Future of work: Redefining work (Part 1: Transition to a high-information environment and the definition of work)
Phuah Eng Chye (27 October 2018)
“The US manufacturing sector is doing great. Average hourly earnings have risen 25 percent in the past decade. Manufacturing’s contribution to GDP grew from $1.8 trillion in 2008 to $2.2 trillion last year. Productivity, measured as output by hour, is up 10 percent in the past decade. Workers are making more things than they were a decade ago, and they’re making more money doing it. But there are fewer workers. Two decades ago, close to 18 million people worked in US manufacturing. Now, despite the fact that the sector has created almost 1 million jobs since 2010, employment in manufacturing is closer to 12 million. Plenty of jobs still exist in the US economy, but plenty have been lost. And the jobs that have vanished were good jobs, middle-class ones – the kind that helped families buy houses, cars, and college educations for their children. Many of the jobs were available to immigrants and workers without college degrees, and allowed them to work toward the American dream… we’ve come to a point where people are upset about the quality of the jobs.” Chicago Booth Review (2017) “How to create middle class jobs: Sixteen top academics offer ideas for bringing back opportunity”.
I did not expect to write so many articles on the organisation of work. It was a more difficult topic than it looked. The ground was extensive, the issues complex, the evidence indecisive and the models inadequate. But shaping a roadmap for the future of work is undeniably important. This is work in progress with many new reports issued over the past two years.
Clarity on the future of work is lacking; nonetheless there is no shortage of reform proposals such as bringing back manufacturing jobs; enhancing education and training; undertaking tax reforms, rolling back regulations or undertaking infrastructure projects to create employment. But these proposals seem like a laundry list of tired ideas that have been around a long time that either couldn’t be implemented or was and didn’t work out. In policy-making, it is often the situation that the low-lying fruit turns out to be rotten because all the good ones have already been plucked earlier.
Still, covering the ground extensively is a useful exercise. It helps to clarify perspective as the clustering of different debates and issues help form a schematic of where issues stand relative to one another. This makes apparent the gaps and inconsistencies between the challenges of technology and productivity (employment levels), labour reform (work forms and labour markets), macroeconomic outcomes (labour share of income) and landscape change (information disruption).
In my view, the on-the-ground discontinuities will become even more apparent as the work of the future increasingly departs from the work of the past. The work of the future is less likely to be associated with manufacturing, production or careers for the majority of the population. Information disruption is changing the way work and labour is organised. Work and household units are increasingly modular and diverse. An information infrastructure has evolved to increasingly support autonomous exchange or stranger sharing.
Hence, work and household organisational structures are being reshaped in the transition from a low-information environment to a high-information environment. The reform of work will thus likely involve new solutions because traditional organisations and rules are likely to be part of the problem. Developing a good roadmap will therefore require reviewing how concepts such as work and labour, employment and firms are changing in the transition to a high-information environment.
- Work and labour. The transition from manufacturing to services to information blurs the traditional boundaries that define work and production. Work has become increasingly modular, autonomous and transactionable. It is performed on-demand and is no longer distinct from consumption. On the other side of the coin, the transformation of work has resulted in workers bearing higher employment and income uncertainties and work-related risks (i.e. idle time, accidents). This comes at a time of social changes brought on by demographic aging where “we live longer and fewer children are being born”. Mårten Blix points out that “a longer life raises the spectre of different life-phases in ways that were not possible before. For instance, people may want to work less and be with their children in certain phases. In other phases, they may want to work a lot or switch to something else.” Hence, “digitalization presents challenges to the core of the welfare state – the financing of public welfare, income distribution and high levels of employment. Already now, public welfare services are under increasing cost pressures from aging populations…With high taxes on labor and one of the most highly regulated housing markets, there is a risk that new jobs and services will grow too slowly and that people cannot move to where the jobs are. Job automation and transfer of tasks to the cloud will put increasing pressures on a tax base in large part based on labor income…the highly regulated labor market with high entry barriers makes it difficult for unskilled workers to get jobs”. The welfare challenges are aggravated by polarisation which reinforces inequalities in several dimensions – class, race and geography.
- The changing organisation of work expanded the diversity of work forms with the majority of new jobs related to services and information rather than to manufacturing and production. In the process, the ideals of career and income growth income over a lifetime is fading; with employment shifting from an assured long-term relationship towards autonomous transactions with multiple parties. The threat posed by transience and flexible work arrangements is not unemployment but employment and income uncertainties, the loss of social protection and the rapid obsolescence of human skills. But it is difficult to figure what to do about it. Banning or reversing flexible work arrangements would mean reverting to the low-information business models that required protection by entry restrictions, segmentation and price regulations. This would lead to a situation of not using the new information capabilities to manage efficiently and giving up on the conveniences offered by technological progress. Flexible work arrangements need to be accepted but what is missing are the regulations required to ensure fairness to labour and to protect the social needs of households.
