Fractional Work - the next small thing?


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Presentation on 'Fractional Work' given by Leon Benjamin at Tory Party Conference launch of 'Link Tank' on 5.12.09

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Fractional Work - the next small thing?

  1. 1. Fractional Work The Next Small Thing? London, 22 nd October 2003 5 th October 2009 The unit of work is no longer a whole job An opportunity . Not a threat.
  2. 2. What is Fractional Work? <ul><li>Research. There is none. </li></ul><ul><ul><ul><li>Officially it doesn’t exist </li></ul></ul></ul><ul><ul><ul><li>Temporary work research only tells part of the story </li></ul></ul></ul><ul><ul><ul><ul><li>OECD, ILO </li></ul></ul></ul></ul><ul><ul><ul><li>There’s a hidden GDP that is not accounted for anywhere </li></ul></ul></ul>
  3. 3. The Emergence of 21 st Century Labour Models: Fractional Work <ul><li>The perfect labour storm </li></ul><ul><ul><ul><li>There is a tectonic shift taking place in the structure and nature of work </li></ul></ul></ul><ul><li>The emergence of fractional, ‘on-demand’ models of labour </li></ul><ul><ul><ul><li>Why is this important? </li></ul></ul></ul><ul><ul><ul><ul><li>Potential for full employment but comprised of multiple fractional sources of work </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Competitive with offshore pricing </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Big business in on the action </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Profound implications for education & training policy </li></ul></ul></ul></ul></ul><ul><li>Government legislation is causing incalculable damage to its widespread adoption </li></ul><ul><ul><ul><li>Legislation with unintentional consequences </li></ul></ul></ul><ul><ul><ul><li>How to enable and accelerate fractional work </li></ul></ul></ul>
  4. 4. A Perfect Labour Storm <ul><li>Provenance </li></ul><ul><ul><ul><li>Recent US research (cf Prof Alan Binder) estimates 30-40 million ‘high end’ white collar jobs could be lost within the next generation </li></ul></ul></ul><ul><ul><ul><ul><li>On that basis the comparable number in the UK could be as much as eight million </li></ul></ul></ul></ul><ul><ul><ul><li>Estimates of 16 million PhD students in Asia by 2015 </li></ul></ul></ul><ul><ul><ul><ul><li>0.5m PhDs in EU-27 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>In 2007 Indian IT services company receives 4m job applications in one year </li></ul></ul></ul></ul><ul><ul><ul><ul><li>2 billion people internet connected </li></ul></ul></ul></ul><ul><ul><ul><li>31% of UK workforce retiring in the next 5 years </li></ul></ul></ul><ul><ul><ul><ul><li>In the US one-fifth of the country's large, established companies will lose 40 percent or more of their top level talent in the next five years </li></ul></ul></ul></ul><ul><ul><ul><li>Un-retirement trends & ‘grey ceilings’ </li></ul></ul></ul><ul><ul><ul><ul><li>The impact of the credit crisis on pension values </li></ul></ul></ul></ul><ul><ul><ul><li>In Japan, 30% of the adult work force is made up of temporary workers </li></ul></ul></ul><ul><ul><ul><ul><li>If current government policy prevails only 1 in 2 (yes, one in two) people will be employed in Japan in the year 2050 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>10 years of ‘steady state economy’ and zero percent interest rates </li></ul></ul></ul></ul>
  5. 5. A Perfect Labour Storm <ul><li>Provenance </li></ul><ul><ul><ul><li>The under-employment of older people is costing the UK 12-30 billion a year </li></ul></ul></ul><ul><ul><ul><ul><li>A lot of spare capacity in other UK home worker based networks </li></ul></ul></ul></ul><ul><ul><ul><li>Anecdotal evidence to suggest that SMEs are the biggest buyers of offshore labour </li></ul></ul></ul><ul><ul><ul><ul><li>Particularly in the creative industries </li></ul></ul></ul></ul><ul><ul><ul><li>The OECD reports that, from the collapse of Lehman Brothers last year to the end of 2010, 25 million more people will be unemployed in the developed world </li></ul></ul></ul><ul><li>Temporary work on the rise </li></ul><ul><ul><ul><li>Short-term work contracts have increased as a proportion of total employment; </li></ul></ul></ul><ul><ul><ul><ul><li>From 12.7 to 18.3 percent in the Netherlands, </li></ul></ul></ul></ul><ul><ul><ul><ul><li>8.5 to 14 percent in Italy </li></ul></ul></ul></ul><ul><ul><ul><ul><li>11 to 12.3 percent OECD-wide over the past decade </li></ul></ul></ul></ul><ul><ul><ul><ul><li>UK currently 25% </li></ul></ul></ul></ul><ul><li>Fractional Work </li></ul><ul><ul><ul><li>An Opportunity. Not a threat. </li></ul></ul></ul>
