Political realities and a reform agenda for the digital ageExcerpt from the book "Work in the Digital Age. Challenges of the Fourth Industrial Revolution"
How can progressive politics create innovative public policy able to engage with the challenges of work in the digital age? Das Progressive Zentrum’s Policy Fellows Max Neufeind and Florian Ranft as well as Jacqueline O’Reilly are the editors of the book “Work in the Digital Age” and urge us to update, recharge and reload the concept of work in society to make it fit for the fourth industrial revolution.
For progressive politics, the task remains of how to develop a public policy agenda that addresses the challenges of this new wave of ‘destructive creation’. This task comes at a time of exceptional volatility in European and North American politics, significant shifts in geopolitical power from west to east, and a profoundly changing global economic order where new forms of capitalism, with greater levels of state intervention, are emerging in countries such as China, Russia and India. These transformative shifts were accelerated by the global financial crisis of 2007/08, whose unanticipated magnitude led to a great recession, the worst global economic decline since the 1930s (IMF 2009).
The consequences of the great recession for the people of Europe have been painful and long lasting. They have increased the economic divide between southern and northern Europe and impoverished many in Eastern Europe. With increasing rates of economic divergence, social exclusion and poverty in countries that were hit the most by the crisis, levels of trust in political institutions have also deteriorated among EU citizens (Muro and Vidal 2014; see Theodoropoulou this volume). As a consequence of these major economic and social forces, the European political landscape has profoundly changed with voters questioning traditional allegiances and party affiliations (Dassonneville and Hooghe 2017; Hernández and Kriesi 2015). These developments have polarised and fragmented party systems across Europe and have led to the rise of a new generation of challenger parties on the left and right (Hobolt and Tilley 2016). It has also undermined the power of traditional centre-right and centre-left parties who are being electorally squeezed, and find it increasingly difficult to build coalitions.
This shake up of the centre ground has meant that governing coalitions commonly include more than two parties (Belgium, the Netherlands and Norway), rightwing populist parties (Austria, Finland, Norway and Poland), or are formed as minority governments (Denmark, Ireland, Portugal, Spain and the UK). Progressives are often relegated to nothing more than spectators. In some countries, the electoral success of rightwing populist parties has made it difficult to form any stable government at all, as was seen in the 2018 elections in the Czech Republic and Italy. Only in very few cases have progressives broken the mould, notably in France and Portugal, where they remain electorally potent.
Adding to this post-crisis socio-economic and political era of uncertainty are new technologies and the debate on the robotisation of work that have left many people disorientated about their personal future and prosperity. There is not only increasing uncertainty about what the future of work will look like (Benhamou this volume) and whether there will be enough jobs to go round (Arnold et al. this volume), but also how new forms of employment will be regulated (Berg and De Stefano this volume) and what the consequences of change will be for the environment, discrimination and equality (Schor this volume). Although there is an intellectual debate unfolding, to which this volume seeks to contribute, in modern economies traditional political concepts, solutions and narratives are no longer resonating with large parts of the electorate.
In this phase of ‘diffuse nervousness’ (Braun 2018) people feel that politics needs a fresh start and must offer, among other essentials: affordable housing, modern infrastructure, world class education, social and health care, a secure workplace and a sustainable economy that creates jobs, growth and higher wages. Yet, the solutions on offer from traditional parties do not seem to be convincing. Arguably, this explains the rise in support for populists who have successfully exploited this vacuum with anti-establishment strategies, claiming that traditional parties are unable to respond to these challenges by highlighting the dangers of migration and open borders (Goodwin 2011).
There is a risk that the effects of digitalisation may exacerbate the next populist backlash, which could be directed at machines and their owners. This makes it more relevant for progressives to offer a convincing narrative that addresses the concerns of voters and at the same time recognises the vast economic opportunities for business, industry and the public sector that this revolution presents. There is time for policymakers to respond to the challenges outlined in this volume. But it is imperative for them to be better prepared and develop a deeper understanding of the changes that lay ahead. This requires the identification of new concepts of work and the role of business and the state in the promotion and provision of modern social welfare and social dialogue systems (see Jolly this volume; Palier this volume). These new concepts need to explain how a friendly environment for growth, innovation and job creation, with high-quality training and education and fair taxation of firms and corporations, can be developed. Such an approach also needs to include a more rigorous consideration of the social and political – not only industrial – consequences of an economy where value is increasingly created from intangible assets, including data, data-sharing, branding and marketing (Hofheinz this volume).
Soete argues that the third industrial revolution was dominated by a sense of technological determinism and international competitiveness during the 1980s. Despite the belief of developing a malleable European model of the information society, the speed of change made it feel impossible to govern; liberalisation and deregulation became the default options. This created the feeling that there was no capacity for policy action to address the threats of job loss and low productivity. This sense of incapacity cannot be repeated with the advent of the fourth industrial revolution.
In this book the scene-setting theoretical chapters and case studies offer insights into the current state of the debates about the future of work in Europe, what the challenges and solutions are, and who the main actors are that may promote and precipitate change. We can identify a number of responses where new coalitions of actors emerge to develop existing concepts of work and labour relations and to address some of the negative consequences of digitalisation at work (Flecker this volume; Kanjuo Mrčela this volume).
