Posted: 30 May 2017 5 min. read

Technology, jobs and the "gig economy"

Last week I spoke at a debate on the effects of technology in the workplace. The event got me thinking about this vast, complex subject. Here’s a two-minute summary of my musings.

It seems to me that innovation will remain the key driver of growth and human welfare. Rising prosperity and insatiable human demand seem likely to create new industries and jobs to replace those destroyed by technology. In short, robots won’t steal all the jobs. This has been the pattern of the last 200 years and I think it will persistent.

The counter-case is that today’s technologies are so transformational it will be different this time. New technologies, such as artificial intelligence, will replace not just repetitive or manual jobs, but the creative cognitive work which is makes up the bulk of work in rich countries. The number of jobs, the quality of work and wages could all suffer.

On this bleak assessment corporations which control the disruptive technologies will prosper and working people will lose out.

Some argue that the internet and mobile apps are already facilitating growth in less secure, temporary and part-time work. The so-called “gig economy”, the world of contract, part-time and temporary work, has certainly emerged as a hot political topic. It offers a new twist on an age-old issue of balancing the rights of workers and companies.

It is a sign of just how new this subject is that the first reference I can find to the gig economy in the Financial Times was last August. Since then media coverage has soared, partly as a result of a series of court rulings on the rights of part-time or self-employed workers. In a sign of the times the UK government last October commissioned the former head of Tony Blair’s Policy Unit, Matthew Taylor, to lead a review of workers’ rights and practices.

On his appointment Mr Taylor said that in a UK workforce of some 33 million people five million considered their work insecure and six million are not covered by “the standard suite of workplace rights”. He went on to say that “rapidly changing business models and working practices are continually stretching the limits of our employment rules”. 

There’s been a fair amount of critical coverage of the gig economy in the last year or so. Indeed, the term gig economy seems to have become freighted with rather negative connotations.

This is a pity because it’s not hard to see benefits too. Just as eBay has created huge value by bringing buyers and sellers together, so the internet enables those seeking work, and those needing work done, to connect more easily. It also facilitates more flexible forms of working for those, such as students, older people or those with family responsibilities, who do not want to work full-time. In the UK the great majority of those who work part-time do so out of choice, not for want to a full-time job. 

My own sense is that fears that robots will take all the jobs are massively overdone. History shows that when a machine comes along and does something more efficiently than a human, productivity and incomes rise. People don’t sit on that spare cash; they spend it, on new and different goods and services. That creates new industries and jobs. 

I think technology will continue to change the nature of work and the returns to workers, generally for the better. Where I agree with the technology pessimists is that this won’t always be so.

But this is not a new problem. Worries about the quality of work and the distribution of incomes are age old. So, too, are the solutions. From the Victorian Factory Acts to the introduction of health insurance before the First World War the Minimum Wage in 1998, governments have often sought to alter market outcomes for the benefit of those in work.

Ever since the word capitalism was coined in the Industrial Revolution it has been clear that the market, on its own, does not deliver optimal outcomes. The state is needed to set rules for the private sector and to meet human needs for which the market caters inadequately or not at all.

Far from the technology creating unparalleled challenges for the world of work they create familiar challenges. The state has plenty of levers it can use to alter market outcomes. The problem, to my mind, is not that technology or the gig economy poses wholly new problems or one to which there are no solutions.

The real question is different – how can we ensure state interventions fulfil social need without undermining the dynamism of the market system?

Even if I had an answer it wouldn’t remotely fit into two minutes. But it’s a question that is likely to preoccupy policymakers for a long time to come.   

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Ian Stewart

Ian Stewart

Partner and Chief UK Economist

Ian Stewart is a Partner and Chief Economist at Deloitte where he advises Boards and companies on macroeconomics. Ian devised the Deloitte Survey of Chief Financial Officers and writes a popular weekly economics blog, the Monday Briefing. His previous roles include Chief Economist for Europe at Merrill Lynch, Head of Economics in the Conservative Research Department and Special Adviser to the Secretary of State for Work and Pensions. Ian was educated at the London School of Economics.