labour_flexibility_taylor_review - RSA

Critique of pure labour market flexibility


  • Future of Work
  • Economics and Finance
  • Employment

On reading David Hume, Immanuel Kant remarked that he had awoken from dogmatic slumber. Jeremy Bentham said that the scales had fallen from his eyes. When it comes to labour market flexibility, the UK body politic has been in a similar slumber - with scaled vision in addition. 'Flexibility equals employment equals security equals mobility’ is the fundamental law of British labour market policy. And, with the publication of the Government’s response to the Taylor Review of Modern Employment practices, the scales may just be beginning to fall.

Reading the Government’s response, one would not draw that initial conclusion. It opens extolling the virtues of flexibility and repeats the mantras of the last thirty years. Kant, of course, didn’t reject reason. He rejected ‘pure reason’. However, Hume’s critique, essentially a humanist take on the biases of human cognition (one which psychology has tended to corroborate – The Enigma of Reason is to be highly recommended on this point) undermined the purity of the notion of reason. In accepting the critical point made in the Taylor review, namely that good work should be an over-arching national objective, pure flexibility is on the way out and an orthodoxy of modern British political economy is under pressure.

And remember, this is the Government of a party that has been associated with deregulation, rejection of the EU Social Chapter (and, in fact, now the EU itself), reduction of access to industrial tribunals and hostility to trade unionism. This week’s response struck a very different note in both tone and substance.

The simple fact is that flexibility has its limits and, with record levels of employment, these limits are becoming apparent. Rather than seeing flexibility as the all-encompassing answer, it is better to ask who benefits and who loses from flexibility. This is the core of the Taylor review: who, ultimately, has the power within a contract of employment? Ultimately, flexibility is a good thing if it benefits both sides of the contract. Whilst the unions have made some constructive comments on the review, this is why their call to outlaw zero hours’ contracts or some forms of self-employment may ultimately harm some workers – flexibility can be of benefit to workers as well as employers. Many freelancers or service providers are happy to sit on the books of a variety of employers, choosing the work and hours that suit them best. A right to request regular hours and to have that request taken seriously is a better starting point.

Underneath all of this is a persistent drumbeat of economic insecurity. As recent RSA reports have relentlessly emphasised, economic security is both a deeper and wider concept than job security alone. Economic security is about the degree of confidence that you can maintain a decent quality of life in the future given your current economic and financial circumstances. If you are in low paid, precarious work then that degree of confidence is likely to be low.

And, indeed, approximately 16 per cent of workers are in a category of work that combines flexibility with low pay, few savings and weak worker power and voice according to our recent survey of the modern labour market. For this segment, careful reform of labour market rules is critical. And so is wider trade union representation and penetration. But so is having some freedom to walk away and look for better work opportunities or retraining. We will have proposals on this latter dimension next week.

Finally, businesses themselves have to be required to take greater responsibility to see things from a worker’s perspective. And just this week, a delivery driver was reported to have died after the employer was accused of putting him under undue pressure. This will take a multi-faceted approach combining law, with leadership, with reform of welfare institutions, with changes to corporate behaviour and governance and smart trade union development strategies. In other words, a combined Government, business, and civil society response – an approach informing the Taylor review recommendations.

The goals have now been set. Good work matters and flexibility has to be seen in that context. Humean empiricism must come next. Labour markets are complex, evolving social and legal constructs. We haven’t got it right but we have at least, following this week’s announcement, set ourselves on a better course. Pure flexibility has been critiqued and this opens a new discussion. 

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