The chapters often highlight the human, social and political response to the main challenges of the fourth industrial revolution, which have more on offer for policymakers and politicians than just liberalisation and deregulation. The contributions also offer brief yet comprehensive analyses from experts, and perspectives from different countries, which catalyse the debates at regional, national and supra-national level. The book makes it clear that countries are moving at different speeds. Our comparison of the different levels of digital density, even within the EU, illustrates the variety of challenges different social and political actors face. Such a comparative perspective has until now been surprisingly lacking in the vast volumes of research on the fourth industrial revolution.
As people feel increasingly insecure about what the future of work will mean for them, there is a need for democratic discourse and control relating to socio-technical changes caused by digital advancements. While conservatives and right-wing populists offer easy solutions to complex scenarios, either by protecting vested interests or deregulating industries, the centre left must claim leadership by providing individuals with strong safety nets and empowering tools in a new work environment, and by advancing a narrative of an open and updated society.
This book illustrates that we are at a key political juncture where these issues need a more informed public policy-based discussion about the direction of change, a debate that has not yet received the attention it deserves. Otherwise we risk sleepwalking into a potentially turbulent political environment where the disruptions created by technological change are blamed on other social groups and minorities. There is a chance for progressives, but they have to discuss it more rigorously and must project themselves more resolutely into the future.
So what should a progressive agenda on work in the digital age encompass? We believe the following constitute the crucial building blocks for progressive policymakers:
1. Don’t fall for the dominant discourse. Developing and using the right maps is essential and helps to see beyond the disruption talk
2. Get serious about high-quality initial education and training. That’s more than teaching kids how to code
3. Build institutions that guarantee secure transitions and foster employability. Focus on enabling good transitions for everyone
4. Translate employment standards and social protection into the digital age. Recognise technology as an enabling force
5. Update tax and transfer policies to tackle income and wealth inequality. Aim to distribute ownership more widely
6. Re-invent the state as the lead investor. Go for mission-oriented innovation
7. Mind the regional gap. Make regional development great again
8. Broaden your view. Envision a good working society that includes all forms of work, paid and unpaid
the digital age, especially as new employment platforms emerge.
1. Framing: from hype to discourse and scenarios
A progressive agenda on work in the digital age must be based on a critical analysis of the current discourse around digitalisation. We must talk about factors including interests, power and control. The idea that technology itself will deliver fast and clear-cut solutions to social problems (‘technological solutionism’) is misguided and dangerous. So is the notion that technological innovations render only one distinct model of work in the future possible (‘technological determinism’) (Benhamou this volume). In fact, we have to talk about the different possible futures of work – with some that will possibly be more desirable than others.
To have any effect, a progressive agenda must be more than merely a list of measures that are needed for societies to adapt to the coming change. Any progressive agenda must present policies that explicitly seek to shape the future of work. Progressives recognise that a world of work where technology autonomously shapes all aspects of human action is a myth; in fact the opposite is true. Since human decisions shape how technology is implemented, the question is: Who makes those decisions and what consequences do they have? How do we develop a discourse about the types of technologies being developed in the workplace and wider social life, and the purposes they serve for different social groups? Only then can we begin defining the conditions, and the rules and norms through which the digital revolution can improve the living standards of all members of our societies, rather than just those of a privileged few. Critically, technology is not only about jobs becoming automated. Technology will also define the kinds of new jobs that we will end up with in the future, and how jobs that we currently have may change (Bernhardt 2017). The language surrounding the fourth industrial revolution, including terms like ‘Industry 4.0’, is embedded in certain discourses and pursued by actors with their own interests; we must not neglect the political dimension of this revolution (Pfeiffer 2017).
Progressives must be sure to make use of the right ‘maps’, as O’Reilly (2017) puts it, to make sense of the digital transformation. Downplaying technological disruptions does not help, nor does being blinded by the relentless disruption talk – ‘automation angst’ (see Arnold et al. this volume). New technologies might pose new challenges for policymakers, but the basic questions remain the same. How can policymakers equip citizens with the skills that will be needed to thrive in the future? How can governments guarantee decent work and social protection for all? How can productivity gains be shared fairly? Engaging with key stakeholders through social partnership arrangements remains vital for governments and policymakers to establish better ways of promoting equity and prosperity. Addressing the challenges of the fourth industrial revolution effectively will require institutions to be transformed, as many contributions to this volume have argued. Progressives should call for meaningful reform, which is something different from a ‘disruption’ of the status quo. The future of work remains unknown and somewhat unpredictable, but that should not leave us feeling paralysed.
There are key policy challenges that progressives must address now, regardless of how future scenarios will materialise. Focusing on the implications of change at the individual level draws attention to policies that affect successful transitions throughout the life course: transitions from school to work, and between jobs and different forms of employment and working time arrangements.
2. Initial education and training: equipping everyone with the right skills
Digitalisation will lead to major changes in the demands for skills. However, it is unclear to both businesses and policymakers precisely what skills will be needed (see Aubrey this volume).
Much of the debate on the digital transformation on the labour market has been in relation to skills-biased technological change (where high skills yield a wage premium that rises over time), routine-biased technological change (demand for routine skills decreasing over time) and capital-biased technological change (productivity-enhancing technological advances reducing labour’s share of aggregate output) (Berger and Frey 2016). While the latter two are important, the race between developments in technology and investment in skills is pivotal for labour market outcomes (Martin 2018). One answer to the challenges posed by skills-biased technological change lies in making education and training more widely available to all citizens over their life course, regardless of income or age.
