Steven Hill: The Downsides of the Digital Job Market

Germany has certain types of labour supports for workers. But as I discovered during the research for this book, actually not enough. In some ways Germany is starting to adopt the worst parts of the United States.

In Silicon Valley you have a number of companies that have succeeded. But the types of jobs they're creating, I mean, these ones that we've heard of like, you know, Apple and Google and then the newer ones like Uber and AirBnB, one of the companies that not many people heard of but I think is even more influential is a company called Upwork. Upwork is a company based in Silicon Valley. They have about 250 regular employees. They can use technology to oversee about 10 million freelancers scattered all over the world. 10 million! And these freelancers on the Upwork platform are doing a whole range of things from videography, you know, computer software, digital design, translation but you also see architects, engineers, a whole range of occupations and industries that if wanna hire someone I go on there and hire someone. And it's actually an online labour auction in which the workers bid on the jobs. And so there you can see a German worker saying "Oh I'd like to make about 60 euros an hour for this job", and an American worker saying "I'll take 70 dollars an hour". And then you can see workers from Thailand, India, the Philippines saying "I'll take 2 euros an hour for this job". And those are highly trained workers, they have access to technology. They can produce the product, upload it to Dropbox or email it to the person that hired them, and so, I mean, it used to be companies outsource jobs but they had to set up plants in places like India in order to do that. They don't even need to do that anymore. They can just hire them online. And so it's really creating this kind of race to the bottom in which German workers are literally competing with workers in developing countries for the same types of jobs. And also these jobs, they are contractors, they are freelancers, so they don't get any health care, they don't get any retirement, labour protection. Even if they get injured on the job, there's no protection for them, no one pays for their recovery. You're on your own basically. It's called the "on your own" society, so to speak. So this creates a huge problem. You know, many of these people are working this way. They don't have a single employer and a fulltime job where they get all their benefits and protections. Instead they're working now for multiple businesses, and they are juggling, juggling, juggling all these different jobs. And even when you have a job today it might last for two hours, or another job might last for two days. You ought to be looking for the next job and the job after that at the same time, so you're constantly juggling. Some people do OK with this kind of lifestyle, particularly when you're young you like the flexibility. But as you get older you want more stability, you want more income. You want to not always be looking for the next job, and I've interviewed in Germany a number of workers who were formerly freelancers and finally said "Oh God you know after doing that for 5 or 6 years, I was exhausted, I would do anything to find a decent, regularly paid and even fulltime job. I didn't care so much about the flexibility anymore, I wanted the security." So this is the trade-off in the economy today between flexibility and security. And the proposals in my book are to how can we make workers have both flexibility and security. I think that's really the key where Germany can lead. How do we figure out a way to make all these parttime jobs that people are working today into good jobs? Instead of the crummy jobs they are now with the flexibility but no security and lower wages.

Some people say millenials are the first post-capitalist generation, they geared to this digital economy, flexibility, you know, every generation of young people since the World War II era, whether it was the hippies, the beats, the disco divers, they all liked flexibility. No one wanted a career at that point, right? It's only as you get older that you start wanting these things. But the problem is that the current economy is not going to give you that. Because the trend in Germany as in the United States as in all over Europe is towards fewer permanent fulltime jobs. Germany today has fewer permanent fulltime jobs than it had in 2000. In fact, 10 percent less. Germany is losing fulltime permanent jobs faster than France and the UK. Germans like to lecture France about getting your economy together, and the Germans are losing more fulltime permanent jobs than they are in France. The trend in Germany as in the rest of Europe is towards greater temporary parttime jobs. In fact, the number of Germans working parttime jobs now is 27 percent of your labour force. That's an increase by about a quarter in recent years. You know, in the 2008/2009 collapse, economic collapse that happened worldwide the jobs that were lost were the good, more fulltime, more permanent jobs, and they are being replaced by the parttime temporary jobs. And in addition, in this post-crisis economy the jobs that are increasing are the low-wage jobs and the high-wage jobs but there's not that many of the high-wage jobs. It's the middle income jobs that are collapsing. Germany hasn't been as bad as some of the countries in Europe. It's created more middle income jobs. But the middle income jobs created are parttime and often temporary jobs. So this is a big problem.

A universal portable safety net. It's the idea that no matter how you work, whether you're parttime or temp worker, Werkvertrag subcontractor, mini job, solo self-employed, it doesn't matter, of if you're permanent fulltime, doesn't matter. You would get a basic safety net that includes things like health care, retirement, injure worker compensation, unemployment compensation, all the things that we associate with social welfare you would get that as a worker. And that this would be there for you, no matter how you work. If you want to work, you know, temporary jobs, parttime jobs, you want to work for multiple businesses or maybe that's the only way you can work because you can't find any other type of work you aren't gonna be shut out from the social security system which is how it tends to work today. So the way we can do that, you know, the obvious quesion is "Sure that sounds great but how do you pay for it?", right? Well, here's how you pay for it. We create for each German worker what's called an individual security account, and then every business that hires that worker would pay a little bit more above the wage, and it wouldn't be that much, it would be 2-3 euros more above the wage that would be put into this individual security account for that worker, and then that worker would be able to use that money to purchase the welfare net that the worker needs. Some of it would go into existing infrastructure that you already have for the welfare net for things like health care and the pension system. You know, you already have a fund for unemployment. But workers now don't have the money to put into that, so now there we have money that would go into that and making sure that they are covered if something happens to them, they get injured on th job. And the amount that the business would pay would be prorated to the number of hours that that worker works for that business. So if that worker only works 10 hours a week, that business would pay about a quarter of what normally that business would pay towards a work of 40 hour a week fulltime worker for their safety net needs. And if we did it this way, every worker would be covered by some degree of social security. You could have negotiations about how wealthy, how rich this safety net should be. You know, it might be a minimal one at first, then you add to it over time. Businesses might compete against each other by trying to offer a more generous safety net than other businesses. There's all sorts of innovation that would happen in the economy around a system like this.