Adapting to the new labour market

The following blog is based on a speech delivered by Neil Carberry, Chief Executive of the Recruitment and Employment Confederation, at the ERSA Annual Conference in December 2018. 

The “end of jobs” is a common refrain. Going back to the Luddite riots, seismic shifts in the labour market have caused displacement of jobs and had significant effects on people’s lives. Often, workers have suffered. Over the years we have got better at supporting people with these transitions, as we should.

Because transitions is what they were, jobs disappeared and new jobs were created. Often the new jobs proved to be more durable and rewarding than what went before. Sometimes they didn’t, and intervention was needed to correct that. The Factory Acts of the 19th Century alongside the rise of free Trade Unions represent just one such example.

This is the historical context in which I approach the debate about the future of work. It makes me a cynic of “end of work” narratives, but a worrier about potential inequalities of outcome if we get the change process wrong. As I have already suggested, history tells us work will change, rather than be extinguished. It suggests that, over time, a new social contract will be established which manages the vital balance between the essential economic dynamism of the free market and social protection that provides a universal safety net.

Over the years to the recession, the UK did this pretty well – allowing it to grow effectively while protecting the labour share more than in more rigid labour markets on the continent. Recovering that balance will be important to a sense of shared prosperity in the years to come.

How can we do this? We need to work with the change, not against it.

While the current phase of technology change is travelling faster than much of what went before – and therefore has the potential to be even more challenging to navigate – we can already see the signs of a transitional rather than an existential challenge to jobs emerging.

Data from the Federal Reserve of St. Louis show that routine jobs at all skill levels are on the down, while non-routine jobs remain healthy. In my own industry of recruitment, the real value that firms are delivering is increasingly based on advice and understanding of changing client business models and worker needs – not simple matchmaking.

The recent flurry of court cases here in the UK on the rights of gig economy workers show that new technology will also have to work with long-established principles of fairness in the way we work. The recent Taylor Review is another example of this – seeking to find new protections that suit the economy that is developing, rather than turning the clock back.

Nevertheless, that long progress to a new labour market will still be difficult for many to navigate, whether they are young people facing a much more complex world than any of us did, or workers with long careers in a sector that has been disrupted.

As Keynes noted, In the long run we are all dead. He meant, of course, that future positive outcomes are great – but they can count for little if people are struggling now.

Public policy responses to this kind of change can be too slow, poorly targeted and subscale. Given the size of the challenge we face, it is on all of us to make sure that doesn’t happen this time. To its credit, the Government has begun thinking about this through the Industrial Strategy – and this is exactly the kind of issue that underlines why such a strategy matters.

Some of the initiatives that the Government is exploring – like a National Retraining Scheme – have real potential if done at scale and with a strong understanding of changing labour market demand. Established tools, like the National Minimum/Living Wage are an effective tool to protect workers. Others – like the troubled apprenticeship levy – need real change if they are to be effective. 

But we can help that change to happen. As recruiters, our REC members are jobs experts and want to help – not only improving public programmes but by raising expectations on inclusion and helping clients understand what they can and should do, through our Good Recruitment Campaign and working with the employability sector. Encouraging an enlightened long-termism in business thinking will be important to getting this right.

There is a lot of overlap in this with the vital role of ERSA members in supporting people to navigate their way into this changing world – especially where people are starting a long way away from the labour market. It’s clear that the role ERSA members play will be more important than ever in the times to come – let’s work together find a framework that helps us all to make a difference as people navigate their way through the new world of work. If we get the scale and the pace right, we can make sure that this transition is effective for workers.

Neil Carberry is Chief Executive of the Recruitment and Employment Confederation (REC), a Low Pay Commissioner and ACAS Council member