Future of work: Transition to the information society

Future of work: Transition to the information society

Phuah Eng Chye (2 March 2019)

“Once we start on a technology path, it frames our choices, but the technology does not determine in the first place exactly which trajectory we will follow. We will be making choices in an inherently fluid and ever-changing environment shaped to some degree by unpredictable technical change and social reactions to these changes. Ultimately, the results will depend on how we believe markets should be structured – who gains and who can compete; how we innovate; what we value in society; how we protect our communities, our workers, and the clients and users of these technologies; and how we channel the enormous opportunities created by these sociotechnical changes. It is up to us to sidestep a dystopia and to create, if not a utopia, at least a world of ever greater benefit for communities and citizens”.

Martin Kenney, John Zysman (2016) “The rise of the platform economy”

Information challenges our physical and production-based notions of work. It is not so much the new business models, which are incidental and constantly permutating, but the new ways of collecting and using information that are reshaping workplace realities. Martin Kenney and John Zysman notes that “in the late nineteenth century, the corporation emerged as a means of orchestrating economic activity and organizing markets. In the twenty-first century, we speculate that these functions will be taken on by the platform in the cloud…What policy and political issues arise when the orchestrators of economic activity are relatively small firms, rather than” large organizations.

In this regard, there are differences in terms of how information is influencing social change. Historically, large corporations were major employers. They organised work within the framework of an industrial organisation which evolved into arrangements promoting stable and dependable work relations. In today’s world, the corporate leaders operate large global businesses but with relatively few direct employees. Their business models are decimating traditionally-organised companies and, along with them, traditional employment. In the process, traditional employment, generally regarded as good manufacturing jobs, are being replaced by bad flexible jobs. In addition, information polarises income distribution. The most sought-after talents, CEOs and direct employees of the successful firms or the “mothership” are relatively well paid. Workers outside of this select grouping are not.

The macroeconomic consequence is that businesses end up facing the anaemic demand created by their collective efficiencies in reducing the wage bill. At the microeconomic level, falling labour participation rates co-exist with rising unfilled vacancies; suggesting that frictions and labour market inefficiencies have increased despite more information being available.

There are several themes and related policy issues arising from the transition from a low-information to a high-information environment to consider.

  • Shift from production to information. Manufacturing jobs have been replaced by service and information-based work. This weakened the link between work and production and strengthened the link between income and data. Despite this, some matured economies persist with policies to promote manufacturing to address employment and wage challenges. This diverts resources from expanding the information ecosystem and stymie information-based job creation. Matured economies may experience stagnation because they are unable to create sufficient information jobs to offset the loss of production jobs.
  • Shift from employment to participation. Much of new work are of the non-traditional forms – fragmented, shared, transient and transacted. There is also growing overlap between production and consumption, and home and office, while work opportunities tend to concentrate in select cities. The reorganisation of work has reduced the dominance of traditional employment. The concept of participation[1] would broaden the purpose of work beyond production. The paradigm of participation is aimed at maximising the social value of human capital. The under-utilisation of human capital has economic costs and implies that neither consumption, production or efficiency are being optimised. Maximising the use of human capital would therefore increase economic activities, improve the value (monetisation) of domestic assets and increase national wealth. From the perspective of households, the future of work comprises a portfolio of jobs or assignments. In tandem with this, there is a need to broaden the household sources of income; particularly from capital (whether through a government or family endowment). This would assist households to cope with the challenges from flexible, part-time and on-demand work. There is also a need to regulate the new work forms so that they become good jobs[2] that add value to society and that strengthens the relationship between work and social needs. Overall, policy should centre around managing human participation rather than production, profits or wages.
  • Information effects. The uncertainties generated by information effects have wide-ranging effects on household and business formation, labour relations and societal cultures and values. For example, polarisation aggravates inequalities which creates strong headwinds against the rebuilding of the middle class. There are better prospects of success by focusing on the alternative goal of strengthening the income baseline. The trend towards autonomous systems may lead to “deskilling” because “staff have little chance to gain experience” and results in humans “becoming less and less capable of solving problems”. Monique Kremer and Robert Went also points out the risks from technology being used for “behavioural monitoring” which are “incompatible with privacy rights” and posing the “risks of unhealthy psychological and physical strain”. Deskilling will have a corrosive effect on human capital and undermine an economy’s capacity for long-term growth. Guy Standing warns of the creation of an underclass arising from “a status that offers no sense of career, no sense of secure occupational identity and few, if any, entitlements to the state and enterprise benefits”. In relation to this, he notes “human society has not been built over the centuries on permanent incessant change; it has been based on the slow construction of stable identities and rather ‘rigid’ spheres of security…The outcome is a growing mass of people…in situations that can only be described as alienated, anomic, anxious and prone to anger. The warning sign is political disengagement”.

