The Future of Work - Good Jobs for All*

This chapter assesses the global evidence on major factors influencing the future of work. It has become evident that there is a large variation in national developments, yet, there are shared issues of general relevance that make it possible to tell a global story. First, technology and globalization are intimately related forces driving permanent structural change in employment and affecting the global distribution of economic activities and jobs. While there has been permanent technological change, its implications differ with respect to levels of development and speed of adjustment around the globe. Global integration has become stronger, not least facilitated by modern IT and other technological innovation, leading to declining costs of international transactions, but also by political decisions to remove barriers. This points at the importance of political decisions in shaping the impact globalization can have on the further development of employment patterns. Looking at most recent changes, workers in different parts of the world have been affected quite asymmetrically by technology and globalization. Winners and losers of change can be identified, with a certain tendency toward employment polarization in many developed countries, creating societal and political challenges in compensating for losses while not foregoing the potential wins - and by preparing societies to reap the benefits of technological advancements and global integration through forward- looking, preventive strategies. Second, demographic change is a major driving force in the world of work around the globe. Diversity in the labor market, induced by demographic factors, is on the increase, with rising employment of women, older workers and migration, although significant gaps regarding the labor market integration of women, older workers as well as migrants, continue to exist in some regions of the world. Empirical studies into the effects of diversity create a nuanced picture, pointing at the many dimensions of diversity and its consequences. But diversity is also often linked to discrimination. In fact, there is empirical evidence on discrimination in the labor market based on ethnicity, gender, age, disability, sexual, or religious orientation - this is not only creating barriers for individual careers but also implying a loss of productive potentials in the economy. Anti- discrimination rules and systematic awareness raising, monitoring and enforcement are therefore justified as are positive strategies to change actual practices in the labor market. When looking at different types of employment types we can identify a large variety of contracts, deviating more or less from a permanent, full- time dependent employment status in the formal sector, which is often taken as a benchmark to assess the quality of a job. Part- time work, fixed- term contracts, temporary agency work, but also different forms of self- employment or own- account and crowd work as well as informal employment differ regarding core parameters such as employment stability, earnings, and inclusion into social protection from standard employment. Institutional changes, but also changes in the structure of demand and supply for certain skills have opened up this broad diversity of contractual relationships in the world of work around the globe, not least the creation of highly flexible demand patterns and complex value chains in today’s economies. Virtually all labor markets exhibit some forms of segmentation, with barriers to mobility between the segments. From a policy perspective, narrowing the regulatory gaps as well as inequality regarding inclusion into social protection between different contract types is a pressing issue, with concrete challenges depending on the national context. Moving to the margins of the labor market, different forms of under-, non- or unemployment continue to exist, pointing at a full or partial exclusion of some groups from paid work. Patterns of exclusion and boundaries of the labor market are structured by institutional rules defining certain status forms, and in particular only the existence of a welfare state and social policies make unemployment a useful category and indicator in some regions of the world. While there is a fragmentation of labor markets characterized by different forms of “external” flexibility, firms have also become more flexible “internally,” i.e. as regards their internal processes of working, but in particular regarding working time and mobile working. In general, patterns of working time and workplace flexibility can be in the interest of employers, of workers or both. Over time we have seen many new and diverse arrangements emerging, potentially reconciling productivity and flexibility interests of employers and work/ life preferences of workers. There has been an improvement in many cases. Still, there are many issues that can be perceived as problematic from a social progress point of view, in particular very short, very long, and unpredictable working time requirements or ill- designed shift work arrangements which have negative effects on workers’ health and families. This is also observed in poorly regulated informal employment or in segments of formal labor markets where working time standards have eroded due to a lack of collective bargaining and appropriate legislation and enforcement. Work is intimately related to individual health and well- being. While unemployment is definitively harmful in terms of well- being and health, being employed can help raise individual well- being and health. However, there are also some health risks attached to work. Precarious forms of work can have negative effects on mental health. Industrial work was particularly at risk of physically hazardous working conditions as regards occupational injuries or work- related diseases caused by chemical substances, but as a matter of fact, in many low- and medium-income countries these risks are still very much a present phenomenon. However, in many developed countries recent changes in the modern world of work have created new mental and psychological demands on individuals, creating stressful psychosocial work environments and working- time related stress. Evidence indicates that jobs defined by high demands and low control, and by high effort in combination with low reward, increase the risk of stress- related disorders, such as cardiovascular disease or depression. While this evidence has clear implications for work practices so that employers have to meet their responsibilities, there is a role for public policies as regards the prevention of health risks at the workplace. Collective bargaining is an important institutional mechanism to establish negotiated standards regarding pay, working time, and other working