When I were a lad, people were saying that the challenge of future decades would be what to do with all our leisure time. Working weeks in the advanced economies had fallen and continued to fall. New technology, automation and robots, it was said, would mean that we could improve productivity yet still work less. Books like “The Leisure Shock” were fashionable. The emerging micro-technologies would, we were told, liberate us all from a life of drudgery.
They were still banging on about it when I got to university. I remember one of my lecturers talking about the 32-cubed working life – we would all work 32 hours a week for 32 weeks of the year for 32 years of our lives. That, he assured us, would be enough to keep us comfortably off. The challenge would be working out what to do with the rest of the time. It sounded pretty good to me.
Imagine my surprise, then, when I arrived in the corporate world and found that working way over your contractual hours was the norm. Furthermore, it was expected. Anyone just doing their standard hours was regarded as a shirker. “Bloody hell, I’ve been done,” I thought. “What happened to the Leisure Shock?”
Hours of work continued to rise in the eighties, peaked in the early 1990s, then fell slightly over the next two decades. Even so, no-one was talking about machines creating the leisured society any more.
The idea that technology would reduce the need for human work didn’t go away though. It has reappeared in the form of the Peak Employment theory – the idea that the advanced economies are reaching the limit of their ability to create jobs. In the 2010s, though, the Zeitgeist is less optimistic than it was in the 1970s. This time, automation promises not leisured affluence but increasingly casualised and precarious employment. This post on Zero Hedge explains:
Peak employment is the theory that due to factors such as efficiency, driven by technological innovation, and demand, developed economies may have already passed beyond the highest point of employment and that from this point onwards employment will continue to fall and unemployment inexorably rise.
Australian economist Shane Granger has been on the case too. Given Australia’s projected population increase, he argues, the country will reach the upper limit of its ability to employ more people sometime in the next decade. He notes that the use of part-time and contingent labour was increasing in Australia even before the recession and concludes:
As shown in the data there is an undeniable trend over the past two and a half decades in terms to utilise part-time labour solutions rather than traditional full-time employment. In fact in 1978 the ratio of PTE to FTE jobs was 1:5.6but this has decreased to just 1:2.4. It would only take another recessionary period to decrease this ratio further as demonstrated in the loss of FTE during previous downturns.
With an increasing working age population and a growing gap between jobs available the future is looking anything but certain, especially with the rise of labour augmentation and robotics replacing jobs quicker than they can be created.
Shane also links to this piece from ABC’s Michael Janda who argues that job creation cannot keep pace with Australia’s rising population and that therefore labour force participation is falling.
He then looked at the UK and drew similar conclusions, noting, as in Australia, an increase in the proportion of part-time workers:
In conclusion looking at the UK ‘employment type’ data is further confirmation of a global trend toward greater reliance on part-time employment, which on one hand is increasing employment to record levels while at the same time decreasing the amount of work available.
Has the UK reached peak employment yet? I’m not convinced it has but the more I look at the global data the more I am convinced we are reaching that point in the next decade.
Now, of course, none of this is very orthodox. That the ‘Lump of Labour’ is a fallacy seems to be received wisdom among economists. The idea that there is a fixed amount of work to go round is poo-pooed by most of them. More people create more demand and therefore more jobs, they argue. How, therefore, could rising populations outstrip the supply of work?
Although the amount of work is not “fixed,” neither is it instantly and infinitely elastic. It is also a fallacy that an increased supply of labor “automatically” creates an increased demand for it.
In other words, just because it is wrong to claim that the amount of work is fixed, it doesn’t mean that economies have an infinite capacity to create jobs. Or, as Antony Mason puts it:
[C]urrently the British economy is expanding at a snail’s pace, if at all. Youth unemployment (for 18–24 year olds) stands at over 20% and rising. To a large extent, this is the outcome of the failure of the labour market to adapt to a post-industrial, highly mechanised and automated world, where many of the traditional low-skill, entry-level jobs have vanished.
It would seem that, where an economy is expanding, it may be appropriate to debunk the nay-sayers by citing the lump of labour fallacy. But where an economy is shrinking or static, the job market starts to look decidedly lumpy, and letting more people into the job market is unlikely, per se, to be a catalyst for growth.
And, says, says Juliet Schor, this is a global problem:
Right now we’re experiencing glutted labour markets, in OECD countries as well as globally. Labour economist Richard Freeman estimates that over the last decade, the effective global labour supply has about doubled, from 1.46 to 2.93 billion. If people offer more hours to the market, wages fall and unemployment rises. Excess supply of labour also undermines investment and innovation, which accelerate when labour is scarce relative to capital.
I have to confess, I’m not really sure what to make of all this and I would be interested to know what others think.
That said, if employment really is peaking and slow growth is to be the norm for the forseeable future, the question then is how the advantages and disadvantages are distributed. Will it be as the 1970s optimists hoped – where we share out the work and do shorter weeks, take more holiday and retire earlier? Or will it be something we are more familiar with in 2013, where ever-increasing numbers of people take part-time and casual work, endlessly competing for the few scraps they can find?
Or have we nothing to worry about as we will soon return to full employment and all this will be forgotten?
Answers, theories and musings in the usual place please.