The future of work is not precarization but polarization

Work is always undergoing changes; the big turning point currently is polarization, the ever-growing divide between people in the labor market. Precarization is not actually the prevailing phenomenon, and, in fact, most workers remain in stable, full-time jobs.

Polarization means that, for example, service industry jobs are becoming increasingly uncertain and short-term. Meanwhile, stable and well-paid jobs fall overwhelmingly to those highly educated. Some middle-income jobs are also vanishing due to polarization – entire occupations are disappearing, while new, either high or low-skill jobs are appearing in their place.

–  For some, careers become fragmented, for others they do not. For instance, over 90 percent of highly educated technology industry employees have stable, full-time jobs. For them, the change does not concern their working career but the content of their work, Satu Ojala, postdoctoral research fellow at Tampere University, says.

Ojala is the responsible researcher of the “Fragmented Work Careers?” research project funded by the Finnish Work Environment Fund. She has done research on job quality and uncertainty, part-time and fixed-term work, working time and place as well as working conditions of young people. The research project examines how the changes in working life impact the careers of employees working in the industrial export industries. These industries require specialized competence and constant adaptability to changes.

In contrast, employees and seasonal workers in industries such as trade and tourism work under varying short-term contracts. The service industry makes up two thirds of the entire labor force in Europe. Services are also increasingly polarized because they cover everything from specialist consultant work to outsourced cleaning services.

Technologies are not a force of nature. Accepting certain work regulations is a political choice because technologies themselves cannot overstep political decision-making or the trilateral and bilateral negotiation system. Uber serves as a good example: the ridesharing company was first banned then later legalized, Ojala says.

Technologies have enabled a brand-new platform economy, where the changes in the use of labor force have become politically more acceptable. Yet, but a handful of people profit from these platforms: only 0.3% of the employed have earned at least a fourth of their income from platforms, according to a recent survey by Statistics Finland.

The platform economy has been linked to the decline and precarization of work. For some industries, declining employment conditions and disappearing advancement opportunities and uncertainty are what loom ahead. However, Ojala emphasizes that the technological advancements offered by the platform economy do not exceed the society’s chance to agree on job regulations.

–  Technologies are not a force of nature. Accepting certain work regulations is a political choice because technologies themselves cannot overstep political decision-making or the trilateral and bilateral negotiation system. Uber serves as a good example: the ridesharing company was first banned then later legalized, Ojala says.

According to Satu Ojala, the will to weaken job regulations is a political phenomenon happening across Europe.

Transferable skills are important

Tech companies must invest in technology and skills in order to continue their existence. This also applies to employees, if they wish to make it in the labor market: constantly learning new skills is every-day for employees.

Investments benefit companies as well as their employees. When trained and given opportunity to develop, employees maintain their status on the labor market. Similarly, companies cannot compete unless they upgrade the skill set of their employees and invest in technology that increases their productivity.

Transferable skills such as language skills were found to be important to those export industry employees studied by the “Fragmented Work Careers?” research project. These skills are required both in high and low-education positions. Transferable skills could also involve varied expertise and salesmanship involved in selling, for example, elevators and their maintenance to foreign customers.

–  Transferable skills include communication, leadership, and teamwork skills. Generic skills are becoming ever more vital. All actions involving upgrading skills are clearly necessary. Training benefits both the employee and the employer, Ojala says.

According to Professor of Economics Jari Vainiomäki, the effects of technology, robotics and artificial intelligence on employment and income disparity are widely researched, but the questions are highly controversial. He also mentions polarization as a phenomenon where employment is focused on the opposite ends of the income spectrum, further widening the income gap in the process.

–  As a whole, new technology does not lead to lower employment, only the proportions of certain occupations and education levels are changing. New commodities are forming, and their production also requires human labor. New technology may however increase the wage gap because the tasks disappearing are middle-income jobs and the ones growing are low-income service industry jobs or high-income jobs demanding expertise, Vainiomäki explains.

According to Vainiomäki, attitudes toward technology can be sharply divided into two extreme ends: techno-pessimists and techno-optimists.

Pessimists believe that robots will replace the majority of human labor and that the masses will be left without jobs and income. Only highly skilled, highly educated workers will have enough work developing new technology. As for techno-optimists, they are convinced that developing, producing and using new technology will create new job opportunities and occupations that will replace the occupations and jobs that are currently disappearing.

The effects of climate change on public finance may be considerable. Tuomala believes that managing climate change will demand some form of increase in taxation.

Public finance depends on production and economic growth that soon must become sustainable in order to combat climate change. How can we make economic growth sustainable in future conditions?

–  The employers we interviewed clearly had the will to reform their production in order to meet the big challenges set by climate change. But, in reality, money talks, and politics has the power to change these things, Ojala says.

Taxation is an important tool for political steering. In economic terms, cutting work taxation and, in turn, raising environmental taxes and taxes on natural resources offers a double advantage: we pollute the environment less therefore promote sustainable development and improve conditions for employment.

Matti Tuomala, professor of economics, says that the effects of climate change on public finance may be considerable.