The importance of education in science, technology, engineering and mathematics (STEM) has become central to discussions about the future of work in the digital age, but focussing on STEM alone will not suffice (see de Franceschi this volume). Teaching young people how to code is useful, but does not solve the problem. Autor (2015) expects the future workforce of advanced economies to feature a significant proportion of ‘T-shaped’ skill profiles that combine specific vocational skills with transversal foundational middle skills including literacy, numeracy, adaptability, capacity for problem solving and common sense. With nurses, teachers, construction supervisors, tradespeople or physical therapists we find such profiles that bring together technical skills with interpersonal interaction, flexibility and adaptability to offer services that are uniquely human (Autor 2013).
It is crucial to understand that the increasing use of digital technologies at work is raising the demand for skills along four lines (OECD 2016a). Generic ICT skills involve being able to use technologies in daily work; specific ICT skills include programming, developing and managing; complementary ICT skills allow processing complex information, communicating with co-workers and clients, and solving problems. However, all three require sound levels of general cognitive skills as a prerequisite. While enhancing the provision of new digital skills we also need to recognise that the general cognitive skills level of a substantial proportion of the workforce in advanced economies is already today below or at the level of computer capabilities (Elliott 2017; OECD 2016c). Proficiency in problem solving in technology-rich environments is relatively low for the majority of adults in advanced economies (OECD 2016b). Thus, legitimate demands for substantial investments in digital skills have to be complemented by investments in non-digital skills. The challenge is that the need for investment in non-digital skills might even surpass that which will be required for developing digital skills (Elliott 2017).
So how can the skills challenge be tackled? There is general agreement on the importance of early childhood education (Kalleberg this volume; MGI 2017) and high-quality future-oriented primary and secondary education, which includes generic, specific and complementary ICT skills and a change to how core subjects are taught, with increased emphasis being placed on conceptual understanding and problem-solving (Levy and Murnane 2013). Where generic ICT skills are insufficiently developed on a broader scale (see in this volume Drahokoupil for central and eastern Europe and de Franceschi for Italy), updating syllabuses and curricula in primary and secondary schools must be a priority to prevent a ‘lost generation’ of young people with low competences in the key information-processing skills that are in increasingly high demand in the labour market (Martin 2018). Policymakers should look to Sweden, which has been successful in integrating ICT skills in its curricula (OECD 2016d).
The idea of complementary ICT skills has to be taken seriously in tertiary education. ‘Hard’ technical knowledge and skills alone will not be enough (Kremer and Went this volume). Workers in an Industry 4.0 manufacturing scenario will need higher levels of ‘soft’ skills, such as the capacity for trans-disciplinary collaboration, an understanding of how the material and the abstract level of production processes are linked, or the ability to act confidently in conditions of uncertainty (Pfeiffer 2015). Italy’s plan Industria 4.0, for example, dedicates €220 million to vocational and university training that is focused specifically on the fourth industrial revolution (de Franceschi this volume).
The emphasis on STEM fields has to be expanded to an emphasis on STEAM, including the interaction of STEM subjects with arts and humanities (Land 2013). For example, the French National Council for Digitalisation recommends the promotion of creativity, abstraction and interpretation skills while focusing less on static knowledge (Weber this volume).
In addition, it seems crucial not only to focus on university-based tertiary education, but to update vocational training and to foster its attractiveness. Routine-biased technological change has the potential to produce a polarised labour market with the middle being hollowed out. High-quality vocational training with a significant component of work-based learning is one key measure that may prevent this from happening. The stigmatisation of non-university tertiary education as a second choice option to university education remains a problem in some countries. Where vocational training is more widespread, occupational profiles must be modernised and training methods opened up. This does not mean that occupational profiles become imposed by bureaucratic decree but rather that government provides the right framework for social partners to become an actor in this process. Trade unions and employers associations possess deep knowledge of industries and service sectors, which can help gather data on skills demands and identify key challenges in adapting to the fourth industrial revolution. Pfeiffer (2015) emphasises that vocational schools must be modernised, and that teaching staff must be offered continuing education and training opportunities, particularly with regard to new learning methods and accruing digital skills.
Finally, we need better intelligence-based careers advice for school leavers about future skill demands. Too often there is insufficient information for school leavers to understand whether demand is increasing or decreasing for certain occupations, leading to uninformed career decisions (see in this volume de Franceschi for Italy and Aubrey for the UK). Counselling will not be based on perfect forecasts, which we do not have, but should rather focus on robust individual strategies to promote the development of relevant and adaptable skill sets.
3. Secure transitions and employability: an active working life for all
While getting initial education and training right is necessary, it is not sufficient for tackling the challenges of the fourth industrial revolution for two reasons:
- Skills demand will change, so frontloading skills is of limited effectiveness.
- Most of the workforce in 2030 is already in employment today, therefore more attention needs to be focused on maintaining and improving their employability.
As Arnold et al. (this volume) emphasise, the main challenge for labour and social policy in the digital age is not the elimination of human labour by technology. The risk of jobs being eliminated through automation tends to be overestimated in the public discourse as the task composition of jobs, the macroeconomics of technology diffusion, and hurdles to digitalisation are not fully taken into account. While the net employment effects of new digital technologies could be small, this does not preclude massive structural changes. The demand for human labour is likely to increase in sectors such as IT and education, but there could be a substantial reduction in the number of jobs in manufacturing industries, where the use of machines and technical equipment is widespread (Arnold et al. this volume).
