The future of work

Quick summary

The traditional model of full-time, permanent employment is becoming less common, with the potential for harmful effects on workers and on tax revenues.

While record numbers of people are in work in the UK today, there are important concerns around the quality of this work and around productivity.

Low levels of collective representation for both workers and employers pose a barrier to addressing these concerns on a labour-market wide basis.

Technological innovation could dramatically reduce the amount of work available in the future, though it could also complement human workers and help to raise productivity and earnings.

Policy needs to respond to equip citizens for these likely future changes and mitigate any negative societal impacts of technological change.

Work used to be an important part of the political conversation in the UK, from the post-war pursuit of full employment to the government’s battles with trade unions in the 1980s. It’s not a topic politicians in the UK are particularly vocal about any more, though. This seems like an important omission, given that the work we do is so closely linked with the sustainability of the state in terms of tax revenues, social security expenditure and the relationship between government and citizens. There are also increasingly important issues related to work that demand the attention of policymakers:

High employment may be being achieved at the expense of high-quality work

Employment in the UK may be at a record high, but there are concerns that the quantity of work may be at the expense of its quality. Last year’s Taylor Review of Modern Employment Practices identified room for improvement in the UK on wages, employment quality, the provision of education and training, working conditions, work-life balance and collective representation. Persistently low productivity is another source of concern, highlighted by Andy Haldane of the Bank of England, among others.

The relative atomisation of workers and businesses may pose a barrier to addressing these deficiencies. Trade union membership in the UK has declined precipitously since the 1970s, and membership of employers’ associations is significantly lower in the UK than in many other advanced economies, particularly in Europe. A stronger collective voice for workers could help to achieve the changes necessary to drive up employment quality, while better connecting employers could help the diffusion of best practices and support the uptake of productivity-enhancing technologies.

More people have atypical working arrangements

The proportion of the workforce who are self-employed grew from under 12% in 2000 to almost 15% at the beginning of 2016. The increase in part-time self-employment is particularly notable, a trend that may be related to the rise of the ‘gig economy’. ‘Zero-hours’ contracts, which don’t guarantee employees a minimum amount of work, have also attracted public and media attention. 2.8% of people in employment were on this sort of contract at the end of 2017.

There is a strident debate over whether these atypical ways of working enable valued flexibility or simply create insecurity for workers. There are also important tax implications: the self-employed make lower National Insurance contributions, amounting to over £1,200 per self-employed person per year. Strongly held public views that the self-employed deserve lower tax rates make addressing this anomaly by equalszing tax rates across forms of employment politically challenging.

Technological change may substantially affect the nature of work in the future

Technological innovation is creating huge potential for the automation of tasks, but the impacts on the quantity and nature of work are still uncertain. Important studies have suggested that automation could have potentially huge job-displacing effects, while others suggest that machines will complement workers, completing specific tasks rather than replacing humans entirely.

There are important questions for government regarding how to respond to the risk of widespread job displacement. These include the necessity and feasibility of a universal basic income for all citizens, how to best deliver education and training to equip workers for a future in which some skills are no longer in demand, and how to mitigate the growth in inequality between those who own or work with technology, and those that don’t.

The challenge for policymakers is how to deal with current issues around the quality of work, atypical working arrangements and low productivity, while at the same time planning for an uncertain future in which who works and how they work could be very different.

 

Expert commentary