Friday, 28 March 2014

Two Futures of Work

By Tom Lloyd
Visiting Fellow to Northampton Business School

Two contemporaneous, but very different arguments about the future of work are struggling for ascendancy.

The first is the ‘opportunity’ argument, which sees new technology as offering not only greater efficiency, but also much more choice in the way we work, and how much, and how long we work. It loosens the bonds that have hitherto tied us to organisations, workplaces, fixed hours, and careers devoted to climbing hierarchies. It makes labour markets more efficient, and purges them of prejudices that have reserved almost all of the power in organisations and most of the wealth they create for white males.

The ‘opportunity’ argument foresees re-configurations of work, and re-assignments of roles and responsibilities that will reduce the sacrifices, in terms of work-life balance, that people have had to make until now for fulfilling careers.

The other less optimistic, but, allegedly, more realistic argument about the future of work is the ‘threat’ argument. We’re living in a fool’s paradise, according to this view, if we think we can take our noses from the grindstone and re-arrange work patterns in ways that suit us more, and suit organisations less. At a time when Far Eastern people, in particular, are out-working and out-studying us and so poised to ‘eat our lunch’, as New York Times columnist, Tom Friedman, puts it, we simply can’t afford to burden ourselves with such self-indulgent notions.

As Amy Chua warned us, in her book Battle Hymn of the Tiger Mother (Penguin, 2011) the economic future belongs to the industrious and diligent. If our children don’t study until midnight, and we don’t work till we drop, we’re going to lose the world economic war, and our living standards will plummet.

According to this view, seeking a ‘better’ balance than the market produces between assignments of power and influence, and work and home life is like re-arranging the deck chairs on the Titanic. The modern world is intensely competitive. The only societies than can be expected to prosper are those with a strong work ethic.

So which argument is right? Time will tell, but my money is on the ‘opportunity’ argument, for two reasons.

First, the new work patterns that are emerging as people choose to work less, strike a different balance between work and home life, share jobs, retire early, or gradually (what Garrick Fraser, calls the ‘glide path’, will lead to better allocations of human resources, and make is easier for ability and talent to move to higher value uses.

Second, as the excellent Simon Kuper has pointed out (‘What are we working for?’, Financial Times, February 15/16, 2014), the current debate about the future of work in western economies is a sign of affluence, not of decadence. Working less and more flexibly is the reward for economic success, not a herald of economic failure. It is what economic growth is for. As Asians approach western living standards, they will choose to work less and more flexibly just as we have done.

We’re adaptable creatures. When we’re poor, we dedicate all of our energy, time and ability to escaping poverty. When we’ve succeeded we find we have more choice, and some of us choose to work less.

Find a short biography of Tom Lloyd's on the CCEG website HERE, along with his professional blog on business and management.

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[The views and opinions expressed in this blogs by guests or members of the CCEG are those of the author, and not of the CCEG or the University of Northampton Business School]

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Wednesday, 5 March 2014

Immigration is a Good Thing

By Tom Lloyd
Visiting Fellow to Northampton Business School

If people were beating a path to your company’s door it would be a cause for celebration. More sales, more profit, and a higher share price. What’s not to like?

When people beat a path to our country’s door, a growing number of Britons turn to those who promise to stem the inflow. They fear that immigrants will steal their jobs and, by adding to the burden of welfare, increase taxation.

But all academic studies of the economic impact of immigrants show we are much better off with immigrants, than without them. A 2010 Brookings Institution survey of the academic literature found that ‘immigrants raise the overall standard of living ..... by boosting wages and lowering prices.’

They enlarge the economy and by making some businesses viable that would probably have failed without them, they create new jobs, and increase employment opportunities for everyone.

It is generally accepted that high-skilled immigrants increase the rate of company formation and innovation. Studies have shown that immigrants are more likely than native-borns to obtain patents for product and process inventions. High-skilled immigrants also bring to their host economies valuable knowledge of foreign markets, and cultures.

Although it is not so widely accepted, low-skilled immigrants also strengthen the economy.

Because they are younger, and more mobile than native-born workers they improve the efficiency of the labour market, and the problems caused by labour immobility, such as lower economic growth and the UK’s serious regional economic imbalances.

And, far from adding to it, immigrants actually ease the so-called ‘welfare burden’ in two ways.

First, because they are relatively young they impose no additional age-related welfare costs, and so help to defuse the ‘demographic time-bomb’ associated with the withdrawal of the baby-boomers from the workforce. Without tax-paying immigrants, the British pensions burden would soon become economically intolerable.
Second, because the marginal, per capita cost of welfare falls, as the population expands.

In other words, relatively young immigrants are likely to increase tax revenues more than they increase welfare costs. They have been shown by study, after study to deliver substantial net benefits to our economy.

It is, therefore, to be deeply regretted that demands for controls and ‘caps’ on immigration are likely to play a key role in shaping Britain’s political landscape over the next few years. All parties are committed, in one way or another, to respond positively to the apparent compulsion of a minority of members of native-born ethnic groups to harm themselves economically.

I’m not so na├»ve as to suppose there’s anything rational about the anti-immigration political groundswell. But it is one of the great tragedies of our age that the emotional responses of many native-born Britons to immigration do not include pride in the fact that people from other countries are attracted by the British qualities of stability, tolerance and liberalism, and the British principles of fair play and equality before the law.

The problems caused by tensions between ethnic groups are commonly attributed to immigration, but have little directly to do with the new immigration that ‘caps’ are designed to control. Instead of pandering to, and seeking votes from, irrational fears about rates of immigration, politicians would serve their constituents better if they lauded the economic benefits of immigration, and suggested that new immigrants enrich and add ‘hybrid vigour’ to our culture.

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[The views and opinions expressed in this blogs by guests or members of the CCEG are those of the author, and not of the CCEG or the University of Northampton Business School]

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