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FUTURE OF

WORK
Remarks to Chatham House

Thursday 24th May, 2018


RT HON LIAM BYRNE MP

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Introduction
Thank you very much for inviting me to speak today – congratulations to
Chatham House for hosting this important conference today - and to the
Institute for the Future of Work, which launches today.

The doorstep is generally where we pick up on the public’s sixth sense about
what’s really going on in the world and for me it’s been striking that in the last
two elections I’ve had conversations with voters about their worries about the
future.

One was in the printing industry. Another was a lorry driver. They were both in
their fifties. They knew they had decades of work ahead. They hadn’t saved
enough in their pensions. And they could see their jobs in peril as technology
was changing. They’d both paid in all their life their worry was blunt: “how
am I going to survive, how am I am going to support my family when I’m on
the scrap heap?”

This fear of the future, this sense of foreboding, is having a profound impact
on politics and the decisions people take on polling day. In particular it’s
creating a geography of discontent – where self-confident cities vote one way,
and anxious towns, which still hold the balance of power, vote another.

So today I want spell out three blunt messages about the future of work and the
task of reformers ahead.

MORE NOT LESS

First, the truth is that if we want a richer, fairer country, then the possibilities
of technology should not be feared or frustrated - but accelerated.

As someone once put it, our problem is not too many robots, it’s too few.

In the long term, the key to a country’s wealth is its productivity and right now
ours is terrible.

Indeed, it worse than at the end of the 1970’s when we used to call it ‘British
disease’.

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Over the last three centuries, the way we’ve escaped the Malthus trap, is by
harnessing technology to transform the business of producing more with less.

The IMF put it like this recently,

“While the time lags between particular inventions and their eventual broad
diffusion can be, long and change over time, technology has been key to
productivity growth since the first industrial revolution, which, in turn, has
underpinned strong per- capita GDP growth”.

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So, our first challenge is that the nation that led the first industrial revolution is
also ran in the fourth.

Once we were the superpower of the steam age. Now we’re a cyber slow
coach.

While counties like Israel, South Korea, Singapore, Estonia, UAE are racing to
put in place the infrastructure of the future - 5G networks, public e-identity
schemes, ubiquitous ePayment technology – and we are lagging behind.

China, the world’s first user of paper currency is on course to become the
worlds first cashless society. As one Far Eastern ambassador said to me the
other day, we used to look West for the most advanced ideas; now we look
east.

We spend too little on R&D; we propose too little for digital infrastructure;
and our electronic ID schemes for the online world are too poor. This has to
change.

OECD NATIONS: % of GDP spent on R&D

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FAIR SHARES

But, second, if we are to create new wealth, our task is to ensure that it is
wealth that is fairly shared.

And, if we want this new world to be a fairer place, then we need to restore a
moral economy where today the market economy dominates.

This conflict, as EP Thompson recognised, goes back to the very beginnings of


the industrial revolution, when in his words, the medieval moral economy of
just price, and just wage, broke down as the market economy broke through.

There was protest - often violence – aimed at the machines.

From the arson at Albion Mill in 1791, to the Luddite machine-breakers of


1811-13, to the Captain Swing riots of 1830.

We think this was anti-technology. But it was not. The millers of London and
the spinners of the North simply wanted decent plans to help them maintain
themselves a decent life amidst change. Just prices. And just pay.

Eric Hobsbawn called it, ’collective bargaining by riot’; there was no question
to hostility to machines as such, he noted, rather,

‘Wrecking was simply a technique of trade unionism in the period before, and
during, the early phases, of the Industrial Revolution’ 1.

Without a plan to recreate a semblance of the moral economy, I can tell you
technophobia is going to become a national religion.

Why? Because we can’t divorce technology from the profound rise of market
power amongst capitalism’s winner take all firms that are already driving up
prices and driving down wages.

Let me explain.

When we think about the future of work, we need to keep both tech and trade
in view – because both have enabled the most important economic change of
the age of globalisation: the huge growth in market power of global, platform
businesses.

