Labour’s Future of Work: Flexicurity, Universal Basic Income, and the Precariat

In the last week or so, we've talked a lot about how automation is coming for our jobs. For our latest instalment, David Hall reports from Labour's Future of Work Conference.

The problem of the future is that we can’t know what it looks like.

Yet we can make predictions. Here’s one: an NZIER report estimated that 46 per cent of New Zealand jobs are at risk of automation in the next two decades. In other words, jobs that people have today, jobs that people are currently taking out loans to train in, will soon be performed by machines.

Here’s another prediction: within seven years, synthetic milk will enter the global dairy market. This will not only increase supply, but also competition, because synthetic milk has various market advantages including its minimal environmental impact.

And another: by the end of their working lives, today’s fifteen year-olds will have on average seventeen different jobs in five different industries.

Of course, such predictions are shrouded in uncertainty, not only because the future is hard to predict, but also because, by making predictions, we give ourselves reasons to reshape the future. If what we predict is alarming, we can move to change it.

Labour’s Future of Work Commission is this sort of exercise. Its scope is nothing less than how to reorientate our workers and our institutions around vast technological change—or, as everyone likes to say these days, disruption.

Like many words bandied around the Future of Work Conference, 'disruption' is distinctly double-edged. There’s a certain species of techno-capitalist whose eyes will moisten adoringly whenever the word is uttered, as if disruption is undeniably a virtue, the pinnacle of the entrepreneur’s powers. But for every disruptor there is also 'the disrupted', the people whose livelihoods are lost to new technologies.

'Flexibility' is another such word. One conference speaker—a comms, HR-type—gushed over the “incredible” flexibility of the modern workplace, lauding the “improved efficiency and cost-savings” and the “choice” to work from home. Yet one worker’s gain could be another’s inconvenience. In this vein, other speakers spoke of flexibility in terms of “insecurity” and “uncertainty”, of casual contracts and vanishing vocations. AUT economist Gail Pacheco noted that temporary workers were paid less than permanent workers, even when they were doing precisely the same thing. For these flexi-realists, the key question was about whom flexibility benefited, which was ultimately a question of power.

Göran Roos

Yet the ultimate Jekyll-and-Hyde word was 'productivity'. Of course, we’re used to hearing about productivity as an economic good; in New Zealand, we even have a Productivity Commission. But then came Swedish technologist Göran Roos, clearly relishing his role as the harbinger of bad news (the synthetic milk prediction was also his). He reminded everyone that the benefit of automation is its productivity gains. This is the driving factor behind the technological revolutions of the past, when machine labour overtook human labour in industry and manufacturing. Now, the digital revolution enables machines to enter the service sector: banking, finance, HR, retail, education, and so on. So far, productivity gains in this sector have been a humble 0.3 per cent, but Roos warns that they’re set to escalate to an unprecedented 6–10 per cent in coming years as humans are replaced by algorithms and self-service tellers. He showed an ominously U-shaped graph which signifies the looming collapse of mid-skilled service jobs, leaving only those jobs that computers can’t do, either low-skilled jobs like care work or highly-skilled jobs involving creativity or expert judgment. Once upon a time, it was thought this would herald an Age of Leisure, where the middle-classes were freed from work to pursue their hobbies. But as Roos drolly noted, “We know the difference between a hobby and a business is that a business makes money and a hobby loses money.” And in today’s world, a future of no work is no future at all.

Grant Robertson

For a party of organised labour, which is also a party of progressives, the dilemma is how to respond.

Labour’s Grant Robertson, who chairs the Future of Work Commission, clearly doesn’t want to halt the future. He’s not about to propose that New Zealand become like the fictional society of Erewhon, whose leaders un-invented machines once they realised what the future held in store. Rather, he wants to design “a transition that is just and fair”.

As fuzzy as this sounds, it’s starting to get firmer. So far, the clearest policy is the Working Futures plan for three free years of tertiary education. The aim is to help people to switch careers, or to retrain within a career, as new technologies eclipse certain skills, systems, or entire vocations. Crucially, it applies not only to university degrees, but also to apprenticeships and vocational training.

Other proposals remain under consideration. Much of it is unsurprising Labour fare, including proposals to expand internet access, to increase R&D funding, to encourage business clusters, to support the transition from school to work, to strengthen rights for collective bargaining, and to build partnerships with Māori and Pasifika. There’s a signal of interest in the Danish “flexicurity model”, which combines generous welfare provision with direct interventions in the labour market to provide jobs to the unemployed. There’s also plans to support “social entrepreneurship”—although it’s hard to tell at this stage if this goes beyond mere support for a fashionable phrase.

But the proposal that received the most attention was the Universal Basic Income (UBI). This would provide a mandatory minimum income to every citizen, a minimum level of economic security as the disruptions of perpetual innovation bump workers from one job to the next.

