In his 1930 essay “Economic Possibilities for Our Grandchildren”, John Maynard Keynes foretells a world a century in the future where humankind will at last be free of the necessity of toil. He foresees an era when people in advanced economies will be faced for the first time with their “permanent problem – how to use [their] freedom from pressing economic cares”. He envisions people working three-hour shifts or a fifteen-hour week not because they have to but because they are confronted with this newfound conundrum.
From the viewpoint of the shifting labour market of the second decade of the 21st century, this prediction comes across as hopelessly idealistic. But if someone as keen and sharp as Keynes could be so far off the mark, the contemporary reader is left wondering where we went wrong.
Indeed, job security seems more uncertain today in developed countries than at any time since the post-war boom, when the social contract based on full-time salaried work emerged.
Building on its past work looking at this shifting job market, France Stratégie invited Matthew Taylor, the chief executive of the UK’s Royal Society of Arts (RSA), to discuss the independent review of the state of work in the UK that he headed for the British government in 2017.
A rise in casual work
The labour market in the UK has in recent years been undergoing shifts similar to those seen in other developed countries. As its title suggests, Good Work: The Taylor Review of Modern Working Pratices aims to provide an outline of the practical ways in which the British government can ensure all its citizens enjoy fair and decent work, “with realistic scope for development and fulfilment.” Concretely, it lays out a total of 55 recommendations on how the country can improve its labour market, with Teresa May’s government expected to issue a response in the first quarter of 2018.
Taylor stressed during the talk that low unemployment and relatively strong labour force participation rates make it an opportune time in the UK to redress shortcomings in the job market and make sure everyone enjoys quality work.
Six factors determine what is good work for the Taylor review: wages; quality of employment; education and training; working conditions; work-life balance; and consultative participation and collective representation.
Amidst the backdrop of an increasing number of people working independently and outside the traditional salaried model (see this article on a 2017 France Stratégie study for a look at how this trend has played out in France over the past three decades), Taylor explained there is growing public concern in the UK about workers and working conditions at the bottom end of the labour market.
The gig economy has only accelerated a trend of increasing casual work in the UK. The rise in so-called zero-hours contracts – where employers don’t legally have to guarantee workers any hours and workers don’t have to accept hours offered – since the turn of the century illustrates this. According to UK government statistics cited in The Guardian, they increased fourfold from roughly 200 000 in 2000 to 910 000 at the end of 2016 (roughly 3% of the country’s total labour force).
The UK currently has three employment statuses: employee, worker and self-employed. The intermediate category, worker, covers casual work and provides some employment rights, such as a minimum wage and holiday pay.
As with other advanced economies, a crucial issue in the UK is companies have been increasingly taking on employees as self-employed, absolving them of the responsibility of providing basic social protection.
Good Work argues the intermediate status is useful when providing “basic protection to less formal employment relationships”. However, it recommends renaming the ‘worker’ status ‘dependent contractor’ to avoid confusion and help distinguish those who are eligible for ‘worker’ rights.
Improving job protection
Although France, for its part, has two employment statuses – salaried and non-salaried – it too has been confronted with the “casualisation” of the labour market. As a result, many workers find themselves in a grey zone where they’re neither salaried employees nor fully-fledged business owners who are self-employed.
More often than not work they work as autoentrepreneurs, a system created in 2009 that effectively allows a little over a million people today to pay about half what they would normally pay in social charges as a corporation, with a cap on what their annual revenue can be.
While it was ostensibly created to boost entrepreneurship, in practice it has benefited employers more than workers. “This subcontracting on an individual basis has in effect become a type of job flexibility, chosen or not, and is an alternative to short-term contracts,” France Stratégie analysts Cécile Jolly and Jean Flamand pointed out in the above-mentioned study.
In both the UK and France, the government is looking at ways to improve protection for such workers. For example, Good Work proposes providing dependent contractors with a premium on their wages equivalent to the paid annual leave employees receive in the UK, roughly 12% of hours worked (it refers to this as “rolled-up” holiday pay).
Another key recommendation for addressing growing job insecurity is to pay a higher minimum wage to those who work hours not guaranteed in a contract. This has already proven controversial, with a high-ranking labour market official in May’s Conservative government coming out against the measure in October 2017 on the grounds it complicates existing minimum wage regulation.
Apart from measures like this, Good Work advocates the courts placing greater emphasis on control and less on personal service when determining whether someone is self-employed or not.
What’s more, the review highlights “Government must take steps to ensure that flexibility does not benefit the employer, at the unreasonable expense of the worker, and that flexibility is genuinely a mutually beneficial arrangement.”
Looking to the long term, as is in France, the Taylor review sees making “the taxation of labour more consistent across employment forms” as necessary “in the interests of innovation, fair competition and sound public finances.”
Though the review highlights that the government should be held accountable for quality work, it ultimately sees corporate governance and transparency as trumping government regulation: “The best way to achieve better work is not national regulation but responsible corporate governance, good management and strong employment relations within the organisation”.
Regardless of which recommendations the UK government decides to adopt, the verdict is clearly still out on corporations owning up to their responsibilities. Let us hope in years to come such a view won’t be seen as hopelessly idealistic as Keynes’ 1930 prediction about work in the 21st century.