Structural change also unfolds within occupations. When machines take over tasks that are comparatively easy to programme and automate, human labour is mainly needed for less routine and skill-intensive tasks that involve creativity and social interactions. Thus, occupations change markedly with regard to task composition and skill requirements (Arnold et al. this volume).
If the challenge is about a future with different jobs, not one with no jobs, the main problem is one of matching. In a worst-case scenario, advanced economies will see high levels of technological unemployment and high levels of skilled labour shortages at the same time. Therefore, ensuring employability over a person’s life becomes the primary objective for policymakers. To prevent large-scale structural skill mismatches between workers and jobs, opportunities for upskilling and reskilling as well as for developing transferrable skills must be expanded (see Karjalainen this volume).
Addressing the challenges outlined above begins with acknowledging that the digital transformation will lead to a more ‘fluid’ world of work. Rates of job turnover are likely to increase within companies as well as between sectors and occupations. The task content of jobs will change faster. The answer to this ‘fluidity’ is to provide for secure transitions for those who have to change jobs, and employability for those whose jobs change.
Let us begin with transitions. Since protecting companies from technology-based disruptions does not seem to be economically or socially desirable (Atkinson this volume; Kalleberg this volume), workers have to be provided with secure transitions between different jobs and occupations. Job security measures must be translated into a comprehensive set of policies that ensure that workers who lose their jobs are taken care of and given access to training and new skills that will allow them to return to the labour market.
The term ‘flexicurity’ has been used to describe reforms in this direction that have been implemented in recent years most notably in the Nordic countries, and most prominently illustrated in Denmark and the Netherlands (see Ilsøe this volume; Keune and Dekker this volume). While the term is often misused as a catch-all phrase, progressives should focus on its essence as an explicit alternative to the mantra of liberalisation and deregulation. Obviously, flexicurity is not a simple one-size-fits-all tool. It depends heavily on institutions, for example, the tax-based social security and training systems in Denmark, and a culture of consensus between the social partners. Tripartite agreements between business, unions and the government are at the heart of the Danish flexicurity model along with extensive active labour market policies. The implementation of this model presents significant challenges in countries lacking these features.
A progressive version of flexicurity should not be about promoting any kind of mobility but rather about ‘good transitions’ (Ranft and Thillaye 2015; Schmid 2003), which allow people to end up in desirable positions and to have a meaningful career. The overall goal is not the creation of a flexible labour market per se, but rather to enable more people moving into higher quality jobs or to maintain a continuity of employment (O’Reilly, Cebrián and Lallement 2000). To achieve this, flexicurity measures must be embedded in a broader paradigm of prevention. Most importantly, such a paradigm would comprise improved access to life-long learning. In most advanced economies life-long learning is an empty phrase. Adult participation in education and training activities varies vastly across the countries covered in this volume, from high rates in the Netherlands, the Nordic countries and Canada to low participation rates in southern Europe, Slovakia, Poland and France (Martin 2018).
In most countries examined in this volume, institutions that mitigate the effects of structural change for individuals are reactive. For example, access to unemployment insurance and corresponding reskilling measures are often only granted once redundancy has taken place. Söderqvist and Arnold et al. (this volume) emphasise that reforms will need to push existing institutions to introduce proactive measures that are focused on the individual, particularly those groups whose skill levels would otherwise fall further and further behind the rising skills requirements. This would also need a change in culture and narratives, with upskilling and reskilling becoming an integral part of a successful working life (Hofheinz this volume; Keune and Dekker this volume).
Such a prevention paradigm must consist of two building blocks: financing and allowing people to make informed choices. Upgrading skills and taking time off to do so needs to be financially viable for people. Those with the greatest need for upgrading their skills – particularly those in non-standard employment, workers in small- and medium-enterprises, or the non-employed – often do not have access to necessary financial resources to invest in their skills. Here, governments can play an important role, for example by creating individual activity accounts. France recently introduced a measure to spread access to education over the lifetime with the ‘compte personnel d’activité’ (Weber this volume). The account runs throughout the working life and is not attached to an employment contract. Whether the current model will allow for substantial investments in upskilling or reskilling remains to be seen. Germany is discussing the implementation of more generously funded ‘individual activity accounts’ (Rahner and Schönstein this volume). Up to €20,000 per individual could be used for qualification and further training as well as for starting a business. The individual activity account would particularly provide younger people with financial scope for personal development.
If the financial barrier is overcome, institutions must support individuals to make sound investments in their human capital. To accomplish this, an encompassing and sound careers advice infrastructure is needed. The German government is discussing the proposed introduction of a legal entitlement to careers and continuous education advice based on labour market forecasting (Rahner and Schönstein this volume). In Finland, trade unions play a key role in career counselling (Karjalainen this volume). No matter who provides it, counselling has to be located at the regional and local levels, as Aubrey (this volume) points out. To help individuals track their human capital investments and to help future generations make more informed choices lifetime digital individual learning records, as suggested in the Taylor report (Taylor 2017), seem promising. For a comprehensive approach to skills advice and development, policymakers should look to Singapore and its Skills Future initiative (Ng 2017).
