Facing the heightened competition of globalising
markets, employers need labour flexibility,
according to the OECD’s Stijn Broecke, “to deal
with fluctuations in demand, to address risks,
and to grab opportunities.” Diverse and flexible
employment arrangements give employers greater
agility at a much lower cost than they would
have with a workforce dominated by “inflexible”
contracts. Few would dispute this. The controversy
is around whether these diverse forms of
employment are good for workers, who might face
heightened economic risks and sometimes lower
access to social protection.
Complicating matters in some countries, according
to Matthew Taylor, is a “fuzzy boundary between
work, self-employment, and casualisation”. Highprofile
lawsuits in the US and Europe related to
the employment status of those platform workers
remind us that the search for labour flexibility can
be a contested process, where both sides claim
the support of the law.
Taylor’s recent UK government review of working
practices in the modern economy recommended
legal changes around employment status so that
workers and companies have a clearer set of rules
and mutual expectations. But he also believes
that applying current law could go a long way
towards preventing misclassification: “Even when
recognising the boundary can be blurred, for most
people you can distinguish between employment
categories.”
Social protection is an essential partner to
flexibility. The same market volatility that makes
labour flexibility essential for companies also
makes social protection essential for workers. “You
can’t ask people to take risks if all the risks fall on
their shoulders” without compensating benefits,
says Philip Jennings. He therefore expects “a
rebirth of the idea of a universal social protection
net and a reconsideration of what it looks like. It
won’t just be about keeping poverty away, but also
about how we can accompany people through
the dislocations to come.” This will not only be
important for individuals. Companies will soon
be facing smaller, ageing workforces in European
and Asian countries. What they offer potential
talent, including around social protection, will
have to be sufficiently attractive to a wider age
range. Social cohesion will also demand answers
to social protection challenges. If a larger number
of millennials, for example, compared with other
generations, are interested in diverse forms of
work, says Rebekah Smith,“ We have to ensure
that there is intergenerational solidarity – that the
generations just coming into the labour market
have adequate access to social protection but in
an economically sustainable way.”
A New Social Contract: Who Pays?
One of the strengths of direct, open-ended, fulltime
employment contracts is their legal clarity
about who shoulders the various risks that social
protections are designed to address. This sort
of clarity is often lacking for other forms of work.
With their share in the marketplace increasing, it’s
crucial to decide how to strike that social bargain.
The demands of flexibility and social protection
are currently discussed as if they were in
opposition. “The big question that comes out of
this is who bears responsibility for offering certain
types of flexibility and for certain types of social
protection?” says Professor Mark Stuart. “Who’s
going to cover the costs?” Bettina Schaller adds
that any potential solution to these questions faces
two further challenges: “Is the funding sustainable
in a broader societal discussion, and is it going to
actually stand the test of time?”
Without a solution, those not covered by social
protection may have to fall back on the last resort
of the state. Stijn Broecke points out that this will
be funded by general taxation, so firms that use
diverse forms of working arrangements to avoid
providing social protection could end up paying
for it anyway through higher taxation.
Let’s Write a New Social Contract
Behind the differences of national systems, we are
on a shared, universal quest; to provide adequate
social safety nets to everyone in need – regardless
of employment status or any other difference. In
a changing world of work, this demands a fresh
way of looking at what work means, in all its forms
– from full-time, open-ended contracts or part-