Recommendations for a Robust Labor Market

Recommendations for a Robust Labor Market
The working environment of 2035 will be fundamentally different from that of today. To remain future-proof, employers need to work on robustness now, argue Hilde van der Baan and Gijs Linse of Allen & Overy. They identify five trends employers can capitalize on for sustainable success.

The tightness in the labor market is not yet over. Despite this there are plenty of reasons to look to the future with optimism. There are enough opportunities to organize work more efficiently, strengthen sustainable employability in the labor market and make organizations more attractive to (future generations of) workers. What are the main trends and how can employers respond?

1. Find the balance between the outside and inside of work
Dealing with ‘false self-employment’ and for self-employed workers a mandatory pension plan and insurance against disability ... these are themes that have strongly shaped the public debate on the position of workers in recent years. Anne Megens of employers' association AWVN calls it the ‘outside’ of work. At the same time, many workers are more concerned with the 'inside' of work. For example - certainly in certain sectors - they do not, or no longer, want to be in permanent employment at all, because being self-employed gives them more control over their schedule or the type of work.
Unfortunately, this ‘conscious’ choice for self-employment also exposes a problem in the labor market. It is problematic when more and more teachers and health care workers want - or need - to work as self-employed or temporary employees when, for example, this results in the less popular hours and tasks ending up on the plate of permanent employees, for whom the job in turn becomes less attractive. There is a huge shortage of technicians, which makes it problematic when many young people choose to work as flash delivery drivers after completing their MBO engineering education, because they can earn a higher hourly wage than in a job which they are trained for. To make the labor market of the future robust, it is desirable that that ‘outside’ is well regulated in ten years, but still provides sufficient flexibility on the inside. So that, for example, those who out of conviction choose an existence as a self-employed person, or want to do their work differently, are not forced into an unsuitable straitjacket by new regulations. This will only succeed if we organize work in such a way that permanent employees experience sufficient autonomy and development opportunities.

2. Make better choices about renumeration, prestige, and purpose
The 'inside' of work involves, among other things, finding the right balance between the paycheck, prestige, and purpose. Renumeration must be in order for people to make ends meet with their salaries. Yet money is no longer the only reason - or even the most important - for choosing an employer. Working people especially value autonomy. Can you work in a coffee shop with your laptop, maybe even from abroad? Can you work from home? Do you have influence over your schedule and your work? At present that is more prestigious than the company car or the exciting trips.
Even more important is purpose: making an impact together with others in a team and contributing to the social purpose of a company. Focusing too one-sidedly on the paycheck may seem attractive in the short term, but it offers no solace in the long term, because this need for autonomy and purpose plays - with differences in nuance – in all generations and all types of jobs. Employers must look critically at both their job descriptions (is the contribution to purpose clear) and the actual implementation of those descriptions. They should also continue to examine whether their terms of employment are still in line with the changing needs of workers.

3. Organize ‘learning’ better
With jobs changing ever faster due to digitization, robotization and artificial intelligence (AI), lifelong learning is becoming even more important than it already was. Large employers often invest heavily in this and, due to their size, can set up development programs relatively cheaply and efficiently. Employees of small companies usually have fewer options. They also often experience having less possibility to spend time on a development program. In addition, little is arranged for the large group without permanent employment: self-employed, job-seeking older people and people who are outside the labor market. The AWVN therefore advocates a personal 'learning budget', independent of job or employer, from which every Dutch person can draw during their lifetime. In addition, there should be a central platform - paid for by government and business - where the now hugely fragmented supply of training can be brought together and assessed for quality and relevance. The employers at our roundtable (see ‘A Huge Development Demand for Employers’, in this edition) think the government should focus on those who are not currently employed or do not have access to training. They need more basic digital skills. Our panel sees training their own employees as their own responsibility. But they are in favor of a sector-oriented approach to supply and demand to counteract fragmentation of supply, also for smaller companies. This would make the supply more relevant, reduce costs and make it feasible for smaller companies to invest in their employees.
Because the work environment of 2035 will be fundamentally different from that of today, it is not enough for employers to put together impressive training programs. They also need to guide their employees in making choices from what is on offer - if only because it can be incredibly difficult for people to make sense of both the jobs of the future and the bridge toward them. Moreover, because all jobs and the skills they require are constantly changing, workers of the future will have to change jobs regularly - or at least perform their jobs differently. Employers must therefore develop other career paths, no longer (only) linear upwards, but rather zigzagging between functions, departments and even employers.

4. Embrace robotization and artificial intelligence (AI)
Whether robotization and artificial intelligence (AI) will help solve the labor market shortage is anyone's guess. The fact is that work will change enormously as a result. At Schiphol Airport, co-bots - robots that cooperate with people - will in future do the luggage handling work in the baggage hall, supervised by the people who currently do the 'heavy work'. At Amazon's logistics centers, packages now come to people, saving miles of walking every day. At VodafoneZiggo, thanks to AI, consultants can handle many more chats simultaneously, with a higher first-time fix. Robots and AI can thus lighten heavy workloads and make work much more efficient. This is mostly good news, but a warning is also in order. Many workers worry about the consequences of these developments for their jobs. Will they still be needed in the future, and will they be able to keep up? It is therefore important to include them in these developments. In part through continuously investing in their development, employees can gain confidence that they will still be relevant on the labor market in 2035.
AI will also have a big impact on white collar work. Much executive work (such as sifting through databases or producing reports) can be done faster and more efficiently with the help of AI. The results need to be checked for errors and tested for ethical and moral aspects. At the moment this is often done, for example, by experienced lawyers or accountants, who immediately identify challenges based on their own experience. People at the beginning of their careers no longer gain that experience precisely because they no longer need to deal critically with information. Learning how to deal with the output of AI should therefore be given extensive attention to training and education programs that companies organize. At the same time, we expect that young employees, precisely because of their zigzagging career paths, will eventually become well equipped for this. Not to mention the fact that AI is developing at lightning speed and thus is likely to make fewer and fewer mistakes. 

5. Bring diversity, inclusiveness, and social safety in order
Many companies have started working on promoting diversity, inclusiveness, and social safety in the workplace in recent years, partly out of their own conviction, partly under pressure from the updated corporate governance code and the me-too movement. This might even in ten years' time still be relevant. We hope, however, that employers will have dealt with this to the extent that their primary focus can be on the many other issues that come their way: learning and development, dealing with shortages and contributing to a sufficiently robust workforce. The latter is not a given. Absenteeism in the Netherlands is on the rise and more and more people are dropping out with mental health complaints. Especially among young people, mental resilience seems to be declining. Employers will increasingly be looked to for help in dealing with absenteeism, even though the cause of psychological complaints may lie in the private sphere. We expect that providing sufficient autonomy, flexibility and training will prove to be a prerequisite in addressing this. If employees are happy with their jobs, one potential source of stress has already disappeared from their lives.

This essay was published in Management Scope 06 2023.