Businesses need to think less about convenience to their bottom line and more about the long-term effects of unsustainable and precarious work.
In 2011, British economist Guy Standing wrote about an emerging class in his book The Precariat: The New Dangerous Class: those unable to find permanent, full time employment with benefits and rights and instead have to take on precarious, temporary work offering no security. Encompassing many types of individuals from different lower to middle class backgrounds, this precarious “class,” Standing argues, has been growing since the force of globalization sped up to an uncontrollable degree in the 1980s and the rise of neoliberalism. At that time, those left to precarious work generally fell into the traditional unskilled lower and working classes in more third world economies. Fast-forward to the 21st century, and you see the growth of a precarious workforce is found in many economies around the world.
Precarious work is on the rise due to depressed global economies, which lack the ability to create sustainable work for many seeking growth and income equality. Companies looking to make up for losses and manage decline are hiring contract or temporary workers at lower wages and offering little to no benefits or social security. Despite the fact that unemployment overall is declining in a number of countries and job growth continues, many economists argue that there is no denying that today’s labor market is more unequal than generations before. And one of the hardest hit by this crisis is the very demographic many businesses aim to market their products to: millennials.
A Vicious Cycle
Millennials continue to suffer greatly from depressed economies around the world. According to the OECD, they make up close to half of the precarious workforce, and opportunities to move out of temporary low wage work are becoming increasingly scarce. With dwindling prospects, millennials are forced to take on part-time jobs. It is not unusual to find an overqualified, educated millennial working in a role that requires no post-secondary education. Without the opportunity to move up the income ladder, college educated millennials are unable to pay off student loans, leading them into more debt. While the precariat spans education and income levels and range in age and generation, businesses and governments should be most worried about this younger generation.
Consequences of Discontent
The precariat class may not be as united and unified as the proletariat in the 19th century, but the growing number of millennials making up the class should be a worrying trend. A socially aware generation, millennials utilize social media and other similar avenues to post their frustrations with their grim predicament. The growing amount of anti-austerity campaigns and movements are hugely supported and even spearheaded by this younger generation who are extremely dissatisfied by the status quo. This has led to an increase in youth-led progressive movements and flourishing extreme political groups. It will not take long before social unrest is part of everyday life, if it has not gotten to that point already in many parts of the world.
Defining a solution may be tough, particularly since the precariat is made up of a wide variety of people with varying backgrounds and means. But in not addressing an increasing number of peoples’ barriers to participate in the economy, this will contribute far more to social fragmentation and social unrest than any other factor.
What can governments do?
Focus less on job creation and more on implementing innovative labor market policies that reform job protection rules, encourage businesses to prioritize incentivizing employees fairly, create an even split between regular and precarious work contracts, and improve job loss protection. Crack down on businesses that offer unpaid internships where workers have to work for free in order to gain experience or get their foot in the door of a company. Implement tax reform that favors investment in infrastructure and public services, rather than corporate tax cuts.
What can businesses do?
Put their reputation before their profit. This will probably cause protest by companies that are trying their best to remain afloat in a dismal economic environment, but they need to think less about convenience to their bottom line and more about the long-term effects of unsustainable and precarious work. Placing labor offshore may be a great short-term solution and reduces costs, but this is only enriching the lives of a very few – often those who do not need help.
A Common Baseline
One of the most controversial solutions comes from Standing himself: Governments should offer a basic income. As Standing states, the easiest way to redistribute income and encourage growth is to, well, redistribute income. Offering a basic income would allow governments to redistribute to those who need it. There are criticisms from other economists who believe it will create idleness and stagnate economic innovation and growth, but according to Standing, there is strong evidence that with basic security, people actually work more. It will also lead to more innovative and fair jobs because it gives power back to the worker to choose a job they want, rather than a job they need; thus inspiring businesses to reconfigure their job creation strategies by either removing those jobs altogether or creating new ones that cater more suitability to the workforce. It must be noted that a basic income is different than employment insurance. Although similar to a basic income in that it is meant to encourage people to re-enter the workforce, the latter pressures individuals to accept work that might be precarious or temporary.
Even if you do not believe in the precariat class or the arguments that there is a new class forming at all, there is no denying that instability, insecurity, and social unrest continues to arise all over the world due to the continued crisis within the global economy. Despite governments around the world attempting to address unemployment or implementing austerity measures to manage decline, simply creating jobs or providing tax cuts to the middle class is not enough. Since globalization, the world economy has changed and now governments and businesses need to come to terms with those changes.
Rebecca McKeand is a research coordinator at Idea Couture. She is based in Toronto, Canada.