Economic uncertainty has increased greatly in recent times. World economies look more vulnerable than they have in a long time.
It is not only the unravelling of financial speculation in the Global Financial Crisis that has led to growth in uncertainty and vulnerability. Globalisation of economic influences, opportunities and competition resulting from the continuing fall of transport and communication costs, as well as the decline of protectionist barriers to international competition, underpin the rise in economic uncertainty.
The precise, long-run outcomes of actions taken in such a complex system are both unknowable and unpredictable. We cannot even untangle cause and effect in such a nest of feedback loops constantly evolving under its own internal dynamics. What becomes central is the importance of flexibility and adaptability, the capacity to learn and modify, to ‘go with the flow’, to turn the course of events to advantage, to be opportunistic and ‘seize the main chance’, to be innovative and to invest in capacities to do these sorts of things.
What does this mean for the job market? Employment is becoming much more precarious than when I graduated from university more than half a century ago. Businesses will look to become more flexible as well as more competitive.
The irony is, the more flexible that businesses become, the less precarious employment will be.
General skills, that give a capacity to learn new skills on the job, are likely to become more important. Careers, as we understand them, are likely to be enjoyed by people who have highly sought after ‘core’ skills and knowledge, those who are flexible, who have the general knowledge base to learn new skills as required, and who have the attitudes and values that make them good team players.
The future will likely see the resurrection of the generalist.
By the same token, some (varying) specific skills are crucial to an enterprise. Flexibility may also be gained by firms adopting a ‘core/periphery’ structure of jobs—the essential skills and jobs being held in the core as ‘permanent’ jobs—jobs which are not precarious, surrounded by a penumbra of less crucial jobs—employment in which is precarious—with job numbers rising and falling as required.
Some businesses may offer to pay people less, but guarantee their jobs irrespective of the state of the market.
This ‘permanency’ discount is likely to be substantial. In other words, tenure may return—but at a far greater price than when compared with the more stable past when I became a university academic.
Further, labour market adaptations and social innovations may be necessary to ensure low levels of unemployment and a reduction in precariousness in employment. Wage subsidies and government make-work schemes may become widespread, but most government efforts are likely to be directed at supporting careers and long-term attachments between particular employers and particular employees.
The reason for this is that, of the investments in skill and knowledge that enhance productivity, most depend on long-duration attachments between specific employees and their own employer. Otherwise, on-the-job training and learning has too little pay-off time to be worthwhile. Communities and their governments are not going to permit a situation where our human capital deteriorates in value and becomes uncompetitive on the world scene.
Governments are likely to rethink the rules surrounding work contracts to make them more likely to be durable in the face of greater uncertainty.
So, what will this mean for workers? Ultimately, workers will be required to be a lot more flexible, they’ll need to be more adaptable and willing to relocate, retrain, and accept lower pay than before, and in return, they’ll receive more durable work guarantees.