Given the basic income’s prominence in overseas debates, it was a matter of due diligence to consider it—but this didn’t prevent a flurry of irresponsible squealing from Labour’s adversaries, which reflects not only the hostility to ideas in this country, but also Labour’s continuing failure to control for these circumstances. In any case, Labour looks unlikely to adopt the policy, given its controversy and its cost. If so, advocates will have to watch and learn from the experiences of other nations, including pilot projects in Ontario, Finland and the Netherlands, and an upcoming referendum in Switzerland.

Yet even if the basic income isn’t the answer, that doesn’t solve the problem at hand: How do we ensure economic security, and therefore political security, in the face of technological transformation in a globally integrated economy?

Guy Standing

Robert Reich, former Secretary of Labor in the Clinton Administration, puts the problem like this: Imagine an iEverything. Anything you want—a pizza, a new car, a new designer dress—can be produced for free at the touch of a button. Even if this were technologically possible, however, it would be economically impossible. No one could afford an iEverything because it would put everyone out of work. Thus, Reich gestures to the American mythology of Henry Ford, the car manufacturer who (supposedly) paid his workers enough to be able to buy the cars they were making. Reich concludes: “It’s a question of market design: How do we recirculate the money? How do we get the money back to the people so they can buy things?”

As it happens, the story about Ford is likely apocryphal. Historians argue that Ford’s team raised wages to ensure labour security, not to transform his employees into customers. So, whether or not this thought experiment tells you something about economic inevitability, it does tell you that Reich is no acolyte for communism, despite inequality being his core concern. On the contrary, his most recent book is titled, Saving Capitalism: For the Many, Not the Few. He wants to correct, rather than overturn, the present system.

But it’s security of labour that’s the core concern for Guy Standing, the other keynote speaker. His seminal book The Precariat identifies “a class in the making”, characterised by low-paid and casualised work that’s often beneath one’s qualifications. The precariat is also time poor, because hours of unpaid labour are needed to apply for jobs, to pitch for projects, and to network for new opportunities. Rather more darkly, he describes the precariat as “the new dangerous class,” driven by “the four As” of anxiety, anomie, alienation, and anger.

It’s lofty rhetoric, made all the loftier by Standing’s performance: plucky, theatrical, even mildly sordid, his rough-hewn but proper accent summoning visions of a cavalry commander in helmet and jodhpurs, spurring his troops on to fight for the noble fight. Indeed, one worry is that he’s over-egging his arguments, that he’s creating a sense of precariousness as much as he’s describing it. After all, an often overlooked explanation for the casualisation of labour—alongside globalisation and technological change—is the inclusion of women in the workforce, which partly involves being paid for work that was once unpaid in the home. So, while the shift to flexible work was a shock to the masculine system, it was less so for women. It could even preferable in the right circumstances, for women and men. In short, it becomes hard to evaluate these trends without understanding the wider context for workers, nor without understanding what actually drives change in a specific occupation. And it’s harder still when understanding is captured by buzzwords.

Bernie Sanders, Jeremy Corbyn, Donald 'The Donald' Trump

For all the Commission’s ambitions, the future of work remains strikingly indistinct. Perhaps that is inevitable, given how much we can’t know. Perhaps it’s even for the best, given that predictions often carry the prejudices of the present. Yet it leaves the sense that what’s driving Labour policy is not so forward looking. What’s driving Labour instead is, first, the desire to revisit the unfulfilled promises of social democracy; and, second, the fears of Labour’s present members about what the future might hold.

This leaves unclear whether the future has yet been represented. A case in point was the relative absence of the social enterprise community. Wellington’s Enspiral Network was namechecked several times by speakers, yet wasn’t itself represented at the conference at all. More broadly, a couple of speakers noted the lack of diversity at the conference, particularly the absence of those generations and ethnicities that will dominate New Zealand’s future workforce. Perhaps this was unfair, given that Labour’s consultation process has engaged more widely. But it isn’t yet clear whether Labour has properly met the future, let alone decided whether they have anything in common.

This isn’t as straightforward as it could seem. After all, those most likely to belong to the precariat—the young, the disadvantaged, the disenfranchised—are also the least likely to vote. And no party in a parliamentary system can afford to hang its fate on non-voters; indeed, Labour’s 2014 campaign, which focused heavily on the “missing million” voters, demonstrates the hazards of doing so.

Admittedly, the rise of Jeremy Corbyn in the UK and Bernie Sanders in the USA shows that the precariat can be mobilised, but it isn’t yet obvious that these movements can form an electoral majority. Nor is it obvious that Corbyn and Sanders actually represent the concerns and values of the precariat, rather than gain their support by default. A new politics—produced for and by the precariat—might look rather different, might even eschew electoral politics entirely. And if it’s true that a hollowed-out working-class fuelled the rise of Donald Trump, then there’s no guarantee that the precariat’s votes will all fall to left-wing parties, nor that the left would want them to.

Of course, the question of how to represent the interests of the future isn’t only Labour’s to solve. It’s a problem for policymakers everywhere, not only for economic policy, but environmental policy also. Imagining what future people expect of us is never going to be easy. But as our risks stack up, as our responses remain inadequate, this could become the crucial point of difference.