As the Chancellor navigates the country out of the pandemic, Rishi Sunak must take account of wider changes to the economy that have been disrupting the world of work. IFOW Chair Professor Sir Chris Pissarides and Director Anna Thomas explore the shifting trends that must underpin his thinking – and argue that good work must be central to rebuilding the economy.
Life online is accelerating structural changes to the economy
To ensure that he charts a course out of the economic devastation left by the pandemic, the Chancellor must be alert to wider shifts in the economic climate. The pandemic has accelerated the embedding of remote working. A hybrid model where people work mostly from home is likely to become a new normal for many, as we anticipated last year. So far, management of remote work has dominated discourse on the future of work.
But this barely scratches the surface. The most profound and enduring changes are deeper shifts in the structure of the economy: acceleration in the digital transformation of companies, the rise of ‘gig’ work, large firm consolidation and the rise of the digital giants.
This starts with growing workplace divides. The boom of e-commerce, for example, comes with a relative increase in precarious warehouse, packaging and delivery jobs, on the one hand, and ‘hot’ high-salaried digital content roles on the other. While Amazon recorded sales of $125 billon in the last quarter of 2020, warehouse workers are still taking eight weeks to earn what Jeff Bezos does in a second - and we’ve seen major retail collapse across the UK.
So the hype about the remote work ‘experiment’ should now shift to a wider discourse about access and distribution of good quality work outside the office.
The pandemic has accelerated trends in automation – but watch out for ‘faux’ automation
The acceleration of automation is now an established trend. We anticipate especially high levels of automation in occupations with high physical proximity, with the exception of health and social care.
But we must beware of ‘faux’ automation which neither replace nor augments human labour. Technology promises more with less but our work suggests that data-driven technologies, which profess to be productivity-enhancing, are being used in ways which involve experimental forms of surveillance on a captive work force. Policy at the interface of health and surveillance will be key this year and we'll need to keep our sights on this question: how can we make sure technology is designed and deployed in a human-centred way, to make work better?
Worker transition is increasing and will hike further
Predictions of increase in worker transition are now mainstream, with McKinsey predicting a hike of 25% in worker transitions. The young and low paid have been worse hit, with poorly paid BAME workers aged under 25 taking multiple hits. Contract workers and the self-employed are a close second.
These stark inequalities, laid bare by the pandemic, are set to increase without targeted policy activism this year. In particular, the most vulnerable and lower income workers have consistently received lower levels of training; and are more likely to lose their jobs and to be exposed to inadequate social protection. Workers, as well as jobs, will need further support.
The future of work is local
It may seem odd to highlight locality at the very point our lives go online. But the pandemic has shown that the best way to understand and tackle many of these challenges is by place. The UK is strikingly unbalanced, as we explore in our 2021 Good Work Monitor here, not only between regions but within them. And nuanced local dynamics invite local policy interventions, designed for local needs.
New Kings College London polling shows that, finally, there’s almost universal agreement that where you live has a big impact on your work, life chances and health.
These factors conspire to make the geography of work - and addressing local inequalities - increasingly significant, even though we know that technology could be deployed to change the geography of access to good work in the future.
Attention to health and wellbeing will endure
Wellbeing at work is longer a niche issue.
This is a welcome step for employees – but also means that there’s huge potential to align health, economic and social interests. Firms are increasingly alert to evidence that the wellbeing of their employees is critical to engagement and performance – and they will be judged by how they treat their workforce through the pandemic. The Chancellor is on track to recognising that the ultimate purpose of the economy is more than to achieve growth measured by GDP. Rather, it is to raise living standards, promote human flourishing and address inequalities.
This takes us to work. The best way to achieve this goal is creating the conditions for good work, and good work for everyone. It’s is the common thread that connects people’s lives and families with economy – and if the Chancellor gets this right, he could set a course for prosperity and wellbeing across the country. Against this background, our Top Policies for the 2021 Budget are:
1. Strategy Work 5.0. Future good work should become a central, cross-cutting policy objective and a commitment to good work should be built into the budget. A future-oriented Strategy Work 5.0, supported by a Danish Disruption-type Council with social partners and representatives from local government, should be initiated to champion the conditions and creation of good jobs across the country.
This would enable the Government to respond to the challenges we’ve identified against the backdrop of the ‘double disruption’: COVID-19 and the technological revolution.
2. A job guarantee. The pandemic support schemes should be extended to match the PM’s roadmap. But as they are inevitably wound down, Government should shift support from jobs to workers in transition and introduce a good Job Guarantee for one year funded at the living wage nationally, but rolled out locally. The priority should be young people aged 16-24 and community programmes. Pilots, such as Work Health Corps, should be encouraged to create good jobs, as we discuss here.
This would focus attention and resources on future good work: the best way to rebuild prosperity and wellbeing. Our research shows that good work offers a vision, framework and measurements to level up the country too.
3. Reward key workers. In recognition of the value to society of front-line work involving human contact through the pandemic, and noting that the roles of many key workers are precarious, we recommend a raise to the basic floor of protection, starting with statutory sick pay at the living wage and a pay rise for public sector key workers. In addition, a tax-free coronavirus payment of £500 (or a proportionate amount for part-timers) should be paid to all key workers, including unpaid carers.
With lessons from the pandemic on the costs of excluding workers from crisis support, the legal, social and economic case for boosting the basic floor of protection across the UK’s workforce has now been established. Revaluing human contact, service work is not only the right thing to do - its the right investment for the age of automation.
Embedding good work into economic strategy, the architecture of decision-making and funding allocation will ensure policy activism is targeted at the most important things, and that crisis management is balanced with long term planning. The future of work is not some distant point on the horizon. It’s happening now, and will be shaped by policy decisions in response to present challenges.
For our full recommendations please see the UK’s Commission for the Future of Work and Good Work Monitor.