Hence, the policy discussion on the future of work should be framed around how information-driven growth is leading to social shortfalls. One major point to consider is that employers and intermediaries have been the main users of information and have taken advantage of the lack of regulation to arbitrage regulatory gaps at the expense of workers.

Martin Kenney and John Zysman note “the debate over policy will not be straightforward or simple. As with all economic transformations, the disruptions will create winners and losers. Who will decide how the results of increased productivity are distributed? The reality is that the winners and losers in markets depend on who can participate and on what terms. There are no markets, and no market platforms, without rules, but what happens to the politics if important market rules are made unchallenged by the platform owners? Many political struggles will be waged over these rules, and those fights will be part of defining the market and society in a platform era…Should we view these disruptions as creating a flood of viable entrepreneurial possibilities or as destroying the security of employment relations for many? Can they create new sources of income and reasonably compensated work? Can policy encourage labor market arrangements that facilitate innovation, provide protection for workers, are efficient, and promote decent, sustainable lives for citizens?”

They add that “if we want workers to accept the new arrangements, how do we assure them that if they accept the flexibility, they will not be the victims but rather the beneficiaries of the ever-greater social value and wealth that is being created? All studies of technology adoption have shown that those who believe they will be victims will resist; if they believe they will be beneficiaries, they may help facilitate the shift”.

Governments should therefore not take the backseat and allow the private sector to dictate policy direction based on commercial instincts. In fact, only governments are in a position to provide the leadership to manage the restructuring of work in relation to the social framework; similar to what they did during the industrial era. There are two parts of the process.

The first part is to jettison the production-based legacy paradigms as they hamper the search for new solutions. The option of returning to the traditional regulation of work and price should be eliminated. The use of legal or physical force to defend traditional arrangements will undermine the primacy of information in monetising economic participation. Supressing information not only reduces choice, it is regressive. In the information society, customers naturally expect more information. For example, ride customers expect information on fare, pick-up time, route, driver and car. The high-information expectations will ease out low-information work arrangements that are segmented, static and based on one-to-one relationships.

The second part is to find a viable replacement paradigm. This is urgent. The impact of information disruption is already significant –such as in the content, retailing, taxi, hotel and airline industries. But there is further momentous change down the road; particularly when disruption spreads to sectors with a high public goods element such as infrastructure (utilities) and public services (education, healthcare and welfare). Disruption in the public goods sectors will unleash massive organisational changes with large-scale effects on the related workforce.

A fresh conversation is needed to find a sensible solution. But so far, the conversation on the future of work seems a bit stale. There is substantial debate on the impact of automation and AI on unemployment. Another track is the “end of work” scenario that could be addressed by rationing work or is being viewed as an opportunity to cultivate interest in more leisurely pursuits. At the extreme is the ideological concern of an elite that will choose to supress an underclass it no longer needs.

I think these conversations misses the important point that the real change is not the end of work but rather that the nature of work will change. Work will have less to do with production and more to do with monetising participation in information-based and social activities.

For example, economic activities are generated by participants sharing data with each other which is giving rise to the view that labour is being replaced by data. Income is generated not by production but by the ability to monetise these activities. Typical of the “long tail” information effect, the bulk of information-based output or content is hardly consumed. Hence, many workers participate in producing or sharing but due to either to low consumption or the difficulty of monetisation, many participants are at risk of not being able to earn sufficient income.

In a financialised economy where a large number of (previously free or low-cost) activities and assets are monetized, everyone will need income because the ability of households and community to provide low-cost support has weakened substantially. From a philosophical standpoint, income should no longer be limited to functioning as a reward for hard work. Monetisation increases the severity of not having income. In other words, individuals need a minimum amount or ante to participate in the economy. In this sense, consumption can be viewed as a form of participation.

Therefore, we need to ask whether the right policies are in place to address basic social needs. The key focus should not be on jobs per se but on maximising the use and value of human capital. In this context, consideration can be given to monetising income from social activities. Income and welfare schemes, including basic income, should be based on the concept of participation. Given improved information capabilities, we should be better positioned to match unutilised (unemployed) human capital with the most pressing social needs; needs that commercial markets are unlikely to address. Hence, governments can provide support (financing, expertise and incentives) to platforms that will assist the self-organisation of community activities such as park maintenance, healthcare and repairs. Ultimately, the ideal is to strengthen the voice of low-income groups who, through their spending, can exert a greater influence on how the economy is organised and where jobs are created.