1 EJ Hobsbawn, The Machine Breakers, Past and Present (Feb, 1952)

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At the end of the 90s, progressives helped take a series of steps - creating
NAFTA, admitting China to the WTO, and East Europe in the EUROPEAN
Union which created a new vast global market place linking 6 billion of the
worlds 7 billion people. In this market a $20 trillion merger wave created a
generation of companies bigger than countries.

Today, they dominate the commanding heights of the global economy. The
collapsing cost of technology allowed them to build global supply chains
which meant they can offshore or automate labour costs to drive down costs..

So they are assumed unprecedented market power - including the power to


hold down wages - and mark-up prices2. They are the new monopsonists 3 and
oligarchs. And this largely explains why wage share of national income is
falling.

2 http://www.janeeckhout.com/wp-content/uploads/RMP.pdf
3https://obamawhitehouse.archives.gov/sites/default/files/page/files/
20161025_monopsony_labor_mrkt_cea.pdf

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As it happens, this is exactly what Joseph Schumpeter forecast would happen.

His book Capitalism, Socialism and Democracy was published In England 75


years ago.

Everyone remembers the famous phrase 'creative destruction '.

But everyone's forgets the flipside Schumpeter forecast: the destruction of


competition.

That is what we're watching today.

More than three-fourths of U.S. industries have experienced an increase in


concentration levels over the last two decades4. Markups in prices are up two
thirds since the early 80’s5. Wages are stagnant if not down. But profits are
breaking records. As is the stock market.

Now, the evidence shows that these super giants – or superstar firms -aren’t
simply using M&A to build power – but technology. 6 And so we have the
advent of what economists call frontier firms, which are far more productive
than anyone else, and far more profitable.

4 See https://economics.mit.edu/files/12544
5 http://www.nber.org/papers/w23687
6 https://hbr.org/2017/04/do-most-companies-even-try-to-innovate-anymore

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These new elites have unprecedented power to behave badly: hurting old
ethical goals of just price, just pay and just shares of power.

Think of James Bloodworth’s horror stories about the life in an Amazon


warehouse, where ubiquitous monitors have become the new ‘butty man’
deciding who gets paid what at the end of the week – and gets the extra hours7.

Or the death of DPD driver Don Lane, who worked himself to death in fear of
the firm’s penalties for slowness.

Or Deliveroo’s court-won freedom not to pay the minimum wage or holiday


pay.

So, new public goods and new regulations - especially in the gig economy -
will be needed to restore the balance, and resolve what I call the ‘Bridges
challenge’.

Harry Bridges was president of the ILWU from 1937 until 1977. An
Australian, he became a longshoreman in San Francisco and won the loyalty of
maritime workers after leading them through the bloody labor strike of 1934.

In the 1960s, the invention of containers put Bridges's leadership to the test.

He saw that mechanization was inevitable, but that it could also make
longshore work safer and easier.

While some jobs would be lost, Bridges wanted to make the best deal possible
for longshoremen, to get them "a piece of the machine."

As he put it:

"We should accept mechanization and start making it work for us, not
against us."

So that’s the challenge for labour today. How do we make sure the machine is
working for workers -not against them. Helping create work which safer, more
fulfilling, and better paid. Creating a country not just of full employment. But
fulfilling employment.

7 A phrase I owe to my friend, Clive Efford MP

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The key to this will be be a progressive supply side strategy: economic growth
driven not by the boasting supply of capital – but by boosting the supply of
innovation.

That’s why strategies to boost human capital strategies are crucial – in


particular, as the IMF advises, boosting investment in skills training for low
skill workers. As the country grows richer, we need to be spending more on
tertiary and technical education. At the bottom, we are the bottom of the pack.

The UK spends about 0.5% of GDP on tertiary education – that’s about a third
of what digital leaders like Estonia spend.

But this is not just about, money is about a new institutional settlement.

In the 1960’s the Wilson government delivered the extraordinary Robbins


report which transformed the world of HE.