Measures of primary prevention (preventing displacement by automation) have to be complemented by measures of secondary prevention (reducing the risk of longer-term unemployment). Sweden, for example, has been very successful with the model of job security councils helping redundant workers to retrain and find new employment (Söderqvist this volume; OECD 2015). These councils began as private unemployment offices that were owned by employers’ associations and trade unions with a focus on white-collar professionals, but now they cover most of the Swedish workforce. Transposing this model to other countries would depend on fostering social partnership, which is seen as an essential precondition. Another option to be considered is using publicly funded employment, something Germany is currently experimenting with (Bauer, Fertig and Fuchs 2016), for secondary prevention.
Finally, understanding the role of policies at the workplace level is crucial when it comes to fostering employability over the life course. Workplaces have to become ‘learnplaces’. Workplace-based measures of reskilling and upskilling have to be available for all workers, not only for those in standard forms of employment (Keune and Dekker this volume; Doellgast this volume). However, Crouch argues that ‘non-employees’ working on digital platforms are less likely to be seen as an asset to be invested in. Meanwhile, systems design at the workplace level is equally important. To enhance human capabilities and skills development, technology must be designed with human factors in mind (Taylor 2017). In addition, progressive policymakers must seek to link the issues of employability and working time. Technology has the potential to allow for more individual working-time arrangements to fit in with different stages of the life course. Life phase oriented working time arrangements improve workers’ health, wellbeing and motivation and are therefore a crucial factor for fostering employability (Chung, Kerkhofs and Ester 2007). While there are clearly very differentiated patterns of the take up of these flexible working time arrangements by gender, age and ethnicity (O’Reilly and Fagan 1998), facilitating an active working life for all will be a major challenge in the digital age, especially as new employment platforms emerge.
4. Employment relations and social protection: safeguarding standards
Digital platforms that mediate work, such as Upwork or Amazon’s Mechanical Turk, and platforms that provide services, such as Uber or Airbnb, transform the nature of work. Platforms may improve labour market efficiency and increase opportunities for flexible employment. Yet, depending on the national regulatory framework, they potentially erode the standardised relationship between employers and employees that is needed to finance and deliver social protection and benefits in most advanced economies (Berg and De Stefano this volume; Huws et al. this volume; Schor this volume).
So far, the amount of gainful employment that is delivered through digital platforms is the subject of considerable controversy. Some experts doubt that digital platforms will lead to more than a marginal rise in self-employment (Atkinson this volume), while others argue that that the phenomena are already more widespread than official statistics now reveal (Hill 2015a). Nonetheless, by their very architecture, including the inherent network effects, digital platforms have the potential for a vast diffusion and for the creation of an internet-based ‘distributed workforce’ in which it is increasingly difficult to enforce national labour laws. Furthermore, digital platforms might catalyse some of the ongoing trends towards a destandardisation of employment relationships (Schor this volume; Weil 2014). Unregulated, the proliferation of platform business models could lead to a two-tier workforce and society (Benhamou this volume; Tyson 2015). On the one hand, there could be an upper tier populated by fully employed highly skilled workers with state- or employer-provided benefits (Howcroft and Rubery this volume), alongside highly skilled self-employed individuals who finance their own benefits. On the other hand, there could be a lower tier populated by contingent middle- and low-skill workers, with low pay and little social security (Berg and De Stefano this volume). However, it is important to note that the disruptive potential of digital platforms also applies to highly skilled knowledge workers (Boes et al. 2017; Crouch this volume).
At the moment, the main challenge that digital platforms pose to policymakers might be the inherent ontological ambiguity over what a firm is, who an employee is according to labour law, and what constitutes an employment relationship (Kalleberg this volume; Keune and Dekker this volume). Social policy and labour law require clear answers to these questions, particularly when benefits are financed through employer and employees contributions, and when representation and social protection depend on an employee status.
Broadly there are four options, which are discussed in more detail here:
- the adaption and enforcement of existing statuses to move (some) platform workers towards an employee status
- the creation of a new, hybrid status halfway between employees and independent workers
- the expansion of some rights and benefits currently reserved for employees towards independent workers
- the creation of one single worker status for all.
First, many commentators and analysts describe a widespread misclassification of dependent platform workers as independent contractors. To contain this trend a modern and enforceable definition of dependent and independent employment and of the relationship between platform workers and their employers would be needed. Prassl (2015) calls for the promulgation of guidelines that provide clear definitions of self-employment relating to tax, insurance contributions and social protection entitlement, where the onus of proof rests with the employer rather than the worker. The issue of classification is currently being debated in several countries, for example, France, Germany and the Netherlands. There are a number of major legal cases in the UK and the European Court of Justice (Berg and De Stefano this volume) as well as some legislative reforms in Italy and Spain (Jolly this volume). Based on an updated definition of the status of a ‘worker’, and what this means, platforms could be required to provide regular benefits and protections for workers who are essentially full-timers – those who work over a certain number of hours a week (see Schor this volume). However, this could lead platforms employers to make sure workers never reach this threshold.
