Wage productivity and new technology for a better work future

You know, traditional economists are very optimistic that automation and other forms of technological advancement should lift wages across the economy because they make workers more productive. But those economists have a misplaced faith that workers will get paid more just because they’re more productive. That’s how the free market textbooks say it should work, but in practice, it doesn’t work that way. Improved productivity clearly creates a bigger economic pie, and that gives an opportunity for workers to win higher living standards, but it never comes to them automatically, it never falls like manna from heaven.

Workers will only get the benefits of higher productivity in the form of higher wages and potentially in the form of shorter work time as well, only if we’re organised enough to press employers to improve their offer, to negotiate better terms and conditions, and that way win ourselves a share of the pie. There’s absolutely no guarantee that technology in and of itself will improve workers wages, unless workers have the power and the ability to capture a bigger share of the pie.

There’s a lot of kind of misplaced utopian stories out there, I think, that people are arguing that new technology will somehow allow everyone to become their own boss, to go out in the world and make their own way, to set up a gig type business, you know, to work from task to task and be freed from a normal job, a kind of an individualistic idea of how technology will change the future of work. And I think that’s quite wrong.

It is true that work can be fragmented through technology where people are working from remote locations and jobs are parceled up into smaller tasks that are sometimes organised over a digital platform, but that doesn’t mean that those people aren’t workers anymore. It’s very far fetched to say that you’re your own boss when you’re an Uber driver or a fast food delivery person who works from their smartphone. You’re still a worker, let’s face it. And in fact, in a high tech world, I think the importance of collective representation and collective bargaining is going to be more important than ever, actually. The digital world is not going to make collective bargaining and trade unions irrelevant. Far from it.

I think they’ll be more important than ever because the inherent asymmetry in the employment relationship that we have always seen between the employer who, if they have a unilateral power, the employer is always able to set the terms and conditions and threaten their workers very effectively, the imbalance between employers and workers is going to be more severe than it has traditionally been in history. Even in a digitised, high tech world, the reality is it’s only when workers can come together, exert some collective influence and impose a cost of disagreement on their employer, that’s the only way they can actually sit down and have a decent negotiation.

If the workers have to go one on one to their boss, they’ll never have the influence and power that’s required to get better wages and conditions.