Tuomala believes that managing climate change will demand some form of increase in taxation. This will also be necessary due to, for example, our ageing population. The key question here is how to raise taxes in a fair manner. These tax increases should primarily target wealth instead of work and consumption.

– Having to pay the losses caused by the long recession and the costs caused by climate change and the ageing population, taxation must also be increased in the future. In other words, how do we disrupt this long-running development where consumption and work income, including social security expenses, have been increasingly heavily taxed, while taxes on capital income, wealth and capital transfer have been reduced, Tuomala states.

Tuomala points out that this development has been going on for decades in all developed countries. The development began because it was justified by meeting the challenges caused by globalization.

– This politics lead to the benefits of globalization having gone exactly to those groups whose taxation has been reduced, Tuomala says.

Public finance is largely founded on taxing work income. Work is taxed at least in terms of income tax, social security expenses and consumption tax. For example, corporate and environmental taxes are also forms of taxation on work. According to Tuomala, combating climate change will not remold our system of taxation. However, changes in energy and traffic taxes will also have consequences on working life.

– Sectors crucial to climate change such as energy production and traffic will have to adapt if we are to solve climate change. For both low and high-income positions, the need for adaption is presumably less essential than the changes brought by robotization and artificial intelligence.

Tuomala refers to the 2006 Stern Review report by economist Nicholas Stern that is known as the most extensive report on the financial effects of climate change that generated a lot of discussion on the topic. The report considers climate change as the single biggest failure by the financial market.

In 2017, the High-Level Commission on Carbon Prices lead by Stern and Joseph Stiglitz released the report Carbon Pricing. The report calls for a drastic increase in the price of coal. The lack of demand is weighing heavily on global finance, while public economies are struggling due to insufficient tax funds.

– The most recent book by Nicholas Stern, Why are we waiting? offers an up-to-date insight into the issue of climate change and voices concern over our postponed counteractions. The Stern-Stiglitz report claims that decreasing carbon emissions in our current global finance might even strengthen economies. A global carbon tax, not necessarily the equal amount in all countries, may help tackle both issues. You see, it is always better to tax bad rather than good things. Taxing carbon would also provide an incentive for innovations that reduce energy consumption and emissions, Tuomala explains.

We need much tougher measures than quantity restrictions. The Stern and Stiglitz committee supports restricting the use of coal in electricity production. These types of restrictions would force energy producers to immediately develop new zero-emission technology.

However, unregulated markets cannot achieve this nor any current ruling political powers, professor Matti Tuomala states.

Tuomala sees no principles that could block ecologically and socially sustainable economic growth.

– However, unregulated markets cannot achieve this nor any current ruling political powers, he states.

A functioning social security system is part of the labor market, and it too is based on economic growth and growing production. Satu Ojala considers climate change as a challenge for social politics and the research of working life that is fundamentally linked to economic growth and energy consumption.

– Our entire social policy is based on economic growth producing good, the machine keeps grinding on new growth, producing more and investing more. The entire social security system is connected to income and increasing production. It truly irks me when people think that climate change would evidently create massive new markets. So, let’s dig up the next minerals from the deep inside the earth and turn it up a notch, Ojala says.

Ojala argues that social security should take financially into account the means to be active that are not dependent on work. These should include, for instance, volunteer work, independent studying and the care for a relative, child or parent. The current situation poses the risk of falling into the poverty trap for people who stay in these statuses.

Acknowledging activity outside of work gives credit to societal work, creates new roles for active citizenship and enforces social security.

 If energy becomes scarce and expensive, we should aim to produce even less energy consuming means of production.

Inexpensive resources are vital to industry. One of the most important ones is energy, and the use of most new technology is based on easily available and affordable energy. At the same time, combating climate change creates pressure to make energy production low-carbon and to reduce energy consumption.

–  If climate change reaches the point where energy can no longer be produced at the rate it is now, the crash in energy production would evidently impede the use of energy consuming technology. We may then already be so far down the road to earth’s destruction that these questions hardly matter,” Jari Vainiomäki states.

Vainiomäki believes however to be possible to develop technology that consumes less energy, and there are incentives for it.

–  If combating climate change leads to increased taxation and higher prices of emissions permits and in consequence the rise of energy prices, as a result, energy consuming and high-energy means of production will be used less and other efforts such as labor force are used more, Vainiomäki explains.

If energy becomes scarce and expensive, we should aim to produce even less energy consuming means of production. If robots and other computer-based production becomes relatively more expensive, the combat against climate change may reduce their use, but it will not end it altogether. Technical advances are seen also in this sense to be adaptable.

–  So, we should develop new technology that uses less expensive means of production and more cheap, abundantly available means. Then, as energy efficiency improves, new technology can be utilized just as before or even more even if the price of energy were to change, Vainiomäki says.

Translation by Salli Hakola. The translator is a Master’s-level student of Multilingual Communication and Translation Studies at Tampere University. The translation was produced as part of a project course in English Translation. The article was originally published in Finnish in 2019.