How to fix the labour market: disruption, technological automation and the gig economy

We've got a serious problem with underskilled people:
UK nations have biggest skills gaps, says OECD - BBC News

And it's not going to get any better with Brexit:
Futures Forum: Brexit: and Neets

Whatever the promise:
Futures Forum: Brexit: and providing good quality jobs

It's about investing in young people:
Tackling youth unemployment is key to improving our economy - Telegraph
Futures Forum: Brexit: and apprenticeships

And not about abandoning the forgotten, the marginalised and those who have been 'left behind':

Futures Forum: Brexit: and bad pay


We could either have massive state funding:

UK state should pay for housing, food, transport and internet, says report

‘Universal basic services’ costing about £42bn could be funded through higher taxes, say Jonathan Portes and academics

 The report suggested doubling Britain’s existing social housing stock with funding to build 1.5m new homes. Photograph: Oli Scarff/Getty Images

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Richard Partington

Wednesday 11 October 2017 00.01 BSTLast modified on Thursday 12 October 2017 17.02 BST

Free housing, food, transport and access to the internet should be given to British citizens in a massive expansion of the welfare state, according to a report warning the rapid advance of technology will lead to job losses.

Former senior government official Jonathan Portes and Professor Henrietta Moore, director of University College London’s Institute for Global Prosperity make the call for a raft of new “universal basic services” using the same principles as the NHS. They estimate it would cost about £42bn, which could be funded by changes to the tax system.

The recommendations include doubling Britain’s existing social housing stock with funding to build 1.5m new homes, which would be offered for free to those in most need. A food service would provide one third of meals for 2.2m households deemed to experience food insecurity each year, while free bus passes would be made available to everyone, rather than just the over-60s.

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The proposals also include access to basic phone services, the internet, and the cost of the BBC licence fee being paid for by the state.

John McDonnell, the shadow chancellor, said the recommendations would “help inform Labour’s thinking”.

“This report offers bold new thinking on how we can overcome those challenges and create an economy that is radically fairer and offers opportunities for all,” he added.

Although British workers are expected to be put increasingly at risk from technological automation in the coming years, leading to job losses and a potential requirement for more state support, such wide-ranging reforms are likely to face tough opposition.

Voters may balk at the higher taxes required, with the report earmarking a massive reduction in the personal tax allowance from the current rate of £11,500 to as little as £4,300 to pay for the changes.

Steady increases to the threshold at which people start paying income tax have proven popular in polling, while the Conservatives claim about 4 million people have been lifted out of income tax altogether since 2010. Lowering the rate by £7,200 would also set the personal allowance at a level unseen since the turn of the millennium.

However, the recommendations come amid growing calls for greater levels of state intervention, including nationalisation of utilities. A major study of public opinion following the general election by the rightwing Legatum Institute and pollsters Populus found as many as 83% would support public ownership of the UK’s water, while 77% back nationalisation of the railways.

The findings could increase pressure on Philip Hammond ahead of his budget next month, even as fresh figures show the amount of money available to the exchequer at risk from weaker levels of productivity in the UK since the financial crisis. The Conservatives have however pledged to increase government spending on housing and university tuition fees, as they attempt to counter growing support for Jeremy Corybn’s Labour party.

The universal basic services report suggests the private sector, charities or the state could operate the new raft of benefits. The value for an individual using all services would represent £126 of net weekly earnings, which would also stand to benefit the poorest in society most.

The authors of the report also argue their recommendations would be more affordable response to potential disruption to the labour market from technological automation than a universal basic income, which would see cash payments given to all UK citizens. They said focusing on more comprehensive service provision rather than handouts would also mean there remains a strong incentive on citizens to find work.

Portes, of King’s College, London, said: “The role of the state is to ensure an equitable distribution of not just money, but opportunity to participate and contribute to society. For that to be meaningful, there are likely to be certain services everyone should be able to access.”

UK state should pay for housing, food, transport and internet, says report | Business | The Guardian

Or we could free up the market to provide.

Here's another take from CapX and the Centre for Policy Studies:

Thursday, October 19, 2017

World Gig Economy Great Britain Labour Party Labor Market Marxism

Corbyn Doesn't Get the Gig Economy

The UK's Labour Party has a fundamental misunderstanding of the labor market and the gig economy, and it's leading to bad policy proposals.

 

by  Ryan Khurana

Jeremy Corbyn said this weekend that automation and the gig economy has released “a more rapacious and exploitative form of capitalism”. He suggests an alternative. Platform firms such as Uber, he says, should be replaced by cooperatives, where gig workers would set their own pay and conditions. Beyond the Marxist connotations of replacing private companies with cooperatives, his statements reflect his party’s continued mischaracterization of the labor market.

