Living and working in the new economy
Living and working in the new economy

This free course is available to start right now. Review the full course description and key learning outcomes and create an account and enrol if you want a free statement of participation.

Free course

Living and working in the new economy

3.3 The downside of the new economy

During the US boom of the 1990s, some economists attributed the paradox of economic growth, rising productivity, but stable or only modestly rising wage costs, to the growing sense of insecurity in the labour force (Greenspan, 1998). Employment insecurity is also emphasised by sociologists such as Ulrich Beck (2000) and Richard Sennett (1998). This section outlines some of their arguments because they are central to those who take a critical view of the new economy. Their arguments also contain implications for the social sustainability of the new economy that is emerging in Europe and the USA.

Ulrich Beck, the German sociologist, argues in The Brave New World of Work (2000) that in the new economy work at all levels is characterised by insecurity and increasing inequality. Fernando Flores and John Gray (2000, p. 24) speak of the ‘death of the career’ and argue that life-long identities are giving way to ‘brief habits’. They suggest that ‘the lives of wired people are more like collections of short stories than the narrative of a bourgeois novel’. These writers all suggest that work in the new economy is organised around projects and is therefore very fluid or changeable. This is especially so in the high-technology sector where teams of people with necessary skills are constructed for particular projects and then dissolved as the project is completed. People change – or are required to change – their employer and their geographical location frequently. Consequently, connections between individuals, firms and communities are fragile. If this view is correct, these processes could undermine the social sustainability of the new economy.

The empirical evidence for claims about increasing insecurity is, however, rather mixed. There is fairly strong evidence for a growing sense of insecurity but at the same time aggregate statistics on job duration indicate little change. In a five-country European study (Ireland, Norway, Portugal, Sweden and the UK) a survey of people between the ages of 18 and 30 perceived jobs to be episodic and insecure, even though those in work tended to work long hours (Lewis and Brannen, 2000).

There has been a considerable restructuring of economies, and companies have also been downsizing, which maybe responsible for the sense of insecurity and ‘skill obsolescence’. In these circumstances employees may be willing to accept low wages in return for job security, possibly accounting for the coexistence of economic growth and moderate increases in wage costs. A study of people in low-paid work by the Institute for Public Policy Research (IPPR, 2000), a left-of-centre policy think-tank, found that the security of a full-time job and a long-term contract superseded all other ‘quality of work’ concerns for older workers who had experienced periods of unemployment, but was less important to younger respondents. An illustrative comment came from a male airport worker aged between 40 and 50 at Hounslow: ‘I'm just happy to have work, to have some security and to be earning a living.’ In the mid to late 1990s only a small proportion of new jobs coming onto the labour market in the UK were full time and permanent (Gregg and Wadsworth, 1999).

Data on employment duration, however, may not be an adequate measure of insecurity. People are sometimes more likely to stay with an employer if they are uncertain about their prospects of re-employment. By contrast, in the high-tech sector, short-term contracts may reflect employee strength rather than weakness. That is, what some workers might conceive as insecurity, an independent contractor might welcome as the freedom to move between contracts to build up their skill portfolio. Security can mean different things to people at different levels in the employment hierarchy and these different dimensions will be conflated in aggregate statistics for employment as a whole; thus, insecurity is difficult to test empirically.

A further downside of the new economy is the emerging duality in the labour force, referred to in the quotation from the OECD (2000), and increasing income inequality. Middle-class well-educated men are over-represented in high-technology jobs in firms, while women, including some who have arrived in the country only recently, are over-represented in the less highly rewarded jobs that provide services more directly for people, such as care work for children and the elderly. Boyd et al. (1995) have referred to this as a division between the high-tech and the high-touch occupations. Both types of work are very much part of the new economy and share characteristics of insecurity, but they are very different in nature and in financial reward.

The development of the personal care and personal services sector depends on whether people are willing to work for low wages. These jobs are typically labour intensive and the scope for productivity increases is limited. In some sectors, such as retail and call centres, students are employed, but this group rarely finds work in personal care attractive.

Employment in call centres is growing. Estimates suggest that there are (in 2001) the equivalent of about 400 000 full-time jobs in UK call centres – about 1.8 per cent of the workforce. Some estimates suggest that this figure will double in the next five years. But newer technologies, such as voice recognition software and direct use of the internet by consumers, could also displace these workers. Call centres deal with telephone enquiries, usually about banking, ticket bookings and billing, but especially for services such as electricity, gas and telephone, or with mail order sales. The size of the workforce in call centres varies from 20 to over 300 people. Often they are completely separate from other activities of the firms to which they belong, which means that career opportunities are limited. Typically, there are four tiers, from an operator (the lowest level) to team leader, supervisor and manager. Promotion to supervisor can be rapid, partly because of the high level of turnover. Pay varies between different types of call centre and by the level of wages in the locality, but generally it is considerably above the minimum wage, though still well below average pay (Incomes Data Services, 2001). Thus, opportunities are limited within call centres and there are no career routes from call centres to the wider organisations whose calls are processed.

These jobs are important because they are the archetypal ‘footloose’ form of employment sought after, for example, by Local Economic Development Agencies in the UK, who emphasise that low pay is prevalent in their areas in order to attract companies. Even though these are part of the new economy, many old-style working practices remain. The employees are closely monitored, their conversations are constantly recorded and employees often work from scripts designed to keep the calls as short as possible. When they have finished one call, another call can be automatically directed to them.

DD202_1

Take your learning further

Making the decision to study can be a big step, which is why you'll want a trusted University. The Open University has 50 years’ experience delivering flexible learning and 170,000 students are studying with us right now. Take a look at all Open University courses.

If you are new to university level study, find out more about the types of qualifications we offer, including our entry level Access courses and Certificates.

Not ready for University study then browse over 900 free courses on OpenLearn and sign up to our newsletter to hear about new free courses as they are released.

Every year, thousands of students decide to study with The Open University. With over 120 qualifications, we’ve got the right course for you.

Request an Open University prospectus