The ‘Quality Work’ agenda: beware unintended consequences
12 February 2018
SUGGESTED
Brexit
9 February 2018
Markets and Morality
Economic Theory
The government’s response to the Taylor Review seems, thankfully, to have avoided serious changes to the status of gig economy employment. However, one thing it seems to have gone for is acceptance of Taylor’s agenda for promoting ‘good’ or ‘quality’ work. This deserves closer scrutiny than it has so far received.
The Department for Business, Energy and Industrial Strategy says that it will join with ‘labour market experts, trade unions and the business community to measure the standards of quality work established in the Taylor Review’. And quality work will … ‘be considered by the Government when agreeing new sector deals with industry, encouraging employers to show how they are investing in their workforces’.
What will this mean in practice? In his Review, Taylor specifically endorsed the QuInnE indicators of quality work. The weirdly-named QuInnE (it stands for ‘Quality of jobs and Innovation generated Employment outcomes’) is a project with €2.5m European Commission funding. It involves researchers – largely sociologists – from seven EU countries, including the UK.
The project has distinguished no less than 27 indicators of work quality, grouped under 6 headings. Given the project’s provenance, it is unsurprising to see that under the heading ‘Consultative Participation and Collective Representation’ there are four indicators – Direct Participation in Organizational Decisions, Consultative Committee/Works Councils, Union Presence and Union Decision-Making Involvement.
If we take the May government’s commitment to the Taylor recommendations seriously, it appears that companies are going to be judged on their performance on such criteria. Failure to score strongly, it appears, will exclude firms from government support under the new industrial strategy. If so, it will be ruling out any support for smaller innovative start-ups which are extremely unlikely to have the full corporatist/’social partner’ framework in place.
Even the less contentious QuInnE indicators of quality work – such as job security, convenient work time scheduling, training and progression opportunities, ‘semi-autonomous teamwork’ – tend to be associated with older, larger businesses and the public sector. It is clear that the research teams involved in the project see this type of organisation as their ideal. Whether this is what the UK needs in the face of rapidly changing technology and markets is, however, questionable to say the least.
It may be that the government will choose a different set of indicators from those which Taylor favours. But there are more fundamental issues with all attempts to pin down ‘quality’ or ‘good’ work to a set of metrics.
As Taylor himself admitted in his Review, people have different valuations of particular work characteristics. The academic literature makes it clear, for instance, that men and women have different rankings of job characteristics, with men rating pay more highly than women, and women having a stronger preference for working with people, and for public rather than private sector employment. Moreover, the valuation of work characteristics varies over the life cycle and alters with changes in family responsibilities. For example, when men become fathers they tend to work longer hours as pay becomes more important with a family to support.
There is, therefore, no unique association of levels of any work characteristic with measures of job satisfaction. Long hours, for example, are disliked by some people but are not a problem for others. Some people like to work indoors while others prefer to work outside. Fixed hours of work are good for some, but others are happy with being able to vary hours to fit in with study or caring responsibilities.
Economists, unlike sociologists, emphasise that there are always trade-offs between job attributes. The concept of compensating differentials, which goes back to Adam Smith, is very important in understanding how the job market works. The wage rate in a free market will adjust to offset other job characteristics. Dangerous, tiring or otherwise unpleasant jobs tend to carry a wage premium. Attractive, enjoyable work will attract applicants even at relatively low wages. People can be equally satisfied with different levels of QuInnE or other indicators if pay is free to adjust. To tell them that they should all aim to have the same working conditions – which is impossible anyway – is paternalistic and substitutes the values of ‘labour market experts, trade unions and the business community’ for individual choice.
If the government requires firms to provide detailed information on a government-approved set of work quality indicators, there will inevitably be a rush to judgment – as is already happening with the publication of gender pay gap data – against those businesses which don’t score highly. They will be seen as ‘bad employers’ by a public which doesn’t explore the reasons behind the metrics. Companies will then try to improve their standing by manipulating the scorecard – for example by outsourcing various types of work or by automating labour-intensive processes. It is doubtful that employees will benefit from this.
The government is also inviting pressure for further employment legislation on the basis of the indicators. In doing so they will reduce business flexibility and people’s employment options. Apparent increases in ‘job security’ can always be obtained by the sort of employment protection legislation sought by unions and sections of the Labour Party, but long experience in continental Europe has shown that this is typically associated with higher levels of unemployment and two-tier labour markets which penalise ‘outsiders’. Further restrictions on working hours may look good on Taylor’s indicators, but in France the 35-hour week has been greatly resented by many less-well-off workers who found that their earning power was reduced. And some people inevitably get around such restrictions by taking second or even third jobs.
