Why politicians won’t solve the jobs crisis

By Neil Patrick

Politicians simply don’t get the nature of work in the 21st century.

Let’s just dismiss the idea they just don’t care because they’re too busy looking out for themselves. The more worrying evidence suggests that they don’t understand the nature and pace of the evolution of technology. And how this is reshaping the world of work.

Today in the UK, self-employed people represent the fastest growing sector of employment. 

These people exist completely outside the politicians’ bubble. But politicians do little or nothing to support them. After all, very few will become big enough in the politicians’ term of office to make any impact on either employment levels or the treasury’s income.

The politicians therefore have little incentive to pay attention to this change. They see the future as a world which is somehow a newer, shinier version of the old one. A world which is big, bold and full of promise. It makes them feel like they are being visionary. The architects of a better future society.

So, they get busy implementing big, “important” projects . They like big things after all. But the 21st century world is a fragmented one. And it’s getting smaller not bigger. Microchips will soon be just one atom and ultimately subatomic. (Yes. Look it up). Big corporations are being nibbled away by much smaller faster moving competitors. And devolution is showing that people want smaller more local governments, not bigger more federal ones.

But the politicians carry on making uninformed and anachronistic decisions about the things that shape every aspect of our lives and how companies and individuals function. Don’t believe me? Here are just three examples.

There’s no recovery in jobs, at least not the type of jobs government understands.

In June, the Office for National Statistics released figures which show that flexible working is at a record high in the UK. The headline figure from the ONS is that 14% of the UK workforce is now either working full time from home or use home as a base. This represents a 1.3 million increase over the six years since the onset of the recession.

Total jobs growth in the same period was around 1.8 million. In other words, over two thirds of the UK jobs created since the recession began have been self-employed or based at home.

Note to government: This is NOT the future of work...
Source: Wikipedia.  Credit: Chris Brown http://500px.com/zoonabar

The Government is claiming this as a victory for its legislation. They want us to believe their foresight has enlightened bosses in helping employees find a better work life balance.

In an interview,  Co-Chair of the LibDem Parliamentary Party Committee on Work and Pensions and a Deputy Government Whip, Jenny Willott said that: "Current workplace arrangements are old fashioned and rigid. Extending the right to request flexible working to all employees will drive a cultural shift where flexible working becomes the norm and is not just for the benefit of parents and carers."

But government legislation isn’t what’s driving this change.

Clearly, this is spin. It's not government policy but in fact the explosion of homeworking that is driving Britain’s rapidly expanding army of freelancers and micro-businesses. The recent increase in employment levels is almost entirely down to a huge surge in the numbers of people who are self-employed.

In the last quarter of 2013 alone, the number of people identified as self-employed rose by a staggering 211,000 while the number of employees fell by 60,000. There are now around 4.5 million self-employed people in the UK. 

These people aren’t working from home as an alternative to going to work in an office for an employer. There is no office and no employer, so employment legislation is of no use or relevance to them. They are doing what they do in spite of what the government is doing with regard to flexible working, not because of it.

Technology is an enabler for small business but a nightmare for large organisations

Start-ups and small businesses reap huge rewards from the tech revolution. Digital media enables immediate and fast deployment of a whole range of powerful tools from video conferencing to online sales platforms.

But transitioning big bureaucracies from paper based systems to digital ones is very different. It’s a huge, complex and expensive task. As a result, we can be pretty confident that when a new government digital system actually goes live after running millions over budget and being delivered late, it still won’t work properly.

Recently, the think tank Policy Exchange reported that the UK public sector could save £24 billion a year by offering the UK population universal fast broadband and migrating all Government information and services to digital platforms.

One of a handful of politicians who do get tech, Nadhim Zahawi is quoted as responding to the report by saying: “The internet and technology is shaping the way everyone interacts, transacts and reacts and has been doing so for at least a decade… well, everyone, that is, except government.”

There is movement of course, but it is painfully slow because the Government knows just how complex, expensive and disaster prone these transitions actually are. And when reducing government debt is a priority, such initiatives have pretty low appeal.

But the good news for government is that if they shifted their attention to the small business sector, things are much less scary and there are lots of quick wins to be had. But this involves breaking the habit of thinking big and instead thinking small…

Like the relatively simple task of getting fast broadband available everywhere in the country. Not only would this transform Government services, universal fast broadband is simply the single most important piece of infrastructure the UK could introduce.

So if home working and digital technology is the future, why is the government looking to invest in 20th century infrastructures?

One of the most extreme examples of how governments make bad decisions around the future of work is the high speed rail network approved in 2012 connecting Manchester and Leeds with Birmingham and Birmingham with London. This is known as HS2.

This high speed rail network will enable people to save time moving across the UK. Some journey times such as Manchester to London are expected to be reduced by almost 50%. 

HS2 Railroutes
Source: Wikipedia   Credit: Cnbrb

But by 2033, when the project will allegedly complete, how many people are actually going to want or need to make such journeys at all? By then it seems a safe bet that current technology trends will likely have developed to a point where such journeys are too expensive, too slow and too prone to disruption if not on the train journey then in the travel to and from the stations?

June 2013 saw the original projected cost of HS2 rise by £10bn to £42.6bn and, less than a week later, it was revealed that the DfT had been using an outdated model to estimate the productivity increases associated with the railway, which meant the project's economic benefits were massively overstated.

Peter Mandelson, originally a major advocate of HS2 when the Labour Party was in government, declared shortly afterwards that HS2 would be an "expensive mistake" and also admitted that the inception of HS2 was "politically driven" to "paint an upbeat view of the future" following the financial crash. He further admitted that the original cost estimates were "almost entirely speculative" and that "Perhaps the most glaring gap in the analysis presented to us at the time were the alternative ways of spending £30bn."

Boris Johnson similarly warned that the costs of the scheme would be in excess of £70 billion. The Institute of Economic Affairs estimates that it will cost more than £80 billion. Incidentally, that figure is pretty much the same as the entire GDP of New Zealand…

But there are non-financial arguments too to conclude that HS2 is a really bad idea. HS2 is not designed for the world of 2033, when it will be complete. It’s designed for a world in which people travelled to meetings. A world in which businesses were big and business was managed via top down command and control hierarchies and nationally dispersed teams.

Thanks to the politician’s disconnect with the reality of 21st century work, the UK is now saddled with a hugely expensive white elephant that will almost certainly end up costing even more than the worst case projection so far of £80 billion. And deliver far fewer benefits than even the most cautious estimates.

It really is time for our leaders to ditch their big ideas and start thinking small.