Employers believe that the fixed, temporary, zero- and short-hours contracts that dominate many workplaces today give them flexibility. And this flexibility helps them to plan, predict costs, and save money.
How such flexibility helps workers is less clear. Yet students and young workers are two groups thought to be in favour of such arrangements. One example. To counter the IWGB union’s 2016 campaign seeking rights for Deliveroo workers, Deliveroo released this video showing their workers, sorry ‘riders’, embracing flexible employment like it was manna from heaven.
As you watch, notice which words are linked to flexibility.
Did you hear it? Flexibility. Freedom. Be your own boss. No one nagging at you. The intended message? Self-employment is good. Flexibility is good. Unions are bad.
Yet what exactly do we mean by flexibility? And why does no one interrogate a word, and a concept, that is generally considerably by everyone to be a good thing?
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In their 2016 paper ‘Flexibility bites back: the multiple and hidden costs of flexible employment policies‘ Jill Rubery, Arjan Keizer and Damian Grimshaw of Alliance Manchester Business School (hereafter Rubery et al.) set out to analyse the common wisdom that employment flexibility is ‘the answer to a wide spectrum of labour market and societal challenges’. Taking the UK as their case they introduce how policies of flexibility are often framed:
The UK is famous for its flexible labour market. Not only has it been responsible for an apparent jobs miracle since the economic crisis but according to the Organisation for Economic Cooperation and Development (OECD), it offers a model for the rest of Europe to follow. Its capacity for working economic miracles is said to extend beyond job creation to promoting less segmented, more inclusive labour markets […] It is also held to reduce welfare dependency and welfare costs, thereby also helping to solve problems of the public purse posed by the crisis and demographic ageing. Flexible labour markets are also equated with modernisation, with adaptation to an increasingly diverse labour force by offering opportunities for work–life balance, unlike traditional inflexible labour markets still prevailing elsewhere in Europe. Even zero-hours contracts have been categorised by some politicians as a work–life balance policy. Finally, flexible labour markets are believed to facilitate adjustment to transformative technologies (Chesbrough, 2011), thereby promoting long-term competitiveness and productivity.
And the first question to ask is surely this:
Whose vision of flexibility are we talking about here: flexibility for the worker, or the employer?
Flexibility as a concept: worker- or employer-oriented?
As the researchers point out, when policymakers ‘laud flexibility for creating jobs’ they are referring to the freedom it gives employers to reduce costs and hire and fire at will. This is ’employer-oriented flexibility’.
There is also a lot of rhetoric around ‘worker-oriented flexibility’: the ability of workers to exercise choice in how they work. Yet without any workplace power – whether in the form of union representation or being an employee with skills that are in high demand – this ‘worker-oriented’ flexibility remains largely at the level of talk, and talk only.
Indeed the only workers who can utilize this ‘worker-oriented’ flexibility are managers, certain professionals, and those self-employed workers with ‘market power’. For those who work in sectors in which agency work, zero hours contracts, and bogus self-employment are common, flexibility is a one-way street and workers are not doing any of the driving.
Here, then, are six arguments commonly used in favour of flexibility. In their paper, Rubery et al. show how each of these claims are not borne out in reality.
1. Flexibility and job creation
Politicians in the UK, until recently, could often be seen lauding the ‘jobs miracle’ in the UK in terms of high employment figures. Yet these figures, according to the researchers, mask a fall in job quality: ‘Most new jobs created from the post-recessionary employment trough to mid-2014 involved part-time employment, zero-hour contracts and self-employment.’
According to the TUC, the wage squeeze following the financial crisis has been one of the worst on record, with UK real wages recovering at a faster rate both from the Great Depression (10 years) and WWII (7 years). Indeed, you’d have to go back to the the economic collapse following the Napoleonic Wars (1798-1822) to find a comparable situation.
Both the ‘crappy jobs problem’ and the wage squeeze are particular problems for young people. As the researchers point out, ‘81% of 20 to 24-year-old agency workers in 2014 said they could not find a permanent job’; a situation that will only worsen as the economic impacts of the coronavirus pandemic continue to be felt.
2. Flexibility and better labour markets
It’s often assumed that a labour market consists of ‘insiders’ and ‘outsiders’. Insiders are those who benefit from high wages, good working conditions, and security; outsiders are those on the fringes of the labour market—traditionally those in part-time employment, and those who suffer from workplace discrimination.
The insider/ outsider thesis (also called ‘dualisation’) tends to assume therefore that the liberalisation of labour markets would therefore let the outsiders in, and democratise labour markets as a whole. It’s a simple hero-story, often well told, though not entirely accurate.
As Rubery et al. point out, ‘greater job churn does not necessarily favour outsiders’. That is, just because it is easier to hire and fire people, and the job market is more competitive as a whole, does NOT automatically mean that those from discriminated groups will benefit. Furthermore, as Emmenegger (2009) has also argued, the ‘dualisation’ thesis as a whole is simplistic and ‘wrong’ in many respects. Firstly it implies a ‘cynical’ and self-serving worldview on the point of market insiders; secondly, the fact is that ‘labour market outsiders can be expected to be as supportive of job security regulations’ as insiders.
In short, not all ‘insiders’ are on the make, and not all ‘outsiders’ want flexibility.
3. Flexibility and decreased welfare costs
Flexibility decreases the welfare bill, it is claimed. Yet the researchers write that ‘easier job creation also means easier job destruction’, adding that ‘those moving off benefits into work in the UK are found to be often stuck in a low pay, no pay cycle between flexible jobs and unemployment’. Then, due to this ‘low pay, no pay cycle’ it becomes increasingly hard for workers to meet their subsistence needs, and so the UK state has intervene in the form of tax credits; the problem being that the government ends up subsidizing low-paid work and the employers have little incentive to offer anything different.
