Movie fans who know the 2015 film The Big Short, will recall the eccentric hedge fund manager who anticipates, in 2005, the collapse of the US housing market and successfully bets against mortgage-backed securities. Three years later, the collapse duly happens with catastrophic consequences for the global economy.
Big forces are at work in global labour markets and our own economy needs to try and anticipate their impact on the world of work, on which people depend for their living and the government depends for taxes in order to avoid a different “Big Short”.
Analysing the legal implications of these forces is what Osborne Clarke’s “Future of Work” team has been and will be doing and what Kevin Barrow, Julian Hemming and Greg Chambers discuss at the 2017 Osborne Clarke “In House Lawyer” series.
So, what are the key challenges for businesses?
1. The impact of Artificial Intelligence and robotics on some areas, and skills shortages in others
Many governments and employers are focusing on re-skilling their workforces in the face of technological changes which may otherwise lead to major job losses in many areas. A focus on skills may also address talent shortages in other areas.
As of April 2017, all UK employers of 50 or more staff have been required to pay the apprenticeship levy of O.5% of annual pay bill based on the total amount of earnings subject to secondary Class 1 National Insurance Contributions rising to 1 .0 per cent for firms with 250 or more employees. This may just be the start – the Matthew Taylor Report and think tanks such as the IPPR have suggested, this Summer, that employers should be able to redeem levy funds (currently an annual allowance of £15K) against all high quality training and not just apprenticeships. The levy was raised with Taylor by almost every employer at Board level to say they are looking at this to get a competitive edge.
Furthermore, the 2017 EU Industrial Strategy report calls for concrete actions to re-train European citizens to mitigate the societal impact of AI and robotics and to close productivity gaps with competitor economies.
2. Diversity targets
Improving diversity in the workforce through reaching out to the communities in which business operates is clearly understood to be economically beneficial.
Diversity without skills won’t be enough, so working with schools, colleges, universities and other trusted community groups to identify and nurture talent will be key. There will be a significant cost to employers in this, but the best ones will do it. The push factors to improve diversity will include legislation such as gender pay gap reporting and probably subsequent similar legislation in the areas of race and age.
3. The growth in non-standard employment models
There has been a worldwide growth in non-standard work relationships. Concerns about the effects of this on society have led to the removal of Employment Tribunal fees making it easier for contract and gig workers to win “status” claims and challenge unfairness.
Businesses needs to understand the status and rights of all individuals in their supply chain, and where they may face tribunal and tax claims. What balance between these groups will business require now and in the future? The answer to this question will be of great interest to HMRC given its direct impact on tax receipts.
4. Remote and flexible working
Successfully managing flexible and remote working with its requirements for the protection of confidential information, IP and trade secrets coupled with the need to ensure flexible and remote workers are productive whilst looking after workers’ health and safety and not infringing their privacy rights will differentiate businesses in future.