Comment: Sleepwalking into the future

The whole structure of government is built on the belief that people earn a living in jobs

WHAT, IN another 15 years, will the young people opening the A- level envelope be doing to earn a living? Some will doubtless be working for large employers, but, as a report published this week by the Department of Trade and Industry points out, the development of the Internet means that many of the new "knowledge workers" are likely to be working for themselves, as individuals or in very small groups.

Just what proportion of the workforce will be self-employed is, of course, unclear. The report, called The Future of Work, Looking Ahead 2015, offers two visions of the future. In one, large companies will keep control of the knowledge their employees generate by offering lavish incentive packages. In the other scenario, more and more people will choose to be self-employed and receive the full value of their skills by selling them in the market- place.

The outcome will have elements of both visions. Companies will have to be much more flexible in the way they attract and retain knowledge workers, but many people will find they do better if they work for themselves. Both trends are, after all, already happening. But in so far as the second vision, dubbed "Wired World" by the DTI team, prevails, it will have profound influences on the support systems workers need.

For example, people will have to become much more adept at selling their services and protecting their knowledge. As Charles Handy pointed out in his ground-breaking book, The Age of Unreason, people will not be seeking jobs, they will be seeking customers. The report argues that these workers will need something like the medieval guilds to represent their interests - professional and craft associations.

Whether or not the guilds are an appropriate model is open to question; the London guilds became restrictive organisations, pushed up prices and forced businesses out of the City. But the idea is surely right; if an increasing proportion of the labour force becomes self-employed, workers will need new support systems.

Labour markets do change radically over a generation. The average duration of employment has not changed radically over the last 25 years - it has come down a little, but not much - but the proportion of the self-employed has risen sharply, and the proportion of people on short-term contracts and in part-time work has soared. I don't know whether we shall reach the proportion of self-employed suggested by Bill Gates, who reckons that by 2050 more than half the population of the US will be self-employed, but the direction is clear.

These changes have taken place without the further spur of the Internet, which will undoubtedly push them further. For a start, the Net already gives individuals virtually the same quality of information that is available to a large corporation. It will soon enable them to buy goods and services at the best market prices available - again narrowing the gap between the individual and the big company. And it enables those of us who produce words or software both to manufacture and to distribute those products from our homes.

But surely the missing link is not the services that we will need, for they will spring up in response to demand. The missing link is government policy.

Take a simple example. Under new legislation we are supposed to work a 48-hour week. But the length of time we work is irrelevant if we are working for ourselves.

I am not going to sue myself because I have to work an extra couple of hours on the computer preparing a slide presentation that I have to give next month in Hong Kong. I often cannot even distinguish what is work and what is leisure. Most of the thinking for this article took place while I was walking the dog - and a very undemanding co-worker he was too.

So while one bit of the DTI is writing reports about the changing nature of work, the other bit is imposing legislation that is at best irrelevant and at worst positively damaging. The thing the self-employed find most grinding is complying with piles of bureaucracy that were designed in Brussels for a large corporation. Whitehall speak with forked tongue.

The key problem is that the whole structure of government is built on the presumption that people earn their livings in jobs. That is perfectly natural, because most people still do. So the income tax system is designed round PAYE; pensions are provided by employers; there is the wholly artificial distinction between full-time and part-time employment; there is a formal retirement age.

As for the minimum wage, I know some self-employed people who would be happy to be able to pay it to themselves.

If, by 2050 there are more people in self-employment than in formal jobs, this entire legislative and regulatory structure will have become redundant for most people. And if 2050 sounds a long way off, remember that this is when the people now getting A-level results will be drawing their pensions.

In any case, the DTI report is talking about 2015, only half a generation off. This suggests that there is an enormous opportunity for a sensible government. Not to fuss about the need for something akin to the medieval guilds, or the need for "continuing support from government". What is needed is for government to rethink the entire way it does its own business.

This is likely to be at least as radical a rethink as that which led to the creation of the present welfare systems of Western Europe. Every government in the developed world will have to do it. The only issues will be those of timing and design. For example, is it better to change the present role of government in a piecemeal way, or should we go for swift, co-ordinated change? Should we be leaders or laggards - try to pioneer a redefinition of government, or watch what others do and learn from them?

The DTI's Wired World may imply much smaller government. No one would suggest that the government of a developed country should abandon its social responsibilities and cease to try to protect the disadvantaged, but it might be possible to achieve these aims with much smaller state intervention. A large amount of public spending involves taking money away from people and then giving it back to the same people, after deducting expenses. A culture of self-employment might encourage people to prefer not to have the money taken away in the first place.

Whatever the size of the state, there is clearly enormous scope for simplification. Large companies can absorb the administrative burden of big government because they hire specialised people to cope with it. Private individuals cannot justify the cost and will not themselves have the skills.

To say that is not to attack the intentions of government, just to say that the present complexity of the tax, benefits and regulatory system is inappropriate for a world in which a large and rising proportion of the workforce is either self-employed or working in small partnerships.

This is important for all developed countries, but in some ways it is particularly important for the UK. We have a particularly flexible work- force. We are unusual in combining a large proportion of part-timers, a high proportion of self-employed and a reasonably high level of business start-ups. So fitting government into the new economic structure is especially important for us.

This, of course, is what the Opposition should be doing. If the Government deserves praise for trying to think long-term about the changing nature of work, the Opposition deserves a raspberry for focusing on the narrow issue of the level of personal taxation rather than the much bigger one of the role of the state during the entire lifetime of people leaving school now.

The world of work is going to be utterly different in the next 25 years. We know that. We know, too, that the Internet is democratising technology by transferring power away from big government and big business to ordinary people. We have much more choice. But we have hardly begun to think through what this additional choice may mean for the A-level students starting today on the next stage of their great adventure.