For example, in a data-driven community, we can imagine organising a human-centric approach that builds work around individuals or a “plug-and-play” architecture for work. Work, linked to public sector or welfare budgets, can be created with potential roles for small entrepreneurs or part-timers. In one scenario, an individual can use his app to see a listing of opportunities, details and price. The individual can select a series of “work assignments” to fill up his calendar and confirm suitable working hours. Work can be targeted to specific vulnerable groups such as the young unemployed and retirees. The young can benefit from organising and working in social schemes or as a means of reducing healthcare and nursing costs for the elderly. At the other end of the age spectrum, it is important to tap the experience and skills of retiree to improve the value of community assets.

I also believe the use of robots and AI should be accelerated as they hold exciting possibilities. Ideally, we can deploy robots to do all the “work” we don’t like, and keep the jobs we like. The challenge is one of organisation. How do we need to change the organisation of work so that humans and technology can work in a harmonious and meaningful manner?

We need to re-examine our beliefs on the purpose of work. Should we continue to emphasise on creating more traditional employment that the new landscape no longer supports? Does it make sense to continue to link work to production or physical output? And what should the right policies be based on? For example, it may be better to have policies that create work for social purposes rather than to support the production of cars or crops or fossil fuels for the purpose of preserving jobs, industries or output.

Overall, the advantage of the information society is that the economy is not built around and constrained by physical production. Instead, the information society offers many opportunities to redefine the organisation of work based on how well we can manage and use information and our imagination. We should use these opportunities to develop a vision for a future of work built around individuals with policies aimed at maximising participation, expanding choice and opportunities, raising living standards and giving more meaning and dignity to the lives of workers.

References

Guy Standing (2011) The Precariat: The New Dangerous Class. Bloomsbury Academic. https://www.hse.ru/data/2013/01/28/1304836059/Standing.%20The_Precariat__The_New_Dangerous_Class__-Bloomsbury_USA(2011).pdf

Martin Kenney, John Zysman (Spring 2016) “The rise of the platform economy.” Issues in Science and Technology 32, no. 3. http://issues.org/32-3/the-rise-of-the-platform-economy/

Monique Kremer, Robert Went (2018) “Mastering the digital transformation: An inclusive robotisation agenda”. Max Neufeind, Jacqueline O’Reilly, Florian Ranft (2018) “Work in the digital age: Challenges of the fourth industrial revolution”. Policy Network, Das Progressive Zentrum. Published by Rowman & Littlefield International Ltd. http://bruegel.org/wp-content/uploads/2018/07/Work-in-the-Digital-Age.pdf

Phuah Eng Chye (5 May 2018) “Technology and work – Technological unemployment and will this time be different?” Economicsofinformationsociety.com.

Phuah Eng Chye (7 July 2018) “Labour share of income (Part 7: The respective roles of wages and profits)”. Economicsofinformationsociety.com.

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 on work”. Economicsofinformationsociety.com.

Phuah Eng Chye (18 August 2018) “Future of work: Other information effects – Polarisation and transience”. Economicsofinformationsociety.com.

Phuah Eng Chye (27 October 2018) “Future of work: Redefining work (Part 1: Transition to a high-information environment and the definition of work)”. Economicsofinformationsociety.com.

Phuah Eng Chye (24 November 2018) “Future of work: Re-defining work (Part 3: Bad jobs, good jobs and what governments could do about it)”.

Economicsofinformationsociety.com. http://economicsofinformationsociety.com/future-of-work-re-defining-work-part-3-bad-jobs-good-jobs-and-what-governments-could-do-about-it/

Phuah Eng Chye (8 December 2018) “Future of work: Redefining work (Part 4: Creating jobs from information and its ecosystem)”.

Economicsofinformationsociety.com.

Phuah Eng Chye (22 December 2018) “Future of work: Redefining work (Part 5: The economic paradigm of participation)”. Economicsofinformationsociety.com.

Phuah Eng Chye (5 January 2019) “Future of work: Redefining work (Part 6: Monetising participation)”. Economicsofinformationsociety.com.

Tags: Phuah Eng Chye, information society, organisation of work, future of work, Guy Standing, Monique Kremer, Robert Went, Martin Kenney, John Zysman


[1] Phuah Eng Chye “Future of work: Redefining work (Part 5: The economic paradigm of participation)”;  “Future of work: Redefining work (Part 6: Monetising participation)”.

[2] Phuah Eng Chye “Future of work: Re-defining work (Part 3: Bad jobs, good jobs and what governments could do about it)”.

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