Second, there is an international debate on the establishment of a new, hybrid category of employment halfway between independent contractors and employees. In the US and the UK the introduction of a ‘dependent contractor’ status is being discussed, and Spain and Italy have already introduced new definitions in labour law reforms (Jolly this volume). Proponents argue that such measures acknowledge the complexity of modern working arrangements and could extend ‘employee-like’ statuses so those with this status receive adequate and high-quality social protection. The recently introduced Belgian federal law on the platform economy (Zanoni this volume) actually creates a third employment status in addition to employees and the self-employed: individuals who offer services on platforms occasionally have to register as self-employed but pay a reduced tax rate, which is levied from the platform employer. However, progressives should be aware of the risk of introducing such a third category as employers might seek to classify more employees in this way to avoid providing social contributions, benefits and entitlement to statutory protections (Kalleberg this volume).
Third, some of the rights associated with standard employment could be extended to the self-employed, for example representation on works councils, through collective organisation and in collective bargaining (Berg and De Stefano this volume; Keune and Bekker this volume). The new categories of emerging self-employed workers associated with digital work platforms are not easily subsumed into the established institutional framework of labour relations (Jolly this volume). But platform workers have shown their willingness to organise. Granting platform workers the right to collective bargaining would require solutions to issues of competition law that can arise, as the recent case of Uber in Seattle shows (Miller 2017). Where platforms largely accept their responsibility as employer, as is the case in Sweden, unions and platforms should come together to integrate collective agreements with the platform firms’ software and make them mutually compatible, as Söderqvist (this volume) argues. Organising dispersed platform worker is a major challenge for unions, although there have been some significant examples of new unions emerging for example in relation to Deliveroo riders and Uber drivers in the UK (Berg and De Stefano this volume). Mainstream unions are also developing new organisational strategies to target these groups of workers (Vandaele 2018). Progressive policymakers need to think about how to make organising easier for platform workers.
The need to expand rights also applies to basic social protection. Schor (this volume) argues that platform workers lack basic welfare provision, and platforms work best when workers participate freely and without compulsion. This requires access to social measures to reduce workers’ dependency. Therefore, the self-employed should be included in basic social protections, particularly pension and disability insurance systems, and (maybe) unemployment benefits. For example, Germany aims to include the self-employed in the statutory pension insurance system (Rahner and Schönstein this volume).
The French National Council for Digitalisation advocates a revision of the social security and collective representation status of the self-employed (Weber this volume). Obviously, the crucial question will be who pays for welfare provision. Keune and Bekker (this volume) argue that the respective costs could be carried either by the companies through social contributions, as with regular employees or, alternatively, all fiscal incentives and tax allowances for the self-employed could be used for social security coverage instead. To allow for the former, the non-trivial issue of portability has to be solved. Some ideas on how to address this issue are emerging. Hill (2015b), for example, proposes an individual security account to be established for each worker. Any business that hires that worker would pay the employer’s share of social security costs on a pro-rata basis into this account, based on the number of hours that a worker works for any given business. Recently, US Senator Mark Warner introduced the Portable Benefits for Independent Workers Pilot Program Act, which would establish a pilot programme for innovations (Portable Benefits Bill 2017).
Besides social benefits, ensuring minimum wage and, possibly, minimum hours has become a key issue. Here, technology can play a crucial role (Berg and de Stefano this volume). The online freelance marketplace Upwork, for example, offers its corporate clients the option of paying by the hour, as it can monitor the workers by recording their keyboard strokes and mouse clicks and by taking random screenshots of a worker’s activity. Including a minimum wage into the algorithmic back-end of platforms such as Uber would be a technological triviality. Keune and Bekker propose introducing regulations that would guarantee a minimum number of hours of work to be paid that take into account the average number of hours worked over a reference period. This is already the case for zero-hour contract workers in the Netherlands.
And finally, a fourth option would be to create one single worker status for all (France Stratégie 2016) whereby everyone regardless of their employment situation has the same rights to access training and social benefits. The principle would be to go beyond the distinction between wage earners and self-employment, creating a universal status for all, defining a right of professional activity encompassing existing statutes. It is argued that a single worker status category would make it easier for people to switch more easily from one job to another and give everyone equal access to training and social protection (France Stratégie 2016, 7). For instance, this would require the creation of a unified pension scheme or personal activity account that would cover everyone, across all sectors regardless of employment status. This concept of a single and common protection of all would lead to profound transformations of the architecture and financing of the welfare state, including simplifying its active and passive labour market policies. However, this option has rarely been discussed outside France and the UK (see Future of Work Commission 2017) and it remains to be seen whether it can resonate in other European countries.
What an updated welfare system that mitigates the risks for digital platform workers will look like is affected by institutional path dependencies of the specific welfare state regimes (Palier this volume): a Bismarckian solution will differ from a Nordic or liberal one. Still, progressive policymakers should not expect digital platforms to disappear but take the need for reform upfront.
Education, employability and social protection of individuals in the future world of work are essential to a progressive agenda. In addition, broader challenges related to tax policy and capital ownership as well as the provision of infrastructure and stimulus for innovation need to be addressed at the governmental level.
5. Tax and transfer policies: addressing income and wealth inequality
Recent technological change is producing vast profits and rents for some ‘superstar firms’ (Autor et al. 2017) and winner-take-all incomes for some individuals working for the most successful firms (Atkinson this volume; Appelbaum, 2017; Haskel and Westlake 2017). Guellec and Paunov (2017) illustrate how rents from digital innovation typically go to shareholders, investors, top executives and key employees of such ‘superstar firms’, while the wage pressure on average workers only increases.
To the extent that the ongoing digital transformation contributes to these trends, three questions have to be addressed:
- Is the tax burden on (dependent) employment adequate?
