“An influential study by economists at Delft University has concluded what many of us suspected. A flexible workforce needs an expanded management bureaucracy to oversee it. Because precarity damages trust, loyalty and commitment, say the Delft researchers, it demands more management and control. An entire generation of free-market workers has begun to act according to the factory adage of the old Soviet Union: “We pretend to work, they pretend to pay us.”
An important read excerpted from Paul Mason, who cites two important recent studies.
“In an influential paper this month, Morgan Stanley economists Charles Goodhart, Manoj Pradhan and Pratyancha Pardeshi argue that we are on the verge of a global turnaround in wages. For the past 30 years, business profits have surged on the back of a demographic glut of labour: the babyboomers of the west augmented by the newly urbanised workforce of the global south, plus millions of women brought into the labour force.
Now the catch-up effects of urbanisation will peter out, they say – and, at the same time, the falling birth rate will create a shortage of labour, triggering a rise in the bargaining power – and wages –of workers. That, in turn, will trigger the rollout of innovations such as McDonald’s touchscreens across the economy. Capital and labour will rebalance; the surge in business-profit rates that happened after 1989 will subside; and Thomas Piketty’s dire predictions about 21st century inequality will be disproved.
Their prediction has been celebrated by the Davos crowd and should, if it turns out to be correct, be welcomed by people who desire greater equality and social justice. But to make it happen, we need a total mindset change, not just among politicians and businesspeople, but among workers and consumers themselves.
The assertion that job security kills innovation is etched deep into the free-market mindset. The pursuit of flexible labour markets has, for the past 30 years, made it easy for bosses to hire and fire; and harder for workers to demand both higher wages and the higher security that comes with them. The zero-hours contract has become the symbol of this culture, but there is worse. Unions trying to organise precarious workers report many businesses where there is no contract at all. Temporary work, part-time work, contracts that guarantee just four hours work a week are all common in the low-pay sector.
The result is the precariat. A broad layer numbering in some countries 25% of the workforce, whose contracts are either temporary or informal, or who arrive via employment agencies.
Now, an influential study by economists at Delft University has concluded what many of us suspected. A flexible workforce needs an expanded management bureaucracy to oversee it. Because precarity damages trust, loyalty and commitment, say the Delft researchers, it demands more management and control. An entire generation of free-market workers has begun to act according to the factory adage of the old Soviet Union: “We pretend to work, they pretend to pay us.”
The researchers conclude: “Easy hire and fire is at the cost of organisational learning, knowledge accumulation and knowledge sharing, thus damaging innovation and labour productivity growth.” The synergies are stark: if the global economy needs a return to higher-paid work, then attacking precarity is the quickest way of achieving that.
After five years of falling real wages in the UK, it’s common to hear politicians of all stripes say that wages need to rise. But it won’t be easy. Empowering union reps, or putting staff representatives on boards, can only go so far in a corporate culture where, as in one fast-food chain, your colleagues can vote you off the job if you’re not smiling enough at customers, and where a “mystery shopper” can scratch the bonus of the entire team if one member screws up.
The lessons of the 60s and early 70s – not just here but across the developed world – suggest that, when workplace cultures turn, they turn big time. The “bought-off” materialist workers derided by Marxist sociologist Herbert Marcuse in 1960 were, by the end of the decade, dancing through iconic Italian factories in conga lines, shutting down the machines. In Italy’s “hot autumn” of 1969, it was precisely the young, temporary manual workers and the salaried office staff who proved the most militant.
In Britain, three basic things would lay the groundwork for a more controlled shift of pricing power towards the workforce and away from employers: the right to a written contract; the obligation to publish salary bands for specific job titles in private-sector firms; and limiting temporary contracts to genuinely temporary or seasonal tasks.
That, plus a clear signal from government that it will stop favouring the kind of contractor who leaves jubilee stewards to sleep beneath bridges overnight. And the ability to take class actions against employers who systematically flout labour rights.
With both Labour and the Conservatives locked in a rhetorical battle over who does most for working people, the real test will be what they do for precarious workers. If power in the world economy really is about to tilt from capital towards labour, getting the milk of human kindness into your business model early might – as the Italian factory bosses found out 50 years ago – be a good idea.”