The Power of Labour Regulation: What Governments Should Do To Successfully Reset The World Of Work

The Power of Labour Regulation: What Governments Should Do To Successfully Reset The World Of Work

Policy-makers have a great opportunity to shape the world of work for the better. Here is a list of recommendations for them to consider.

This article was authored by Bettina Schaller, the Head of Group Public Affairs at the Adecco Group, and is based on   recommendations co-published by The Adecco Group and Lee Hecht Harrison.

The COVID-19 crisis has placed labour market policies into the centre of attention around the world. For the past months, policy-makers have been under immense pressure to mitigate the immediate economic impact of COVID-19. Moving forward, however, they now have the responsibility – and opportunity – to shape the world of work for the better and (re-) build frameworks that reflect the learnings of the crisis. To guide them in this process, here is a list of recommendations that they should consider.

Photo by Thomas Kelley on Unsplash

The transformation of labour markets that began long before the COVID-19 pandemic has now been accelerated. This quick turn of events has naturally posed challenges for businesses, workers, and governments alike. The shift has been best exemplified by a set of interrelated developments, including the move towards more diverse forms of work, an increase in remote work, more digitization, and de-globalization of supply chains. 

But challenging as this sped-up transformation may be, it also presents an unprecedented opportunity to reset normal and design a better Social Contract that reflects the new set of expectations and lays down the responsibilities we all share. Drawing from the five key trends that will shape the future of work in the post-COVID era and our expertise in labour market policy, here are recommendations for governments and policy-makers to base their upcoming decisions on:

Be wise – Protect skills, not jobs

While direct financial support from governments was necessary to help workers and businesses survive the early stages of economic shock, any continuing action will need to take into account the long-term economic viability of companies and the sustainability of government finances.  Rather than propping up businesses that struggle to survive in the reset normal, policymakers should invest in economic development and worker employability. Protecting jobs that won’t be in demand in the future is an unsustainable practice that artificially holds on to the past. Incentivising and supporting workers to maintain their relevance on the labour market will facilitate transitions and alleviate barriers to employment. To that end, policymakers should consider the use of active labour market policies that encourage and empower workers during work transitions and the introduction of the so-called Individual Learning Accounts.

Be bold – Return to an open economy

Forced by the pandemic to act in their national interests, many governments have closed the external borders, reinforcing the emphasis on sovereign and domestic supply chains and inventories. However, as labour markets remain greatly interconnected, falling back on countries’ own talent supply might negatively impact their attractiveness and competitiveness. To avoid this, governments should not only re-open their economies but also modernise migration policies to serve the needs of the labour market, which should be demand-driven. 

Be open – Unleash the potential of the labour market

The organisation of work is stuck in an outdated model. For countries to create a competitive, efficient, and dynamic labour market, they need to take action in several areas. First, policymakers must enhance flexibility and allow for diverse forms of work that reflect the multiple choices of workers and needs of companies. Additionally, they have the opportunity – and responsibility – to accelerate digitization processes. Labour market reforms will need to align with the new era of virtual work, which will dramatically change the way businesses operate. For example, these changes should bring about digital contracts or establish a policy framework for AI in recruitment. And finally, labour markets need effective cooperation between the private and public sectors. To that end, governments should do more to promote Public-Private Partnerships, especially in areas such as employment services. 

Be generous – Redirect the funds in employment to benefit all types of work

As companies revisit their internal policies and strategies to forge a new type of leadership that will put people first, the workplace will change to become more inclusive. And while companies try to make their own organisations more inclusive, socially responsible, and environmentally friendly, governments need to ensure that the labour market itself is primed for job creation. Crucially, this means making it suited for all types of work. Many workers, such as freelancers and gig workers, have previously been left out from most of the unemployment and social benefits, but the post-pandemic world of work will require a change in social protection systems. To help businesses turn available work into actual jobs, policymakers will also need to consider shifting taxes and charges away from labour.

Be nimble, inclusive and smart – A solid bedrock for labour market change

Finally, in order to achieve the best policy outcomes, governments should keep three principles in mind:

  • Policies need to avoid creating bureaucratic hurdles for businesses and workers alike;
  • Policy development should include labour market stakeholders and especially social partner involvement;
  • Policiesshould be evidence- and data-based

To access all recommendations developed jointly by the Adecco Group and LHH, please click here.

You might also be interested in:

Countries At A Crossroads: The Speed Of Future Recovery Will Depend On Today’s Decisions

No Worker Left Behind: Why COVID-19 Could Deliver A New Social Contract

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