and consumption is blurring while labour continues to fragment into part-time and multiple roles. Policies that increase labour market rigidities (e.g. making lay-offs or use of contractors difficult) are incompatible with a landscape demanding even greater flexibilities. It is also right to question whether firms should be forced to provide long-term employment and social commitments when their own existence is unpredictable.

What is clear though is that governments no longer have the luxury of standing back and letting information disruption take its course through relying on markets to force through the adjustments. The continued decline in the labour share of income is taking its toll and perpetuating a situation where, for a large proportion of the population, neither employment not wages (or wage increases) can be assured. The displacement of a growing proportion of the population will only lead to rising social agitation. This raises questions as to whether economies can resume rapid growth if governments are unable to engineer a wage recovery?

There is a need for a coherent and sensible policy response. But it is not so clear as to what governments should or can do. The problem is that while traditional organisations and arrangements are being corroded, suitable replacements for existing policies are yet to emerge.

Overall, the work of the future will not resemble the work of the past as society makes a transition from a structured organisation built around the industrial enterprise to the unstructured organisation of a less physical landscape. Basic concepts such as employment, career, wages, production, consumption and savings will undergo changes in their meanings from the industrial era. Addressing future challenges will require an understanding of how information is reshaping the organisation of work.

References

Gerald F. Davis (2016) The vanishing American corporation: Navigating the hazards of a new economy. Berrett-Koehler Publishers

Center on Foreign Relations (20 September 2017) “David A. Morse Lecture: The future of work – A conversation with Guy Ryder”. https://www.cfr.org/event/david-morse-lecture-future-work-conversation-guy-ryder

Kerstin Jürgens, Reiner Hoffmann, Christina Schildmann (2018) “Lets transform work!”. Recommendations and proposals from the Commission on the Work of the Future. No. 376 Hans Böckler Foundation’s Study series (Hans-Böckler-Stiftung edition). https://www.boeckler.de/pdf/p_study_hbs_376.pdf

Phuah Eng Chye (30 June 2018) “Labour share of income (Part 7 – The roles of wages and profits)”. Economicsofinformationsociety.com. http://economicsofinformationsociety.com/labour-share-of-income-part-7-the-roles-of-wages-and-profits/

Phuah Eng Chye (7 July 2018) “Labour share of income (Part 8: – Wage regulation and information disruption)”. Economicsofinformationsociety.com. http://economicsofinformationsociety.com/labour-share-of-income-part-8-wage-regulation-and-information-disruption/

 

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