In the future, everyone will be self-employed – but society is failing to adapt

What if there is no employer or employee? Just about everyone in an advanced economy will be self-employed at some stage, yet most people are educated to think of 'getting a job' and legislation works on the presumption that people are employed

Hamish McRae
Saturday 24 September 2016 14:06 BST
The rise of Uber is just the first step in an economy dictated by self-employment
The rise of Uber is just the first step in an economy dictated by self-employment (EPA)

The question is an old one, but it has a new twist. The question is this: how do you prepare for the jobs of tomorrow when you don’t know what those jobs will be? And the twist? It is that most of the new jobs in the past have been jobs created by employers, while many (maybe most) of the jobs of the future will be in self-employment.

Forrester Research has estimated that 6 per cent of the jobs in the US will be eliminated by 2021. There are a host of visible signs of what may happen, from self-driving taxis to automated concierge services, including Siri, Cortana and so on. I saw an estimate that put journalists’ jobs near the top of the scale as likely to be eliminated, a disagreeable thought if you happen to be one.

There will, inevitably, be new jobs created – we are creating them in the media as legacy publishing groups now find they have global reach – but there are real concerns that the new jobs will be neither as secure or as well-paid as the ones lost. But while huge attention has been paid to the threats and opportunities, rather less has paid to the policy responses that society should adopt. Yes, society, for this is not just a matter for governments.

I have been reading a paper from Goldman Sachs Global Market Institute about this. It is called ‘Narrowing the jobs gap: investing in people’, and that explains its message. We have to narrow the gap and we do it by investing in human capital.

The argument runs like this. Jobs have been changing over the centuries. In the past automation has generally resulted in the substitution of a machine for boring, repetitive jobs – though many production line jobs were pretty repetitive: “Many occupations (and on a larger scale, many industries) follow a natural evolution. In the early days they are small-scale, innovative, creative and often well-compensated; people dominate. In the later phases these jobs and industries become large-scale, standardised and repetitive and the jobs typically become less remunerative; cost-effective automation displaces people.”

While the benefits from this are felt by society as a whole, the costs are born by the people displaced. It is hard for them to change their skills, partly because of the uncertainties and partly because there is little incentive on employers to help them do so. So there need to be a series of changes to share the burden. These “include a greater educational focus on the skills that underpin 'adaptive' occupations, changes to labour contracts, expanded incentives to encourage private-sector investment in job training, innovative financing structures … and support for small businesses and the freelance economy”.

But how? As always in these matters it is the detail that counts. It is an 18,000-word paper setting out the details, but a couple of points seem to me to worth picking out.

One is need for soft skills. Machines are poor at replicating human interaction: how many times have we been desperate to talk to a real human being when navigating though some automated call centre’s attempted answers to a query? Another is the rise of “adaptive occupations”, jobs where people have to adapt to changing opportunities.

The core of the paper, however, focuses on reducing the barriers to people investing in the skills needed for the new jobs – barriers that are particularly high at the top of the skill range. For example, a university lecturer in some subject where student demand has fallen (a foreign language, perhaps) is in a really difficult position. A professor of Modern Greek cannot quickly re-skill to become one of management and business studies. The huge challenge is to find ways of helping people adapt to such change, and the Goldman paper argues that this requires a rethink of the relationship between employees and employers.

The hardest thing of all, though, is the issue that goes beyond the scope of this paper. What if there is no employer or employee? Just about everyone in an advanced economy will be self-employed at some stage of their career. Yet most people are educated to think of “getting a job”, and virtually all legislation works on the presumption that people are employed.

Uber protests in Chile

The response of the TUC to this is to call for reform of employment status law. The idea is that there should be a statutory presumption that all individuals qualify for the full range of statutory employment rights. They should only not qualify if the employer could demonstrate that individuals were genuinely self-employed.

You can see where the TUC is coming from, and it is an understandable response to the negative aspects of the “gig economy”. But it does not tackle the wider issue of helping people to teach themselves, or be taught, to be adaptive – to regard working for themselves as normal and natural, and for many, preferable to being a wage slave. If you are working for yourself, it is natural to want to invest in your own human capital.

That surely is the nub of the matter. We have no idea what the jobs of the future will be. Jobs that once seemed secure no longer are. But the more that societies can invest in human capital – including the ability to be adaptive – the better we can adjust, and the better the outcome for society as a whole.

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