In 1980s Britain a leading government figure famously told the unemployed to get on their bikes and find a job. By 2000 that quip might have been “get on the Net and start up your dot.com”. During the NASDAQ boom of recent years, the advice made some sense, and getting a job with a new economy star firm was a tantalising option for many. But then came the hype: the business cycle was dead, we were told, and the hierarchical relationships between employees and employers had been flattened forever.
All too good to be true it seems, as dot.coms fold and lay off their workers. Economists are now wisely telling us that while there may be a new economy, old economy principles must still apply, such as good management, financial prudence, and so on. These basics apply to labour too, like stable work environments. But then again, workers have always played a central role in the e-commerce success story. The trouble is they can also be its victims; according to reports, US dot.coms axed some 40,000 jobs in December 2000. Redundancy, e-dundancy, it is all the same in the end.
New technology promised to empower job-seekers, many of whom have done very well, notably in e-commerce. But the accelerating pace of change and mounting work pressure are causing anxiety and insecurity. This is not a good foundation for a high performance economy. Nor would the spectre of unemployment help if the US slowdown continued, despite interest rate cuts, or spread around the world.
It is high time we stepped beyond the simplistic notion of “labour market flexibility”, where workers are expected to give up social protection, decent wages, or job security. We must restore the objective of achieving full employment by ensuring that economic policies translate potential productivity increases into real social and economic gains.
Ironically, in today’s individualistic society the importance of unions (i.e. workers acting collectively) may well increase globally, confounding those who predicted that unions would wane. In 1999, the membership of affiliates to TUAC in North America and the United Kingdom went up for the first time in two decades. Meanwhile, the US communications workers union (CWA) has seen its membership soar from zero to 10,000 in cell phone communications in just a few years.
These trends reflect a real demand among workers for protection and representation, including new economy workers. After all, working in a dot.com warehouse is not devoid of old economy realities. New unions are emerging, such as the Washington Alliance of Technology Workers (WashTec), to campaign for basics like job security, fair compensation, a company voice and education. Its membership includes mobile professionals who now recognise that moving from job to job has its downsides, especially if contracts become scarce, jeopardising pension payments and entitlements for instance. This type of uncertainty is driving isolated workers together, even across borders.
Beyond representation, unions encourage training too; indeed, OECD research shows that unions tend to raise the amount of training done by firms, spurring innovation and productivity growth. And let us remember that not everyone has benefited from the e-commerce boom. Too many workers still live below the poverty line.
E-commerce clearly has great potential for countries everywhere. Unions can counterbalance the centrifugal forces created by globalisation and technological change in a way that individuals cannot. Like businesses, they have to evolve with the times. But like businesses, the basic ground rules remain the same.
©OECD Observer No 224, January 2001