  6. 6. Sources of Fractional Work 100,000 instant access to 100,000 rated and tested professionals who offer technical, marketing and business expertise Revenues of $200m pa 7,500 distributed home-based agents fastest-growing company (Deloitte & Touche Fast 500) Summer 2009 announced the creation of 500 posts in NY & 100 in Wyoming (Estimated) that more than 1 million people in Canada and the US make at least part of their living buying and selling on Ebay
  7. 7. Sources of Fractional Work
  8. 8. Fractional Teams
  9. 9. Platforms
  10. 10. More examples
  11. 11. Legislation is ‘arresting’ its development <ul><li>IR35 </li></ul><ul><ul><ul><li>A scheme to reclaim NI from freelance contractors </li></ul></ul></ul><ul><ul><ul><ul><li>Predicated on full time employee basis </li></ul></ul></ul></ul><ul><ul><ul><li>Just made it harder to operate as a freelancer </li></ul></ul></ul><ul><ul><ul><li>Recent FOI request: IR35 generated just £1m in 10 years! </li></ul></ul></ul><ul><li>Adding insult to injury </li></ul><ul><ul><ul><li>2007:The Chancellor of the Exchequer proposed new legislation limiting the ability of contractors to operate through the medium of limited companies and umbrella companies </li></ul></ul></ul><ul><ul><ul><ul><li>160,000 contractors </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Majority of on low pay scales; security guards, nurses, cleaners, and supply teachers. </li></ul></ul></ul></ul></ul><ul><li>Temporary Workers </li></ul><ul><ul><ul><li>Aug 2009: The controversial Agency Workers' Directive confirmed by Gordon Brown would be implemented in UK law in the next few months. </li></ul></ul></ul><ul><ul><ul><li>The EU-inspired Directive is aimed at protecting vulnerable agency workers by giving them similar rights to employees. </li></ul></ul></ul><ul><ul><ul><li>Gives freelancers rights they do not want and which will make them less attractive to the market </li></ul></ul></ul>
  12. 12. Conclusions <ul><li>The future of work </li></ul><ul><ul><ul><li>The unit of work is no longer a whole job and the traditional career, as an institution, is in unavoidable decline. </li></ul></ul></ul><ul><ul><ul><li>Unfortunately public policy is still based on the assumption that careers are the most desirable form of employment, and that they can be offered to more and more of us. </li></ul></ul></ul><ul><ul><ul><li>Fractional work </li></ul></ul></ul><ul><ul><ul><ul><li>Credible alternative to job/no-job – a new Full Time Equivalent? </li></ul></ul></ul></ul><ul><li>Government role </li></ul><ul><ul><ul><li>Is there a hidden GDP that is not accounted for anywhere? </li></ul></ul></ul><ul><ul><ul><ul><li>Don’t punish. Enable. </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Introduce new legislation that rewards people and companies for this mode of work. Tax it, fairly. </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Set standards – ‘new types of workplace’ </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Regulate these new types of ‘labour exchanges’ </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Place government (knowledge) work on these platforms </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><li>Educate our children for change in the nature of work </li></ul></ul></ul></ul><ul><li>Opportunities </li></ul><ul><ul><ul><li>Fractional workers have low carbon footprints </li></ul></ul></ul><ul><ul><ul><li>Economically active </li></ul></ul></ul><ul><ul><ul><li>Off the unemployment register </li></ul></ul></ul><ul><ul><ul><li>Make use of spare capacity </li></ul></ul></ul><ul><ul><ul><ul><li>Economically inactive (disabled, incapacity benefit claimants) </li></ul></ul></ul></ul>