4. Flexibility and public finances
Flexibility is meant to ensure a ‘balancing of the books’ at the macro level by controlling state spending and increasing tax revenues. We’ve just seen how state spending has, in some aspects, increased under flexible employment policies in the UK because of schemes such as tax credits. Furthermore, as Rubery et. al, point out, the ‘low pay, no pay cycle’ can lead to ‘scarring’ whereby frequent bouts of unemployment can lead to welfare dependency.
The claim that ‘more jobs equals more tax’ also does not stand up to scrutiny, as many jobs are so low paid they do not require the employer or employee to make national insurance contributions. Moreover, the authors point out that
The low tax take from minimum wage jobs in the UK is extreme compared with OECD countries: the UK’s overall tax is fourth lowest after Mexico, Ireland, and New Zealand, and the employer tax on minimum wage jobs is the lowest after Chile.
This trend towards a lower tax take is exacerbated by the rise in self-employment, as the self-employed are not expected (or mandated) to compensate for the lack of employer contributions as they are in other countries. In effect, ‘the tax system is being avoided, not evaded’; yet, either way, the consequences in terms of a lower tax take are much the same.
5. Flexibility and diversity
There is evidence some workers in the UK context, such as mothers and those with caring responsibilities, benefit from flexibility. But there’s also a downside. Many part-time contracts offer low pay, and employers still see part-time workers as ‘lacking commitment’—meaning that female talent, in particular, is undeveloped. What is more, although in Germany and Sweden workers have long had the right to request part-time work and to reduce their hours (in cases of child care, for example), in the UK this right only came in in 2014, and is still not a wholly accepted practice.
Diversity in the workplace, too, is often championed, but rarely implemented, as employers are offered little incentive to employ workers from marginalised groups. Compliance with existing legislation, for example on disability discrimination, is also low.
6. Flexibility and productivity
One final rationale for flexibility comes in the form of ‘modernised’ employment practices; that we are now moving away from hierarchical, Taylorist, standardised work regimes and towards networks and flat hierarchies, continuous improvement, and innovation based on new digital technologies.
Yet there are several problems here, as the authors point out. First, if the employer bases their competitiveness largely or in part on labour market flexibility (eg paying low wages), then the employer often foregoes or even neglects training and HR policies that might aid motivation and long-term productivity. Furthermore, the authors quote Zhou et al. (2011) who point out that businesses with a large amount of temporary contracts score significantly worse in terms of ‘innovative products’.
In contrast Aloisi & Stefano (2020) state that the standard employment relationship, or SER, can in fact be an ‘innovation facilitator’ as it is ‘a resilient and developmental legal category, capable of adapting to constantly changing socio-economic landscapes’. They also add that the SER is perfectly adequate to the demands of the contemporary economy and that ‘classifying workers as employees does not entail a loss of flexibility for employers and businesses’. [my italics]
Regarding new technologies, as this 2019 ACAS policy paper reminds us, from the worker’s perspective digital technologies can be both ’empowering and enslaving’ at the same time—as anyone who’s had to record their lectures for a Covid-imposed digital semester will understand.
Conclusion
Rubery et al. also offer several warnings. First they claim that flexible workplace policies may be undermining long-term economic productivity by ‘substituting a short-term disposable labour model for a longer term partnership and investment approach’. It is also worrying that flexibility, as a macro-level phenomenon, ‘may be undermining the economy’s fiscal base’—meaning that incentives such as tax credits will eventually become unsustainable and put ‘the long-term funding of even a residual welfare system in jeopardy’. They write that ‘flexibility as developed in the UK’ overwhelmingly favours employers over workers, and conclude that it is therefore a ‘Trojan horse for future economic ills’.
To conclude, flexibility is clearly ‘biting back’ in terms of job security, job quality, low and falling wages, less ‘real’ worker flexibility, less diversity, decreasing tax revenues, less product innovation, lower productivity, and is largely unsustainable in economic terms. Quite an achievement for something meant to free us from the employment shackles of the past!
And so considering flexibility’s false dawn and broken promises, perhaps it’s now time for workers to ‘bite back’ and claim a liveable and sustainable working life, not one where they have to bend … until they snap.
Paul Walsh
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Further reading
Zero-hours contracts have a devastating impact on career progression – Labour is right to ban them
References
Aloisi, A., & Stefano, V. (2020). Regulation, flexibility and the future of work: The case for the employment relationship as innovation facilitator. International Labour Review. doi:10.1111/ilr.12160
Briône, P., Wakeling, A. (2019). ‘New technology and the world of work: the winners and the losers’. Acas. Available at https://www.acas.org.uk/new-technology-and-the-world-of-work-the-winners-and-the-losers
Emmenegger, P. (2009). Barriers to entry: insider/outsider politics and the political determinants of job security regulations. Journal of European Social Policy, 19(2), 131–146. doi:10.1177/0958928708101866
Rubery, J., Keizer, A., & Grimshaw, D. (2016). Flexibility bites back: the multiple and hidden costs of flexible employment policies. Human Resource Management Journal, 26(3), 235-251.
Zhou, H., Dekker, R. and Kleinknecht, A. (2011). ‘ Flexible labor and innovation performance: evidence from longitudinal firm‐level data’. Industrial and Corporate Change, 20: 3, 941– 968.
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