conditions. It also has a role in settling distributional conflicts. Compared to legislation, collective agreements can be more flexible as they take into account sectoral or firm- specific issues. Empirical research can show that multi- employer collective bargaining can lead to lower earnings inequality and that coordinated or centralized bargaining is beneficial to a positive economic development. Yet, bargaining systems are quite diverse around the globe, with huge differences in bargaining coverage, union density, and employer organization, as well as a tendency to decline in collective bargaining coverage and increased decentralization; similar differences can also be observed inside individual countries. While collective bargaining is a voluntary system, public policies such as extension clauses and minimum wages can also contribute to shape wage structures in systems with low organizational density. Human capital is a core element of individual life chances and employment potentials. It is also crucial for economic productivity and societal wealth. Empirical research points at the fact that skill formation has a peculiar pattern over the life course with educational investments at different stages building upon each other. Education in early childhood has the strongest returns and a clear potential of reducing ability gaps across children from different backgrounds. Schooling enrolment is far from complete, in particular in medium and low income countries, but is essential in securing individual chances of independent living outside of poverty. Comparative research also gives hints at the specific contribution of vocational education and training for a smooth transition from school to work, in particular if combined with structured learning in firms. Higher education is important for societal progress and innovation. As with schooling also higher education tends to operate under credit constraints so that support through public subsidies is an important measure to mitigate inequality in access to higher education. Finally, continuous training on the job is needed to update skills in a changing economic environment. Policies regarding employment protection, unemployment protection, and reemployment have direct influence on stability and mobility on the labor market. In many countries, institutional rules governing permanent contracts in the formal sector stabilize open- ended employment relationships, but may hamper entry into the core labor market for some groups in the labor force as they tend to reinforce a segmentation of employment. Furthermore, in many countries both formal and effective coverage by unemployment benefits is very limited, leading to a double disadvantage of those in more temporary or informal employment as their access to unemployment protection is also limited. Hence, employment and unemployment protection often privilege certain groups over others, creating gaps in protection for the most vulnerable people. Active labor market policies can help promote the reentry into employment after phases of unemployment, and in fact, there are many options of effective reemployment measures - however, taking a global perspective, the delivery of such policies is quite unequal given institutional, administrative, and fiscal constraints. All in all, relaxing employment protection while strengthening unemployment benefit systems and active labor market policies can help support individuals in a dynamic economic environment where transitions between jobs need to be secured. This, of course, requires fundamental institutional change and capacity building in many countries. Based on our assessment of the global evidence on core employment issues, we derived some main principles to guide policy- making: 1. Opportunity for economic growth should be provided in accordance with ecological sustainability. 2. Full and fair employment in the formal sector should be made a central aim. 3. Good jobs should be defined by as jobs with the following essential features: jobs that are free of any form of precariousness; that enable the workers to exert come control on their time and tasks; that provide fair employment relation and job security; that offer opportunities to stimulate individual development; that prevent any form of discrimination; and reconcile work and extra- work demands well. 4. Inclusive institutions including collective bargaining are needed to provide equitable opportunities for all. 5. We recognize that technological change and globalization generate new jobs while undercutting existing employment is essential. If programs addressing job displacement are implemented, efforts to facilitate reskilling are preferable to cash compensation, though either must come with access to public and health services. Using public funds to shape technologies that generate more employment than they destroy should be a priority for regions, nation- states, and transnational institutions. 6. Globalization cannot be framed as a race to the bottom, but rather as a process founded on minimum standards for employment everywhere. Of course, policies toward strengthening full and fair employment for all may vary according to the level of economic and social development in different regions of the world as well as according to institutional arrangements at national level. Against this backdrop, we see a core set of policies that are essential: • Rules regarding employment protection should allow for flexibility while avoiding a deeper segmentation of the labor market. • Social protections should cover all types of work, yielding no particular hidden advantage of choosing one or another type of work. • Skill formation at different stages of the life course is essential, in particular ensuring the acquisition of skills that can be used in the labor market as well as access to education also for vulnerable groups. • Inclusive labor markets need effective policies to make the most out of diversity and ensure nondiscrimination. Anti- discrimination legislation is important but it is not enough to combat discrimination as it is not “self- enforcing.” A combination of proactive policies to promote equal opportunities in employment, and sanctions for noncompliance or discriminatory behavior is essential. • Legislative and collectively agreed standards regarding working conditions are fundamental to ensure a fair distribution of economic gains as well as to guarantee working conditions that are compatible with health and extra- work demands. • Capacities to bargain collectively are seen as a major complement to legislation. Vital social partnership in old and new sectors and forms is therefore important. Institutions to protect workers from insecurity and uncertainty, as well as to facilitate the creation of good jobs, must be created by political forces.