Future of work: The effect of intangibility on work
Phuah Eng Chye (11 August 2018)
New information capabilities open the path to new ways of producing and consuming and to the creation of new products and services. Maximising the benefits from innovation requires changes in the way work and society is organised. Usually businesses move ahead but societal change lags due to institutional resistance. The difference between the speed of business adjustment and the institutional resistance magnifies social dislocation. Persisting in handling new problems the same old way delays us from fully tapping the new opportunities presented by innovation.
Nowhere is this tension more clearly manifested than in the debate over how work should be organised and jobs defined. In the industrial economy, work was defined by hierarchies and the permanent tenures of large enterprises. The creation of job security with prospects for career and wage advancement underpinned the building of a large middle class that many viewed as critical to achieving economic prosperity and social stability.
But as economies made a transition from manufacturing into services[1], these features of the highly-desired middle class are undermined by the various information effects. The initial effect came mainly from intangibility from the process of dematerialisation. Dematerialisation results in a sharp decline in the use and value of physical material in a product or in the economy. The intangibility effects are now being amplified by social media, big data and the Internet of Things (IoT).
This article outlines the insights of Charles Goldfinger on how intangibility affects work. Charles Goldfinger wrote extensively about intangibility and the logic of dematerialisation on areas such as statistics, work and financial markets. Many of the features he describes accurately reflect the current work landscape. It was his analysis inspired my enquiry into the information society.
Charles Goldfinger hypothesis is that “dematerialization – the shift away from material products – is revolutionizing all aspects of work – its nature, its organization and its relationship with other activities.” He observed the organization and the product of work was becoming intangible and the content of jobs more abstract. His hypothesis on the impact of intangibility on work is as follows.
- Jobs are simultaneously becoming more evanescent, pervasive, dissociated and integrated. On the one hand, fragmentation in time and space seems more extensive than in the industrial economy. On the other, information technology is strengthening the links between different stages of work and creating an overall fluidity.
- The upheaval of worktime and workspace goes hand in hand with a functional explosion. The range of skills and types of work is expanding all the time. In the United States, the number of job categories has risen from eighty in the 1940s to nearly 800 today. At the same time, trades are dying out faster and faster, especially in information technology where many jobs have a short life of only a few years. The new jobs are also quitting familiar workplaces such as factories, offices and warehouses.
- The new forms of work are non-linear. When handling information, knowledge and feelings, there is no direct relationship between the amount of effort and the final result. This makes for very wide disparities in productivity. In industry, the ratio of the performance of an average worker to that of a good one is no more than one to five. But in immaterial work, an excellent programmer can be a hundred times more productive than an average one.
- The new techniques for managing human resources are individualizing the assessment of performance. Two people doing the same job may have different salaries and different status. Automatic across-the-board pay rises are being dropped and replaced by bonuses linked to results. There are no sinecures in the new business enterprise, either for rank-and-file employees, supervisors or technicians. Business leaders are no longer protected. The notions of loyalty and of indissoluble links between a firm and its employees are losing their meaning.
- Non-linear work means non-linear organization. The notion of a rigid, formal hierarchy based on unchanging criteria no longer makes much sense. All that matters now is technical, scientific or artistic skill and the ability to establish a solid relationship with the customer. Functional hierarchy is replaced by the gravitation of authority towards those who create and control the new stock of intangible assets: data, brand image, technological know-how and human capital.
- The unity of time, space and action which characterized work in the industrial economy has disintegrated. Work is no longer a regular eight-hours-a-day, five-days-a week routine. New rhythms have appeared – the hectic pace of financial markets which never sleep, the ups-and-downs of life in show business and the uncertainties of “just-in-time” production where components are delivered a few moments before the final product is assembled.
- The changing nature of work has led to a big increase in non-typical jobs, including part-time, temporary and flexi-time work and short-term contracts. Many observers worry this is a form of hidden under-employment or disguised unemployment but they are overly pessimistic. The growth of non-typical jobs is the result of the convergence of several persistent developments. 1) Employers responding to the pressures of competition and adapting to a global economy which functions seven days a week, twenty-four hours a day. To cope, firms have to figure out how to use their workers more efficiently and flexibly; 2) Fickle demand. Consumers want to be able to buy a very wide range of goods and services anytime, anywhere; 3) The widening range of types of work also reflects long-term demographic trends, especially the greater number of women workers and longer life expectancy.
- The divide between traditional kinds of work and the new jobs is no longer watertight. People are increasingly switching back and forth between the two categories. In the course of a lifetime, a person may change from full-time to part-time work, from an office job to home office and from the security of a big firm to the adventure of entrepreneurship. Changes in the nature of work are breaking down the rigid frontiers which marked off the world of work. The traditionally distinct fields of work, education and leisure are now interwoven and coexist flexibly in a kind of triple helix of social life.
He also predicted the quantity of jobs would not shrink as there would be “new jobs which can more than make up for the inevitable loss of traditional jobs.” In this regard, he suggests “the emerging intangible and relational economy has a huge potential for growth because it is not bound by the constraints of material scarcity.” However, he cautions “pessimistic scenarios are still plausible, such as that of an economy which generates few new jobs and is polarized between a small elite and the rest of the population who are marginalized and live in precarious conditions.”
He reminds us the “transition to the new economy is an open-ended process. The state has a key part to play in bringing it about. Governments can slow down the rate of change by making it more painful and more costly.” But achieving the “optimistic scenarios require a wholesale reform of institutional structures and profound changes in behaviour and attitudes. Such far-reaching changes often run into strong opposition from the social and political establishment and come up against the weight of psychological and social tradition.” The takeaway is that “the gamble of a new approach to work must be made” as new organisational solutions are required to benefit from the new possibilities.
Intangibility is thus the underlying force that causes work to become fragmented, diverse, transactional, transient, demand-driven and performance-linked. There are significant implications from Charles Goldfinger’s intangibility hypothesis and from the various information effects. It suggests the changing nature of work is not caused by globalisation, the emergence of new business models or by pro-market ideologies per se. These are themselves symptoms of the disruption. New ways of using information makes it increasingly difficult to preserve traditional regulations, organisational structures and practices. The pressures from disruption has already intensified further as other information effects come more strongly into play. The next article will analyse the effects giving rise to polarisation and transience.
References
Charles Goldfinger (December 1998) “The future of work”. The UNESCO Courier http://unesdoc.unesco.org/images/0011/001142/114252e.pdf
Phuah Eng Chye (16 September 2017) “The services economy: Service sector growth and the information society”. Economicsofinformationsociety.com. http://economicsofinformationsociety.com/the-services-economy-service-sector-growth-and-the-information-society/
Phuah Eng Chye (29 July 2017) “The significance of information effects”. Economicsofinformationsociety.com. http://economicsofinformationsociety.com/the-significance-of-information-effects/
Phuah Eng Chye (2015) Policy paradigms for the anorexic and financialised economy: Managing the transition to an information society. http://www.amazon.com/dp/B01AWRAKJG
[1] Phuah Eng Chye “The services economy: Service sector growth and the information society”.