- Firms. Firms no longer occupy a central role in the economy as many of its coordination functions can be replaced by apps and algorithms. In this regard, the industrial organisation needed to coordinate massive armies of labour is a historical aberration. We may be witnessing a return of work forms that resemble the cottage industries and underemployment of the past. Kerstin Jürgens, Reiner Hoffmann and Christina Schildmann suggest “the company is not disappearing as technological progress and global networking forge ahead. Rather its form and organisational principles are changing.” However, “this 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 (and to interpretations of the concept of the company)”. This subsequently raises question for the social partnership between firms and their workers; particularly whether it is possible to impose social and labour standards on firms that operate in “a global work space that cannot be regulated at the level of the nation state”. These changes will affect the role and responsibilities of firms in society.
The changes in the meaning of concepts such as work and labour, employment and firms have huge implications for how work should be organised in a high-information environment. In this regard, it should be noted work has greater meaning beyond production or employment. Work defines a society. It is possible to guess the features of a society by its dominant industries (e.g. agriculture, plantations, mining, manufacturing and tourism). Hence, the definition of work is all-encompassing. Work defines our role in society, what we did, how we spent our time, how we manage our risks and scopes our status and freedom (income, wealth, slavery, servant).
The meaning of work is also important to society as purpose can drive collective efforts and inject a sense of urgency (if people believe in the importance of the tasks). Attitudes on work are an integral aspect of the moral beliefs of a society, often built on theological or ideological roots. Earlier in history, successful industrial development was attributed to the Protestant Ethic which espouses hard work and frugality. Within this context, impoverishment and underdevelopment are attributed to laziness or low productivity. Some societies believe emphasis on work should be moderated by the tenets of social justice and that there should be an extensive welfare net to cater to the less fortunate. In finance, work is associated with productive activities and thus lending to non-productive (speculative) activities is frowned upon.
Overall, the transition to a high-information environment is clearly changing the way individuals contribute to the creation of economic, financial and social value. It is thus important to subject our beliefs on work to a robust challenge that acknowledges the transition to a high-information environment. In this regard, technology advances have not made work less important to humans nor improved their ability to pursue leisurely pursuits. Hence, the redefinition of work recognises that the traditional relationships cannot be sustained and needs to be revamped to increase the social benefits that society derives from work.
Chicago Booth Review (2017) “How to create middle class jobs: Sixteen top academics offer ideas for bringing back opportunity”. https://review.chicagobooth.edu/economics/2017/article/how-create-middle-class-jobs
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
Mårten Blix (February 2013) “Future welfare and the ageing population”. Interim report from the Commission on the Future of Sweden. http://www.martenblix.com/uploads/6/2/7/2/62723607/blix_future_welfare_and_the_ageing_population_report_from_the_commission_on_the_future_of_sweden_2013.pdf
Phuah Eng Chye (11 November 2017) “The sharing economy: To deregulate or to reregulate.” Economicsofinformationsociety.com. http://economicsofinformationsociety.com/the-sharing-economy-to-deregulate-or-to-reregulate/
Phuah Eng Chye (20 January 2018) “The sharing economy: A futuristic taxi landscape (Part 2 – Modular regulation)”. Economicsofinformationsociety.com. http://economicsofinformationsociety.com/the-sharing-economy-a-futuristic-taxi-landscape-part-2-modular-regulation/
Phuah Eng Chye (14 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/
Phuah Eng Chye (28 July 2018) “Future of work: Information disruption”. Economicsofinformationsociety.com. http://economicsofinformationsociety.com/future-of-work-information-disruption/
Phuah Eng Chye (11 August 2018) “Future of work: The effect of intangibility.” Economicsofinformationsociety.com. http://economicsofinformationsociety.com/future-of-work-the-effect-of-intangibility-on-work/
Phuah Eng Chye (18 August 2018) “Future of work: Other information effects – polarisation and transience.” Economicsofinformationsociety.com. http://economicsofinformationsociety.com/future-of-work-other-information-effects-polarisation-and-transience/
 Phuah Eng Chye “Future of work: The effect of intangibility.”
 Phuah Eng Chye “Labour share of income (Part 1: Theories and measurement)”.
 Phuah Eng Chye “The sharing economy: To deregulate or to reregulate”.
 Phuah Eng Chye “The sharing economy: A futuristic taxi landscape (Part 2 – Modular regulation)”.