The labour market will not be the same in future. In the 21st century we will witness the emergence of a wide variety of contractual employment arrangements and both policymakers and social partners will need to modernise labour laws to ensure legal certainty, writes Denis Pennel, managing director of the European Confederation of Private Employment Agencies (Eurociett), in an April paper.
This contribution was sent exclusively to EURACTIV by Denis Pennel from Eurociett.
''The financial and economic crisis has spurred debate on the changing labour market. It is therefore legitimate to ask: under what form of contractual employment relationship people will be working in the 21st century?
The answer is probably not one, but many of them! The future of work will mean an increasing variety of contractual arrangements between a worker and an employer. The evolution of labour law over the last 20 years has already paved the way for the development of many 'atypical' forms of employment such as temporary agency work, fixed-term contracts, casual work, civil contracts, zero hour contracts, job sharing, on-call work, telework, apprenticeship and family jobs.
As estimated by the European Commission in 2006, 'the share of total employment taken up by those engaged on working arrangements differing from the standard contractual model as well as those in self-employment has increased from over 36% in 2001 to almost 40% of the EU-25 workforce in 2005' (Source: Commission Green Paper ‘Modernising labour law to meet the challenges of the 21st century’ – November 2006).
This explosion of different types of contractual arrangements between employers and employees reflects the growing diversity of the workforce, and notably the massive entry into the labour market of women (in the EU 27, they have almost reached the 60% threshold of the total workforce and have filled 6m of the 8m new jobs created since 2000) but also the increasing complexity of the labour market due to new types of industrial production (e.g. zero stock, just in time, outsourcing) linked to the globalisation of our economies.
The employment relationship: From subordination to a win-win deal
The 20th century employment relationship was based on a bilateral link aimed at merging the needs of the manufacturing-oriented economy with mass production, full employment, collective behaviour and strong trade unions. In such a context, the contract functioned as a pivot between the permanent, full-time employees and the single entity employer accountable for the obligations placed upon him.
Indeed, following the 19th century Industrial Revolution, workers became more closely tied to the employing organisations, upon which they depended for everything from benefits to professional development and social interaction. 'Job' began to be used to describe a worker's ongoing contractual relationship based on 'subordination' to an employer.
Today, with our society moving towards a knowledge-based economy, there has been a progressive increase of individualistic people's behaviour. This trend will prompt a clear change on where, when and how people work and enable organisations to be more agile and innovative. While large multinational companies will consolidate and become even more global, temporary or 'virtual' SMEs will be set up for the length of punctual and targeted projects. These companies will have smaller regular workforces but increasingly networks of contingent workers. The model used today in the construction or entertainment industries could become the norm rather than the exception: individual workers will be moving in and out of a company's doors on a just-in-time, project-by-project basis.
This will imply massive changes in terms of employment relationships. The contractual labour arrangement will no longer be based on a 'subordination' principle but on a 'win/win deal' based on the respective added value provided by the two parties.
In this context, the ability for companies to quickly staff up or down will be of paramount importance, focusing on key talent, alliances and outsourcing of non-core activities.
As such, the workplace would no longer be a principal source of social interaction or professional networking.
Moreover, workers would not rely upon employers for professional development, health insurance or retirement saving plans.
A broader landscape will open up for labour intermediation
In this changing labour market, the role of private intermediaries will become crucial: individual workers will join independent organisations whose primary purpose will be to provide stable 'homes' for workers as they move from job to job.
Recruitment will become more and more about not only matching skills with vacancies, but also about matching people with organisations and matching people's individual expectations/constraints with professional needs.
The future might actually grow from the past. During the middle ages, the 'Guilds' (i.e. craft associations) were labour market intermediaries organising training, working conditions and quality professional standards. Also looking at the pre-Industrial Revolution employment model, most workers were self-employed (e.g. farmers, shopkeepers, artisans) and belonged to professional associations and local communities that provided means for finding jobs, sharing learning and skills and meeting with peers.
The 21st century has to reinvent and modernise these professional associations to take on the 'life maintenance' role that has been played by direct employers, using new expertise and technologies available. Social networks like LinkedIn or Facebook are in a way recreating a locus of social interaction and identification.
This evolution would of course create a huge new challenge, because the protection of workers' rights mechanisms has been designed for a permanent workforce. The main issue to be tackled is how to ensure that workers, regardless of the kind of contract or employment relationship they hold, nevertheless share some common rights, which are legally recognised and enforced.
Policymakers and social partners will need to work together to modernise labour laws to ensure legal certainty with regard to new work and employment relationships. They will also need to reinvent health and social protection to ensure portability and transferability of rights. Of course, new economic and work security, assured through reasonable expectation of employment continuity and unemployment/retirement schemes, will have to be developed. All that will envision new career paths and upward mobility through smoother transitions in the labour market.
We should not take it for granted that the typical employment relationship of the 21st century will remain the direct, permanent and full-time contract. If new and innovative forms of work security and social protection are established for what are currently called 'atypical contracts', then already this opposition between permanent and flexible contracts is outdated.''