By attacking these platforms, Corbyn presents the Labour Party as being fundamentally anti-consumer.

The Gig Economy

Uber drivers might not be setting their own conditions, as they are paying a fee to use the firm’s matching service, but they are in control of their contract. What platform firms provide is a means to lower the transaction cost of doing business. Drivers are customers of Uber’s product, which is a search and ratings algorithm, that helps them set the prices that will optimise their revenue. By paying to use Uber’s service, drivers pick up as many riders as they want, at times that reflect their desired earnings potential.

Corbyn, however, characterizes the drivers as exploited workers and fails to support firms, such as Uber and Deliveroo, which have provided opportunities for work for new immigrants and those in low-income areas. Instead, he depicts them as exploiting the downtrodden and the weak. This view isn’t even shared by Uber drivers, who overwhelmingly regard themselves as self-employed, and are satisfied with their work.

By attacking these platforms, which have high approval ratings from their users, Corbyn presents the Labour Party as being fundamentally anti-consumer. Meanwhile, firms such as Uber, Deliveroo, and TaskRabbit are enjoying huge increases in their user bases day after day, from both sides of their market, evidently providing a valuable service.

It would keep prices high and productivity low, harming the economy as a whole.

Socialism Is Not a Solution

The Labour Party’s Alternative Modes of Ownership report, launched last month, further exemplified this anti-consumer mentality. Their desire that robotics technologies should be owned not by those who developed them, but by the workers affected by them, is an assault on the right of private property that has been fundamental to the continued prosperity of free market societies.

These co-operative modes of ownership would exacerbate the very problems they seek to address. Their fear of automation, one that is mostly unwarranted, was born of the failure to understand how technology affects jobs. It is not that jobs are destroyed by automation, rather that new technologies change the skills required from employees. Bank tellers are a classic example of this, as the introduction of Automated Telling Machines changed the skills required of a cashier from quick numeracy abilities to customer service.

By instituting models of ownership similar to the guilds of the pre-industrial revolution era, employees who do not desire to retrain to improve their work ability will be able to stop the implementation of new technologies. This may leave them free to do their work, but it would keep prices high and productivity low, harming the economy as a whole.

Changing Job Market

Mr. Corbyn’s belief that automation is destroying good jobs is unsupported by any reading of the data. Since the IT boom of the 1980s, social and communication skills have become increasingly valuable across the professional spectrum. As machines increase the productivity of almost every other task, this importance will only continue to grow. These skills, however, do not require academic retraining. Jobs requiring high social skills have had the fastest rate of job growth in the US between 1980 and 2012, and don’t call for professional qualifications.

The staff shortage in social work jobs can most clearly be explained by the fact that their wages are not market determined.

In the UK, however, those jobs demanding high social skills, such as care work, nursing, and teaching, are running short of staff. It is estimated that by 2037 the shortage in the care sector will exceed 750,000 workers.

This suggests is that there are plenty of jobs out there, but something about the labor market in Britain is preventing recruitment. Indeed, the UK is notorious for having one of the highest skills gaps between jobs and workers in the developed world, which has contributed to low productivity growth and which needs to be fixed.

The staff shortage in social work jobs can most clearly be explained by the fact that their wages are not market determined. This means that when the NHS or state schools have a labor shortage, they cannot increase wages to attract more workers. The failure of the wages to signal market demand means that the unemployed workforce does not believe that these jobs are the best ones for which to retrain.

In the US care sector, however, wages more accurately affect market demand. The median salary for nurses is almost three times higher in the US than the UK, and there is an abundance of registered nurses either working or in training.

If the Labour Party were truly serious about improving the quality of work available, and honestly wanted to harness technological innovation to improve lives, it would seek to remove regulatory barriers rather not hamfistedly make things worse by nationalizing companies and creating worker owned co-operatives.

Reprinted from CapX

Ryan Khurana

Ryan Khurana is a Research Fellow at the Consumer Choice Center and the Institute of Research in Economic and Fiscal Issues.

Corbyn Doesn't Get the Gig Economy - Foundation for Economic Education - Working for a free and prosperous world

See also:
Futures Forum: The Sharing Economy @ BBC Radio 4's Costing the Earth
Futures Forum: Innovation vs. The Nanny State: "How markets are solving the problems government can't" >>>
Futures Forum: A 'defining moment' for the gig/sharing economy as Uber faces a ban in London
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