Today, we need Robbins Rebooted 8, with the aim of transforming lifelong


learning. To create what the French call a 'Learning society' where your

8http://www.smf.co.uk/wp-content/uploads/2014/08/Social-Market-Foundation3822-SMF-Robbins-
Rebooted_web1.pdf

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school, college or university has a lifelong relationship with you - that is rather
more than sending pleading fundraising email.

Realistically, this has huge implications for our learning institutions which by
and large wave goodbye to you at 21.

If what you learn on a three year degree becomes quickly dated after the
moment you leave, then one has to ask why are we offering three year degrees.
Why not ten year degrees - offered a year at a time every decade of your life?

This will need seismic shifts in FE, and HE funding models along with the
role of national insurance and almost certainly the sort of Perhaps even the
lifelong savings accounts now being tested in Singapore.

But the second half of progressive supply side economics, is not deregulation,
but re-regulation to create the incentives for firms to share fairly with workers
and take an interest in raising their skills levels.

This will need tougher competition policy to breakup new monopolies, proper
regulation of monopsony, new minimum wage rules, stronger collective
bargaining and corporate governance reform to make sure new skills earn the
pay they should.

When William Beveridge was describing his five giants of on the road to post
war reconstruction, he called out ‘idleness’ and wrote, ‘next to the
maintenance of peace, maintenance of productive employment is the most
important of all reconstruction aims’; ‘productive work’ was key to the
abolition of want.

Today, the key to productive work that helps abolish want is not an end to
idleness- it’s an end to exploitation.

MANAGING OUR SHIFT TO THE FUTURE

Third, we need to prepare to step in in with extra help the sectors and spaces
hit hard and hit first.

The headline numbers on job automation are alarming – with 10% of UK jobs,
at risk of significant change.

But it’s the story beneath the averages that should worry us.

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The averages disguise the reality of what will happen. Some places and some
sectors will be hit much, much harder, much much sooner.

Millions of jobs for instance may go from retail over the years ahead, and
transportation. Those happen to be the sectors employing the majority of the
British working class. So the risk is that we lose more working class jobs than
the during the shutdown of coal, steel and shipbuilding -combined.

Now, traditionally we've done a very poor job at helping manage the
consequences of what's called sunset industries. Yet we know the answer. It
was set out in the 1944 White Paper on Full Employment.

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This is exactly what we didn't do during the 80's, when coal, steel,
shipbuilding and manufacturing were shutdown. With terrible consequences
for poverty which then rolled down the generations.

Today, huge numbers of people in the former coalfields and steel towns live on
long term disability benefits. We never found a way of regenerating
successfully.

Overwhelming that was because we spent money in those places on physical


capital not human capital.

I remember ten years ago, in one of my wards, one of the poorest working
class wards in Britain, it was easier to get money for bollards than ESOL
classes.

This is not a mistake we should repeat.

So we need to start identifying areas at risk today, and begin plans for a huge
skills surge to insure against the future.

CONCLUSION

Final point. None of these ideas are possible without a different fiscal stance.

First, a readiness to tax corporate profit in new ways; that's partly about raising
the corporate taxes because today's tax cuts are which are currently being
hoarded, paid out to shareholders in share buybacks, or sliced to flatter senior
pay. Often all three.

But it's also about transforming global cooperation so we bring transparency to


tax havens and introduce registers of beneficial ownership.

Second, we have to recognise use that old divisions between capital and
revenue spending are hard to sustain.

Generally fiscal rules smile on borrowing to invest in infrastructure because


the payback is long term.

But today it's intellectual capital not physical capital that often gives you the
biggest bang for your buck.

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When I was finishing my own economic history of Britain, told through the
lives of our entrepreneurs, the thing that struck me most was the way
entrepreneurs make history by inventing the future.

That’s a tradition that we desperately need to rekindle.

But if we want that future to be fails shared, then we’ll need to be true to the
very best of our radical traditions.

Ends.

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