This OECD Forum 2019 background note will be used to prepare speakers on the panel Future of Work: Financing, taking place at the OECD headquarters from 15:45-17:00 on Tuesday, 21 May. Join the Forum Network to comment and help inform the upcoming debate and, whether you're with us in Paris or watching online, let us know what you think of the session!
We are living at a moment of time where a number of trends are converging: very fast-paced technological change, working lives where people will face many job changes, and insecurity, compounded by a “hollowing out” of the middle-class. In addition to this our (working) lives will become longer than ever, as we live into our 80s, 90s, and even 100s, with a quite high number of people envisioning working in some capacity later in life.
Unsurprisingly, these changes result in some anxiety about the future. Ensuring people feel ready and confident is dependent on sound policy decisions by governments, commitment from all societies’ stakeholders, new support networks, as well as innovative models, whether social, financial or in relation to business to address these uncertainties.
Given the constraints on public finances, new thinking is needed on how to find the necessary resources. Public finances will remain key to ensure well-functioning public employment services and effective and timely activation policies that help workers return quickly to work, and reduce costs for unemployment benefit systems, but also to ensure interventions notably in the areas of social protection and adult learning.
Important in this context could be increased tax revenues through widening the tax base (e.g. by bringing the platform economy into the tax system). Removing unintended fiscal incentives for self-employment and combating false self-employment would also boost revenues.
But business and trade unions are also increasingly investing in new training programmes to prepare their workforce for the new skills needed for their future. Some are even investing in training that will ensure that their employees have the skills they need in their next jobs or to be able to set up their own business, i.e. not necessarily with their current employer.
In this sense it is important that education systems not only focus on the technical and social-emotional skills for the new Future of Work, but also the business skills that will allow start-ups and SMEs to thrive, encouraging people to think out of the box and take risks to find the new solutions that are needed to deal with some of the challenges we are facing. Ensuring access to resource will be a deciding factor in encouraging the right environment for new startups and businesses. It will be essential and expected to be financially rewarding to drive innovation to design products and services for the massive “silver market” of older consumers.
In general, people will need to be better educated with the kind of financial knowledge to benefit more from investing their earnings with more impact for their future. In this sense digitalisation will be a great help, as fintech applications will make financial advice much more widely available.
As careers become more unpredictable, with more short-term contracts, and gigs, banks and financial institutions, will have to learn to serve customers who are structurally much more exposed to critical risks and widespread uncertainty. Very few workers have savings to cover six or more months of expenses if they lost their primary source of income. The financial services industry will need to build solutions that encourage short-term savings and create new credit offerings that are forward-looking, which can enable workers to retrain for new positions or take on more entrepreneurial endeavors in a rapidly changing economy.
New methods of risk assessment will have to be explored. In addition, banks will have to play a more active role in their customers’ lives: help finance start-ups and even provide mortgages based on payment history rather than work contract.
Finally, increasing digitalisation will also help with the other changes that will be needed to make longer working lives possible as machines take on some physically demanding roles. For example, a robot that can lift a hospital patient may extend the working life of a nurse who is treating the patient.
- How can we develop a collaborative approach to ensure the public sector, but also business, universities and other stakeholders help find solutions and invest in more adaptable social security, unemployment, health, education and pension systems?
- Are we able to put a price tag on the reforms needed?
- Who will take responsibility for those most vulnerable in our societies? How is your organisation planning to invest to make people more resilient in terms of skills, but also financially?
Continue the conversation and help us co-create the agenda
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