- Are gains in productivity distributed fairly?
- Is the level and concentration of private ownership of the means of production appropriate?
The business and technology community frequently refers to earned income tax credits (EITCs) to address income polarisation and the decrease in workers’ share of national income. EITCs raise income and work incentives by subsidising incomes. Brynjolfsson and McAfee (2014) suggest an expansion of EITCs to ensure that the benefits of innovation are more equitably shared. Without doubt, EITCs have proven effective in the US and the UK (Hofheinz this volume). However, it is difficult to raise significantly the after-tax incomes of workers in low-productivity low-skill industries for the simple reason that wages cannot exceed the output of the worker (Atkinson this volume). EITCs will not suffice, and a broader rebalancing of taxation is required.
It can be argued that as machines become better at substituting human labour, taxing workers’ incomes has increasingly negative effects on employment. Arnold et al. (this volume) raise the question of whether lower tax rates for capital income than for wage income create disincentives to using human labour as an input factor. An adjustment of the relative tax burdens, they argue, could lead to more positive employment effects in the context of the digital transformation. Bailey and Harrop (this volume) call for rebalancing taxation, including a shift towards taxing wealth, non-employment income and negative externalities such as greenhouse gas emissions. One might also think of the global, coordinated wealth tax as prescribed by Piketty (2014). However, the technical obstacles to taxing wealth, related to issues of global assessment and enforcement, are severe and require further consideration. Therefore, progressive policymakers should focus on updating national regulations on inheritance tax, top marginal income tax rates and capital gains tax.
With regard to the (re)distribution of productivity gains, leaders in politics, business and civil society frequently promote the idea of a ‘robot tax’, where a tax is levied on the use of robots, for example. Bill Gates (cited in Delaney 2017) famously argued that a robot tax could finance jobs in the care, health or education sectors. EU lawmakers considered a proposal to tax robot owners to pay for the retraining of workers who lose their jobs, but ultimately rejected it. Proponents of a robot tax face the question how to avoid discouraging innovation. Atkinson (this volume) describes proposals that call for the taxation and regulation of robots as “progress-killing ideas”. This does not necessarily apply to big platform companies that profit from network effects (Soete this volume) and accumulate vast profits. Thus, the European Commission’s recent proposal to tax large digital companies’ revenues at a common rate based on where their users are located, rather than where they are headquartered, seems sensible (Guarascio 2018).
Considering the difficulties that are related to taxing wealth, it makes sense to think about distributing the means to generate wealth instead. Kremer and Went (this volume) and Freeman (2015) argue that by pluralising the ownership of the means of production, for example robots, productivity gains can be shared without disincentivising innovation.
Three options to pluralise ownership are discussed here: social wealth funds, non-classical business forms, for example platform cooperatives, and tackling the ownership of data.
First, several commentators and analysts argue for the introduction of some form of social wealth fund through which to distribute the returns from technological progress more widely and to boost consumption demand (Kremer and Went this volume; Lansley 2016). The proposals differ with regard to who pays into the fund and what the fund should be used for. While Fratzscher (2018) suggests an inheritance-tax-based sovereign investment fund to invest in future-oriented industries, Varoufakis (2017) suggests establishing a fund-based returns system on all capital that is used to pay for a universal basic dividend to all citizens. Setting up social wealth funds would be an effective and practical way for progressive policymakers seriously to address the concentration of wealth in the hands of the few in the digital age.
In many debates, distributing the returns from technological progress is linked to a universal basic income, which has both supporters and detractors, from economists to CEOs, entrepreneurs and activists. For progressives, however, a universal basic income is not the answer to the labour and social policy challenges posed by the fourth industrial revolution, for technical (OECD 2017) and political reasons (Hassel 2017). More sophisticated commentators allude to Ulrich Beck’s (2000) “multi-activity society”, where civic labour is supported by a state-funded social wage, or to Frithjof Bergmann’s concept of “new work” (van Gelder 1994), to name only two. All of these models have their flaws. But they also pose relevant questions and can provide us with inspiration to understand how we conceptualise work and address issues around income and ownership that are so central.
Second, in many countries there is a rich tradition of non-classical business forms, from worker cooperatives to mutual benefit societies or social enterprises (Borzaga, Salvatori and Bodini 2017). Examples like Mondragon, the Basque corporation and federation of worker cooperatives, demonstrate that these non-classical businesses can flourish in the 21st century economy. Scholz and Schneider (2017) and others argue that particularly cooperatives should be rediscovered since they have a huge potential for rendering the rising platform economy more equitable (see Schor this volume; Berg and de Stefano this volume). Digital cooperatives are digital platforms that are collectively owned and democratically governed by workers (and sometime by users as well) to guarantee pay, representation and security. They particularly flourish in the ride-hailing business in the US (for example Juno) but can also be found in the care or cleaning sectors (for example ‘Up and Go’). Digital co-operatives show that the efficiency gains of digital platforms (which should be welcomed in low productivity sectors, see O’Reilly 2017) can go hand in hand with decent work. It is crucial for progressive policymakers to understand that digital platforms are based on technological building blocks that can be combined in very different ways, leading to very different business models and societal outcomes. Progressives should be at the forefront of such innovative regulatory frameworks as well as taxation and funding mechanisms that encourage digital platform models to promote decent work and benefit society at large. For some sectors even state-owned digital platforms could be an option, as Howcroft and Rubery (this volume) allude to.
