An uncertain future As companies seek greater cost variability, jobs will become less secure and companies more transient In the face of rapid technological change and a globalised economy that allows new entrants to disrupt markets at the drop of a hat, businesses increasingly crave agility In many cases, companies will seek to achieve that agility by growing the section of their workforce that consists of temporary, part-time or freelance workers This will have significant ramifications for workers’ lives As Robert Reich, chancellor’s professor of public policy at the Goldman School of Public Policy at the University of California, Berkeley, explains in this interview with The Economist Intelligence Unit (EIU), the shift will place increased pressure on workers to promote their professional profiles to win work, while reducing their ability to borrow against future earnings Meanwhile, the very nature of companies themselves will shift, from communities with a shared identity to fluid associations of workers temporarily united behind a brand This will radically reshape the way companies employ and deploy human resources, and what it means to be a business This interview is part of an investigation into the future of work by The Economist Intelligence Unit, sponsored by Ricoh Europe For more, visit http://bit.ly/eiufuturework The EIU: In your view, how will labour markets evolve in the next 10-15 years? Professor Robert Reich: Jobs will become ever less secure Most people will not be able to predict from one month to the next how much they’ll earn Their hours will be less predictable as well Professor Robert Reich Goldman School of Public Policy, UC Berkeley Photo: Perian Flaherty What is the cause of this trend? Companies are moving from a fixed-cost business model to a variable-cost model so that they can be more nimble Employment is the biggest cost of all, so obviously a variable-cost job also means less secure and less predictable employment Is it a global phenomenon? It’s the direction in which all work is heading, but the United States is in the lead Other nations impose more regulations and constraints in order to make work more secure and predictable, and some nations still have relatively strong labour unions that are also holding on to more secure and predictable forms of work How is this trend manifesting itself already today? In all sorts of ways: more contract work, more freelancing, more temporary work, more parttime work, more work based on billable hours, and less certain hours and pay even for people considered to be full-time employees S P O N S O R E D B Y: What leads you to believe that this is a long-term trend? The structure of the economy is shifting radically Technologies are putting a premium on nimbleness, the capacity to change direction very quickly Companies have no choice but to be flexible and fast Technologies are also making it very efficient to hire large numbers of people for a relatively short time (look at the Amazon Mechanical Turk for an extreme example) Will job insecurity affect all industries, or will some be left unscathed? All industries will be affected eventually The last bastion of security will be tenured professors like me, but we’re a dying breed What are the implications for the economy, for society, and for individuals? The structure of the economy is shifting radically Companies have no choice but to be flexible and fast Professor Robert Reich Goldman School of Public Policy, UC Berkeley The net result is more personal and familial stress, more willingness on the part of working people to take on whatever work comes along (for fear that it will not be there in the future), longer and more irregular working hours, greater emphasis on self-promotion and selfmarketing, and—in macroeconomic terms—less willingness to take on lots of debt and instead more emphasis on saving As in so many other areas of the economy, people who have the most to offer in terms of their education, talents and connections will well Others, less so And what will the impact be for businesses? The very definition of a company will be up for grabs because it will be composed of so many moveable and temporary parts Essentially, a company will consist of a key capital asset, such as a valuable piece of intellectual property, coupled with a brand name All else, especially its workers, won’t really be “its” workers at all Not even the core “talent” will stick around for long At the level of the firm, HR departments will be less concerned about employee benefits and more about temporary recruiting Is this trend inevitable, or can we something about it? Obviously, we can something about it If the public doesn’t like the degree of insecurity the market is generating, it will push government to regulate the labour market and companies to provide more stability and security But, of course, any such rigidity will come with a cost— less nimbleness and efficiency Will the cost be worth it? At some point, almost certainly S P O N S O R E D B Y: ... society, and for individuals? The structure of the economy is shifting radically Companies have no choice but to be flexible and fast Professor Robert Reich Goldman School of Public Policy, UC... many other areas of the economy, people who have the most to offer in terms of their education, talents and connections will well Others, less so And what will the impact be for businesses? The. .. government to regulate the labour market and companies to provide more stability and security But, of course, any such rigidity will come with a cost— less nimbleness and efficiency Will the cost be worth