The Gig economy, Modern Employment, Brexit and the perfect storm.
Whilst there are no shortage of political sideshows at present, one of the most important debates for those of us concerned about shaping the evolving world of work in the UK is going on at present and you’ve probably never heard of it. You should. The Review of Employment Practices in the Modern Economy, led by Matthew Taylor and commissioned by the PM, has been a countrywide consultative exercise in helping shape solutions in response to the fact that our current employment and taxation landscape is not fit for purpose as the world of work changes. I would urge you to participate and get your voice heard given what is at stake.
As a recap, this changing world of work narrative that needs urgent attention is not one you’ll find in the glowing commentary of those obsessed with the knowledge economy and its continuous feedback loops, fussball tables and first world problems to solve. There are structural problems to address in that domain but mainly involve closing the taxation loopholes of the freelance, self-employed who’ve been incentivised over the last few years but who inadvertently are now leaving a collective hole in the exchequer of up to £5bn worse off in 5 years as a result. The ‘disguised employee’ loophole has been a constant source of attack for HMRC in the public sector (see the latest on IR35 classification) but for as long as it allows fiscally-minded employers to reduce their payroll contributions and Governments with a need to drive down the ‘unemployment’ figure then the ‘business-friendly’ administrations have a tough task on their hands to balance this one.
At the other end of the review spectrum is probably a more pressing issue (morally and economically) – how do we provide an employment safety net against the rise of ‘precarious employment’ and how does this new employment landscape align with our shiny branded view of UK plc as the offer to those new trading partners in a post-Brexit world that are apparently lining up to take the place of the EU bloc in doing business with us ?
Let’s firstly reflect on a somewhat cautious view against the belief system that creates economic success - enlightened people practices, capital investment to fuel innovation and productivity, a long term growth strategy and an aligned regulatory framework based on outlawing bad employment practices.
Growth strategy - We haven’t recovered as an economy since the 2008 crash. 85% of businesses are struggling with top line growth. With a focus on the boardroom cancer of short-termism and austerity we have as a profession been on the thin end of the wedge implementing more flexible labour practices - more part-time, temporary contracts – stagnating wage growth which has helped reduce the cost of labour to firms, and therefore, they are more willing to employ workers without the rising productivity.
Capital expenditure - Businesses have hoarded cash (at the expense of capital expenditure and in the interests of shareholders and short-termism) rather than spending it on the tools that will help enhance our productivity and drive innovation.
Employment regulatory framework – And finally our 20th century employment landscape is not fit for purpose for the needs of the changing world of work. An increasingly de-regulated environment since we dethroned the trade union elite in the 1980s, punctuated only by concessions for EU membership on workplace items such as maternity and working time. What we do with those frameworks in future, now we are leaving the EU, will be down to our sovereign parliament and a majority Conservative government for the foreseeable future.
So we have reached a stage where our employment framework allows zero hours contracts to reach 905,000 people and emboldened ‘gig economy’ pioneers such as Uber and Deliveroo to try and argue in the Court of Law on the frankly ridiculous case of self-employed status to keep alive their business models. It’s broken (based purely on arbitrating against an outdated 20th century version) but on what premise do we build a new one ?
One one side, designing new business models are all the rage and excited employers see enormous value in a smaller, loyal core with a set of employment rights we have become used to, tapping into an increasing army of gig economy workers at a point of need. But ‘point of need’ does nothing for the large numbers of people who want more hours, more security and more money to meet the increasing burden of a more difficult standard of living in the UK.
Brexit, or the hard version we are going after, means that we’ve got to find a way of attracting British workers to jobs they have so far refused to embrace (hospitality, construction, healthcare, etc) and who would be increasingly subject to precarious conditions if it goes unchecked. British labour market with a significantly smaller presence of EU27 workers will be immediately confronted with a range of complex questions that will need to be resolved quickly to prevent major disruption.
Finally, the Taylor review has some laudable objectives and for that reason is worth your contribution:
“whether as a nation - as employers, employees, investors, consumers and citizens - we want to give the quality of work in the British economy as much emphasis as we have rightly accorded its quantity.”
As for me, I’ve flagged in my submission that we need a framework that provides protection to all who ‘work’ in our enterprises going forward and with the rising size of atypical contracts we find a way to make the employee who chooses self-employment rather than the employer. To do anything other than this, betraying large swathes of our working population, makes our progressive people practices chatter seem empty and elitist.
Until next time. Get involved.