In acquiescing to this aspect of Taylor’s agenda, the government is losing sight of the advantages of labour market flexibility and moving in the direction of the discredited European social model which Brexit should put behind us. It should think again.
The Department for Business, Energy and Industrial Strategy says that it will join with ‘labour market experts, trade unions and the business community to measure the standards of quality work established in the Taylor Review’. And quality work will … ‘be considered by the Government when agreeing new sector deals with industry, encouraging employers to show how they are investing in their workforces’.
What will this mean in practice? In his Review, Taylor specifically endorsed the QuInnE indicators of quality work. The weirdly-named QuInnE (it stands for ‘Quality of jobs and Innovation generated Employment outcomes’) is a project with €2.5m European Commission funding. It involves researchers – largely sociologists – from seven EU countries, including the UK.
The project has distinguished no less than 27 indicators of work quality, grouped under 6 headings. Given the project’s provenance, it is unsurprising to see that under the heading ‘Consultative Participation and Collective Representation’ there are four indicators – Direct Participation in Organizational Decisions, Consultative Committee/Works Councils, Union Presence and Union Decision-Making Involvement.
If we take the May government’s commitment to the Taylor recommendations seriously, it appears that companies are going to be judged on their performance on such criteria. Failure to score strongly, it appears, will exclude firms from government support under the new industrial strategy. If so, it will be ruling out any support for smaller innovative start-ups which are extremely unlikely to have the full corporatist/’social partner’ framework in place.
Even the less contentious QuInnE indicators of quality work – such as job security, convenient work time scheduling, training and progression opportunities, ‘semi-autonomous teamwork’ – tend to be associated with older, larger businesses and the public sector. It is clear that the research teams involved in the project see this type of organisation as their ideal. Whether this is what the UK needs in the face of rapidly changing technology and markets is, however, questionable to say the least.
It may be that the government will choose a different set of indicators from those which Taylor favours. But there are more fundamental issues with all attempts to pin down ‘quality’ or ‘good’ work to a set of metrics.
As Taylor himself admitted in his Review, people have different valuations of particular work characteristics. The academic literature makes it clear, for instance, that men and women have different rankings of job characteristics, with men rating pay more highly than women, and women having a stronger preference for working with people, and for public rather than private sector employment. Moreover, the valuation of work characteristics varies over the life cycle and alters with changes in family responsibilities. For example, when men become fathers they tend to work longer hours as pay becomes more important with a family to support.
There is, therefore, no unique association of levels of any work characteristic with measures of job satisfaction. Long hours, for example, are disliked by some people but are not a problem for others. Some people like to work indoors while others prefer to work outside. Fixed hours of work are good for some, but others are happy with being able to vary hours to fit in with study or caring responsibilities.
Economists, unlike sociologists, emphasise that there are always trade-offs between job attributes. The concept of compensating differentials, which goes back to Adam Smith, is very important in understanding how the job market works. The wage rate in a free market will adjust to offset other job characteristics. Dangerous, tiring or otherwise unpleasant jobs tend to carry a wage premium. Attractive, enjoyable work will attract applicants even at relatively low wages. People can be equally satisfied with different levels of QuInnE or other indicators if pay is free to adjust. To tell them that they should all aim to have the same working conditions – which is impossible anyway – is paternalistic and substitutes the values of ‘labour market experts, trade unions and the business community’ for individual choice.
If the government requires firms to provide detailed information on a government-approved set of work quality indicators, there will inevitably be a rush to judgment – as is already happening with the publication of gender pay gap data – against those businesses which don’t score highly. They will be seen as ‘bad employers’ by a public which doesn’t explore the reasons behind the metrics. Companies will then try to improve their standing by manipulating the scorecard – for example by outsourcing various types of work or by automating labour-intensive processes. It is doubtful that employees will benefit from this.
The government is also inviting pressure for further employment legislation on the basis of the indicators. In doing so they will reduce business flexibility and people’s employment options. Apparent increases in ‘job security’ can always be obtained by the sort of employment protection legislation sought by unions and sections of the Labour Party, but long experience in continental Europe has shown that this is typically associated with higher levels of unemployment and two-tier labour markets which penalise ‘outsiders’. Further restrictions on working hours may look good on Taylor’s indicators, but in France the 35-hour week has been greatly resented by many less-well-off workers who found that their earning power was reduced. And some people inevitably get around such restrictions by taking second or even third jobs.
In acquiescing to this aspect of Taylor’s agenda, the government is losing sight of the advantages of labour market flexibility and moving in the direction of the discredited European social model which Brexit should put behind us. It should think again.
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