We are on a quest for change – a change in the way we think about work in a rapidly changing world. It is time to reimagine the systems we use to support and enable diverse forms of work so that everyone has an equal opportunity to prosper. It’s a quest for a new social contract for the 21 st century.
The rise of technology and, in particular, the platform economy – where digital applications connect workers with employers – has further enabled new ways of working and new opportunities. However, it has also highlighted significant gaps in the social contract for work, injecting fresh momentum into calls for a new social framework for all types of work.
Governments, employers and social partners need to redesign society to ensure that all forms of work are secure and sustainable, so that there is adequate social protection for all workers. All stakeholders should work together to facilitate a gradual shift towards the individual, portable and transferable build-up of social accounts.
This report is aimed at driving the debate to devise a new social contract that is fit for purpose in today’s world, with a specific focus on work and security in the age of platforms.
The Adecco Group’s position is clear. Where there is a national system of building up social rights, workers should not lose these as they move between forms of work or economic sectors.
When it comes to platform work, the correct classification of types of work is key. If there is a de facto employment relationship between a platform and a worker, it should be defined and classified as such, and all relevant rights and obligations should apply to both parties.
Setting the scene
”Platforms change the scale and speed at which new business models can emerge and grow,” says Matthew Taylor, President of the Royal Society and chair of the recent UK government review of working practices in the modern economy.
The speed of change in the way we are working today is accelerating to the extent that it is now time for governments, employers and social partners in developed countries to act.
Platform work is one example of an increasingly diverse and flexible labour market. In the EU and Japan, 42% of individuals are not in full-time open-ended direct employment. They work part-time, are in temporary work or self-employment. 1 In the US, that figure is 40%. More than 175 million people in those economies alone!
“Forms of work are changing,” says Professor Paul Schoukens of the Institute for Social Law at the University of Leuven. “If social protection systems don’t take that into account, and instead try to enforce what was designed many decades ago, things will go wrong.”
The social contract for work, in particular social protection, has struggled to evolve with the labour market. It is often still funded through employer and employee contributions related to direct, open-ended, full-time direct employment contracts. Coverage for other forms of work falls short, leaving workers vulnerable.
What’s at stake: The challenges of a new social contract for work
More and more people are not in direct, open-ended, full-time contracts
The emergence of new types of employment in the past few decades, including agency work and job-sharing, has helped to create a more diverse labour market. It’s no longer accurate to describe direct, open-ended, full-time contracts as “standard” and everything else as “non-standard” (see box, “Diverse forms of work defined”).
The rise of the platform economy exposes the shortfall
The European Parliament estimates that between 1% and 5% of adults in the EU has undertaken paid work in the platform economy.3 The growth in this new phenomenon has raised the question of how to provide adequate social protection in an increasingly complex global labour market, including areas such as the gig economy. Other challenges will come to light as work diversifies further, including cross-border interactions between small entities, and as society tackles wider questions such as how to treat unpaid work for example in a family business, or that contributes to social value creation, such as caring for an elderly family member or volunteering.
The quest for a new social contract stretches beyond the platform economy in today’s diverse world of work. Could platform work be the catalyst that triggers improvements for all?
Different societies, different social contracts
The social contract for work should empower, not constrain, a more diverse world of work, but one-size-fits-all solutions are not the answer. Political choices mean that social contracts vary widely from country to country – and even within countries. People in diverse working arrangements in the UK, Denmark and the US, for instance, have different concerns.
Social safety nets often fall short
Even in the wealthiest countries, there are significant shortcomings in social safety nets for those who are not in permanent, full-time employment. At highest risk are informal, undeclared or unpaid workers without any contract. But many inside the formal economy, such as self-employed, temporary, and part-time workers, also face significant gaps in social protection.
In the EU, 13% of legally recognised workers lack effective unemployment insurance and 8% do not receive sickness benefit if they are too unwell to work. In South Korea, only about half of workers are enrolled in the unemployment insurance system. And in the US, a recent LinkedIn survey found that freelancers’ biggest concern is finding adequate healthcare coverage. 2
Workers and employers seek flexibility
Diverse types of work meet the needs of companies in a competitive global economy. Volatile and complex economic environments are challenging traditional business models,4 and companies are opting for flexibility: in some multinational enterprises, the share of flexible workforce (including contractors and freelancers) is up to 40%. Diverse and flexible employment arrangements give employers greater agility to access talent with the unique skills they need for a certain activity, potentially at a lower cost than direct, open-ended, full-time employment contracts.
Another driver of growth in diverse forms of work is the workforce itself. Across the OECD, for example, only a minority of part-time workers say they would rather be full time. Flexibility is especially attractive for younger people: a survey by the Adecco Group and LinkedIn found that 82% of 18–26-year-olds see freelancing as a career choice.5
Our aim with this report
In this Adecco Group report, we set out the challenges that developed countries face in providing social protection as workers and companies seek greater flexibility.
One emerging trend is exposing the inadequacies of the current social contract and pushing reform up the agenda: the rise of the platform economy.
This report is intended to raise awareness of the challenges facing policymakers in constructing social policies for work in a rapidly changing world. We hope to encourage a wide and inclusive debate in order to help create a new social contract for all forms of work in the 21 st century.
Social protection defined
Social protection encompasses the programmes designed to reduce poverty and vulnerability throughout the lifetime of individuals – and in most developed countries it is a widely acknowledged right.
The International Labour Organisation (ILO) defines these as the “policies and programmes designed to reduce and prevent poverty and vulnerability throughout the life cycle. [It] includes benefits for children and families, maternity, unemployment, employment injury, sickness, old age, disability, survivors, as well as health protection.”
Diverse forms of work defined
Many analysts and organisations, including the European Commission, follow the ILO and refer to direct, open-ended, full-time employment contracts as “standard” contracts. Other arrangements are regularly grouped under the titles of “non- standard” or “atypical”.
Denis Pennel, Managing Director of the World Employment Confederation, says we need to evolve with the times. “The current language is based on a 20th-century view, and does not reflect the new world of work,” he says. “We also need to stop privileging what some people consider to be the most secure forms of work – it doesn’t make sense any more. You can be exploited in a permanent, full-time contract, and you can be an agency worker with a decent, profitable job.”
Bettina Schaller, Group Public Affairs Director for the Adecco Group, agrees. “Policies have been built around the idea that everybody in the universe has only one aspiration,” she says. “To find a job and then to stay in that same job for the rest of their life. However, a rapidly changing world offers highly attractive and flexible ways of working for individuals and businesses that policy must now support.”
As such, this report will use the terms “direct, open-ended, full-time contracts” and “diverse forms of work/working arrangements”.
- In this report, we refer to this kind of work collectively as “diverse forms of work/working arrangements”. See box, “Diverse working defined”.
- These Are Freelancers’ Top Four Concerns For 2018, Fast Company, 15 December 2017
- The Social Protection of Workers in the Platform Economy, Forde, C, et al, European Parliament, November 2017
- No future of work without social innovation!, the World Employment Confederation Manifesto, October 2017
- Flexible Working: A career and lifestyle pathway, The Adecco Group and LinkedIn, 2017