The employment landscape is changing. Innovations in technology, increased globalisation and the ageing population are among the reasons for this shift. But how should these changes be dealt with? Are they issues that should simply be left to businesses to resolve, or should the state intervene through greater regulation? Lewis Silkin considers.

It sounds like something out of a Sci-fi novel but, according to some commentators, advances in technology will soon put workers into two categories: those who tell computers what to do, and those who are told what to do by computers.

Employment and State intervention

For some, this may mean moving closer to the utopian vision of a life freed from drudgery and filled with more creative leisure pursuits.  But the reality for many unskilled workers could be widespread unemployment.  Perhaps new jobs will emerge to fill the gap, as has happened before in the wake of innovation.  But if we are witnessing a “great decoupling” between economic growth and employment growth this could mean that, at least without State intervention, swathes of the population will become unemployed and unemployable, surpassed by competent machines.  This displacement of labour by technology will have major economic and social repercussions, which could lead to social inequality on a scale unprecedented in western society.

Although these visions of the future may lie some way away, there is no doubt that the employment landscape is changing.   In what some see as a creeping casualisation of the UK labour market, the traditional model of employment is under pressure.   Increasing numbers of workers work part-time, job-share and work flexible hours in ever more variable combinations.  Agency workers supplement permanent employees. Zero hours contracts are increasingly common, despite the recent furore over their use.  Over the Summer, self-employment reached a 40 year high, according to the ONS.

Change in self employment in different job types (ooos), 2009-2014

Managers, professionals and skilled trades have seen the large increases

The reasons for this shift are complex and multi-faceted.  Increasing globalisation means jobs and recruitment aren’t local issues anymore.  Many multi-national employers advertise certain jobs across Europe and more widely. This is a double-edged sword, giving more power and opportunity to those workers with sought-after skills while making it ever harder for those who lack them.  Technology allows those in certain job roles to work more remotely.  Whilst this opens up new and innovative possibilities for work and working patterns, it also brings tensions around working time, as demonstrated by moves in some countries such as France and Germany to protect workers from emails outside office hours.  Data protection and privacy issues also need to be addressed.  For example, the increasing trend for employees to use personal electronic devices for work purposes contributes to the erosion of the bright line between working time and leisure.  An ageing population creates challenges for employers in relation to promotion opportunities and workforce planning, as well as managing four generations in the workplace and, of course, health issues. 

Are these matters which each business should be allowed to (or be left to) resolve for itself, within the confines of existing rules?  Or is further – or even less – State intervention the way forward? 

Certainly, greater flexibility in working arrangements has advantages for those who have other commitments (for example as carers) around which they need to structure their work.  But while employment (though not necessarily ‘traditional’ full-time employment) levels have been rising again recently, wages have been slow to respond.   With the growth of flexible working arrangements, the risk of fluctuating demand is being passed from employer to employee; from the party which is arguably better placed to predict and respond to (and absorb the impact of) such changes, to the worker who is arguably less able to continually adapt their (and their family’s) lifestyle and spending to sometimes sudden and unexpected changes in demand. 

The role of the State: regulation?

This raises fundamental questions about the sort of future society we want to live in and the role of the State in shaping it.  Is this flexibility (or insecurity) a desirable development for society?  If not, is it inevitable, or is there a place for State intervention to control it?  How much and what sort of intervention is desirable or acceptable?  And what is the cumulative effect of any such changes on wider issues such as the health of the economy and its citizens. 

In the UK, the government has already chosen to intervene in a number of discrete ways.  For example, since September 2014 schools in England have introduced coding (from primary school level) as part of the new national school curriculum in an effort to increase computer literacy.  In the longer term, the government hopes this will go some way to address the skills shortage in this sector identified by many businesses.  To address labour market equality, the government is also planning to introduce regulations at the end of the year to prohibit employment agencies and employment businesses from advertising jobs exclusively in other EEA countries.  It also recently extended the right to request flexible working to all employees, not just those with caring responsibilities and has plans to legislate to allow workers on zero hours contracts to work for more than one employer (even if their employment contract purports to prevent them from doing so).  In a nod to the shifting and increasingly uncertain labour landscape, Vince Cable recently launched review on the employment status of workers. 

Available data from the CIPD and our own data analysis suggests that there is no strong correlation between changes in regulating the employment law market and GDP growth.  This seems to debunk a common myth, perpetuated by successive governments, that employment law regulation is a significant deterrent to investment in the UK and stops employers creating new jobs.  On the contrary, the UK is one of the least regulated employment law markets in the world.  Nevertheless, it may still be counter-productive to heavily regulate the market, especially through employment law as this may have the unintended consequence of prompting further moves by employers away from traditionally more secure employment which they might not otherwise have sought to do. 

It may simply be better to allow flexibility to evolve.  One route might be for the State to provide stronger protection through social security (or income or job guarantees) for those who do not fare well under the system that emerges.  However, the cost (and difficulty of raising funds) makes this an unlikely response, particularly in the current political climate.  But without action to protect vulnerable workers, the increasing numbers dependent on the welfare state may challenge its continuing viability.

As new issues are thrown up, and State resources dwindle, perhaps the role of the State in such matters might be supplanted by multinational companies.  Some large employers already provide healthcare and pensions for their employees.  To attract and retain the best talent in a competitive market in the future, multinationals may choose to expand both the range of benefits provided (education and training, for instance) and offer to provide them to workers’ relatives as well.  This could ease the burden on the State and go some way to take the strain off the welfare state – but what of those who are not employed by large employers?  This may simply be a different route to inequality.   

Regulation in the future

Change is unlikely to be as quick as some anticipate.  However, there appears to be an increasing feeling that there is a narrow window of opportunity to enact policies which will positively influence employment levels, the UK economy and the ability of its citizens to deal with future challenges.  How the government tackles the future regulation of the employment relationship, pension provision, immigration, investment in healthcare, tax, welfare and the provision and content of state education will be critical.  It’s a delicate balance between what’s best for the country as a whole, bearing in mind its place in Europe and the global economy, and ensuring that individual citizens are not too harshly treated by the rules – or lack of them – by providing an adequate (yet affordable) ‘safety net’. 

Now, it’s time to weigh up the options.    

By James Davies and Anna Sella, Lewis Silkin


Are you told what to do by computers? Or do you tell computers what to do? Share your thoughts about the future of technology on the workplace using the comments section below.

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