“The Future of Work under Socioeconomic
Professor Atsushi Seike *
Professor of Labor Economics, Keio University
Professor of Labor Economics, Keio University
I. Structural Changes that Shape the Future of WorkThere are three major structural changes that will shape the future of work. In the labor supply side, the future of work is basically constrained by structural changes in demography. In the labor demand side on the other hand, it is greatly influenced by structural changes in technology and market competition.
Structural changes in demography are caused by population aging in developed countries and population explosion in developing countries. The former will bring about a decrease in the labor force, so in order to cope with it, it is extremely important for us to promote the employment of women and older people. We need to develop and redesign work styles and employment practices so that the ability of women and older people can be fully utilized. On the other hand, population explosion will lead to an increase in the labor force, particularly the younger work force, so it is indispensable to ensure employment under the increasing pressure of an expanding labor supply.
On the other hand, structural changes in technology, especially labor-saving technological innovations, reduce the necessary number of employment at certain production levels. It also requires workers to acquire knowledge and skills that adapt to new technologies. There's no doubt that these factors will decisively change the future of work.
Structural changes in market competition also have a potential to change the future of work. In particular, changes in international competition over products and services may increase employment in some countries while decreasing employment in other countries. And in order to cope with the intensification of international competition, companies will need to change their employment practices so that they can substantially save labor costs.
The impact of these structural changes on labor has become a background factor for those who oppose the expansion of international trade and technological innovation, most notably witnessed in the recent Brexit vote and President Trump’s election. There is also a pessimistic view that an aging population will hinder economic growth and the improvement of employment and working conditions.
However it is impossible to stop the processes of demographic change, technological innovation, and the expansion of international trade. Population aging is also the result of improved living standards due to economic growth. Economic history also shows that in the long term, technological innovations and the expansion of international trade increase production, and as a result, expand employment and improve working conditions.
For example, the Industrial Revolution around the beginning of the 19th century signaled major technological changes which were initially met with fierce opposition, such as the Luddite movement in which newly introduced machines were destroyed in order to protect employment. However, the Industrial Revolution improved productivity resulting in increased demand due to lower prices of products, which eventually increased employment and improved working conditions. This was also the case for the introduction of large-scale production technologies represented by the automobile industry in the early 20th century and during Japan’s postwar economic growth in the middle of the 20th century. What is important is how to distribute the gains of technological innovation and international trade to workers who contributed to realizing these gains, and how to expand technological innovation and international trade so that it will improve the wellbeing of workers.
In order to make our aging economy and society more sustainable, it is extremely important for us to improve value-added productivity. This can not be realized without substantial technological innovation, and in that sense, in Japan, it may be possible to forge a win-win relationship between structural changes in the labor supply side characterized by population aging and structural changes in the labor demand side characterized by technological innovations. And it is also reasonable to transfer labor-intensive jobs from countries with declining work forces like Japan to developing countries where the workforce is increasing rapidly.Structural changes that shape the future of work are inevitable and it is impossible for us to stop them. Under these circumstances, we have to develop theories and practices that will make the future of work better for the wellbeing of workers.
My understanding is that in the past 100 years, the ILO has been making enormous efforts to improve the wellbeing of workers under changing circumstances. In that sense, I believe that the Global Commission on the Future of Work in which we are expected to discuss the ideal state of work under major structural changes is very meaningful. It is my great honor to be able to participate in the Commission, and I am very much looking forward to exchanging views with my respected colleagues.
II. My Role in the Commission
I will participate in the Global Commission on the Future of Work as a labor economist. As you know, most of the members of the Commission are experts on labor issues, and we also have the participation of business executives and union leaders. In this sense this is a Commission in which members will be exchanging their professional views from their respective fields of expertise.
Since I am a labor economist by training, I would like to talk about the future of work under changing socioeconomic structural changes, from an economic point of view. Of course these perspectives may vary depending on prerequisite conditions. Therefore, we need to explore what conditions will lead to a better future for work.
Of course concrete employment systems and labor regulations should be based on the agreement between employers and workers. Whatever fancy plans to reform employment systems or labor regulations, which are created by scholars like us or policy makers, will not be effective if neither the employers nor the workers accept them. Only reforms that can be acceptable for both employers and workers will be able to effectively improve the situation.
In this respect, discussions in the Commission will be meaningful if we are able to find the right balance between what is ideal and what is feasible. It is very important for us to be theoretically and empirically correct but it is also important to be realistically well balanced.
III. International Collaboration Through Mutual Learning
Employment policies to cope with population aging in Japan, in which aging is the most advanced among developed countries, may serve as a good reference for other countries which will be facing the same problem sooner or later. Japan’s low youth unemployment rate may offer some suggestions to other countries that are suffering from high youth unemployment. And according to OECD’s Survey for Adult Skills, Japanese adults displayed the highest levels of proficiency in literacy and numeracy among the OECD countries, and this too may have some implications for other countries.
However, the state of employment also depends on peculiar preconditions of the respective countries. For example, a policy that aims to promote the employment of older people in Japan is based on the fact that Japanese older people have a relatively strong motivation to continue working, and therefore it is not easy to transfer the same policy to other countries where older people have a strong preference for retirement. The major reason why Japan can enjoy a low unemployment rate among young people is because there are job placement practices in which students search and find jobs before graduating from university. Therefore, the Japanese case would not have immediate implications for other countries with different job placement practices in which young people traditionally start searching for jobs after graduation. This is also the case for adult competencies because there are significant differences between Japan and other countries regarding on the job training.
In international conferences, it is of course important to share the good practices of each country, but it is also meaningful to discuss our failures. In fact other countries may learn more from Japan’s failures so that they can avoid making the same mistakes. This is also an important contribution of showing Japan’s case to other countries.
The key to success in international conferences is developing a cooperative relationship among the participants who share common concerns and issues and trying to find some solutions to cope with them together. I would like to do this with my distinguished colleagues from all around the world in the Commission.
* The views expressed in this article reflect the author’s views.