Third, spreading ownership within our societies could also lead to the ownership of data being regulated, based on the argument that this data ‘belongs’ to citizens and is increasingly becoming a crucial factor of production (Fratzscher 2018). Obviously, issues of collective ownership or taxing multinational corporations may not be workable within national borders and may require a coordinated effort in the context of the EU or the World Trade Organization, as Keune and Dekker explain.
In sum, digitalisation of work raises a number of significant challenges for developing new tax and transfer policies to address the emerging and widening disparities in income and wealth. A further dimension of the way inequalities are presenting themselves relates to issues of investing in infrastructure, innovation and supporting regional development.
6. Infrastructure and innovation: investing in the future
The digital era creates demands for new investments in public goods and infrastructure. These include physical infrastructure related to housing, renewable energy, care for the young and the aging, as well as digital infrastructure with open source software, public data and digital courseware, to boost inclusive growth. Just as the industrial economy needed roads, sewers and public libraries to prosper, new kinds of digital public goods are needed, not only to drive innovation and employment but also to rejuvenate the democratic project so the benefits are more widely distributed.
To deliver inclusive growth in the digital age we need innovation policies that are different from traditional industrial policies that supported targeted industries. Historically, government, in the form of the ‘entrepreneurial state’, has funded risky and most pioneering research activities (Mazzucato 2013). In many cases these have contributed to significant technological advances creating and shaping markets, and increasing growth and prosperity; the internet itself would not exist without massive public investments in basic and applied research. In recent years, despite the advent of many innovative technologies these have not had the equivalent effect on productivity growth (Gordon 2016). To improve living standards this ‘productivity paradox’ must be addressed (Atkinson this volume; Soete this volume). Government will be central in the third wave of digitalisation (Case 2017), which is expected to have major productivity effects on health, education, transport, energy and food. For progressives, the role of government should be one of a lead investor and smart regulator. Innovation cannot be left to the private sector alone. It will depend on flourishing cross-sectoral innovation networks, where the state as catalyst is “sparking the initial reaction” (Mazzucato 2013). Since growth has not only a rate, but also a direction, innovation policy must be mission-oriented (Mazzucato and Caetano 2015): the state must set the direction of travel, based on public and political debates specifying society’s ‘grand missions’, while at the same time enabling bottom-up experimentation and learning, and developing new and fragile innovations.
7. Taking a regional perspective
In many advanced economies, GDP per capita in the richest and poorest regions has been diverging over the past two decades (Chazan 2018). ‘Good workers’ and ‘good firms’ are increasingly colocated in large cities (Dauth, Findeisen and Suedkum 2016). Many of those citizens who will be most severely hit by digital transformation and globalisation are spatially concentrated and relatively immobile (Suedekum 2017). In addition, the social prestige associated with urban life has increased (Florida 2002). Many policies proposed above – for example on education and training or secure job-to-job transitions – can only become effective if they account for dramatic regional differences. Understanding regional differences with regard to the effects of the digital transformation and the capacities to deal with them must be a defining characteristic of a progressive agenda on work in the digital age. ‘Solving’ intensifying regional economic disparities by increasing spatial labour mobility, as it can be observed in the US, does not seem to be viable – nor politically desirable. Notably, Gidron and Hall (2017) show how regional decline and a loss in subjective social status increase support for the populist right. Therefore, progressives must revitalise regional development, to demonstrate that the digital transformation is about not only urban co-working spaces and start-up incubators, but also better working and living conditions for all. In particular, regional ecosystems centred on innovation and digital technologies must be better understood, promoted and nourished.
In the digital age, the regional and global levels are closely intertwined. Regional ecosystems are connected to and embedded in international ecosystems, and global value chains can become global value networks (Srai and Christodoulou 2014). It is crucial for policymakers to understand where countries, regions and companies are positioned in these global ecosystems and value networks. Progressive policymakers should take an active role in nurturing high value activities involving emerging technologies that seeks to secure decent work for their citizens.
8. Conclusion: update, recharge and reload the concept of work in society
As evidenced by the rich and diverse range of contributions to this volume there is no lack of ideas about how to address the challenges of the fourth industrial revolution across a number of dimensions. By drawing on a wealth of cross-national evidence we are able to spotlight areas of effective policymaking, and draw attention to factors that have contributed to this. A progressive agenda needs to equip everyone with the right skills, ensure stable employment transitions across the life course, safeguard social standards and create innovative transfer policies that can both stimulate innovation and capture the rewards in a more inclusive way.
We call on progressive policymakers to broaden their view and to envision a good working society in the digital age, which includes and values all forms of human work: paid and unpaid, in industry and in services, dependent and self-employed. Progressives should take a more comprehensive perspective and engage in a debate on the working society that includes work in a broader sense (Kalleberg this volume). A large proportion of work is undertaken not in formal gainful employment but in family labour (caring for children or parents) or voluntary civil labour (in the arts, culture and politics sectors), which all contribute to the general welfare. Without this kind of work our societies could not function. As Howcroft and Rubery (this volume) argue, we need to recognise and value this unpaid, caring and voluntary work more adequately.
Work in the digital era requires us to update, recharge and reload our concept of a good society.
The views and opinions expressed here are those of the authors and do not necessarily reflect the official policy or position of any of the institutions they are affiliated with.
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