Marsh & McLennan Companies joined with the World Economic Forum and other partners to write the 2017 Global Risk Report, an insightful analysis of the risks facing the world after a tumultuous political year. Mercer explores the future of work and the need for employers to step in and fill the gap in social protection systems in chapter 2.3 of the report.
The Fourth Industrial Revolution is threatening to bring the evolution of social protection systems full circle: severely underfunded state social systems are at a breaking point, employers are backing away from traditional employment models and social protection contributions, and individuals once again are shouldering a larger share of the risks. As longevity trends continue to increase and the threat of the automation of jobs becomes very real, the sharing of this risk needs careful rebalancing in order to minimise potential human suffering.
The Fourth Industrial Revolution is fundamentally changing the ways that people work and live in three main ways. First, it is untethering some types of work from a physical location, making it easier to remotely connect workers in one region or country to jobs in another – but also making it less clear which set of employment laws and taxes apply, creating greater global competition for workers, potentially weakening employment protections and draining public social protection coffers.
Second, human labour is being displaced by automation, robotics and artificial intelligence. Opinions differ on the extent of what is possible: Frey and Osborne’s (2013) study found that 47% of US employment is at high risk of being automated over the next two decades, while a 2016 study of 21 Organisation for Economic Co-operation and Development (OECD) countries, using a different methodology, concluded that only 9% of jobs are automatable. In general, lower-skilled workers are more likely to see their jobs disappear to automation, increasing their vulnerability and exacerbating societal inequality.
Finally, the nature of the contract between employer and employee is changing, at the same time that the move to a sharing and collaborative economy increases the prevalence of jobs that fall outside the standard employment contract model. The shift has some positive implications for workers, as it potentially offers more control over when and whether to work and opportunities to supplement their incomes – renting out a room through Airbnb, for example, or driving part-time for a service such as Uber.
But this shift also has negative implications: it means workers can expect more volatility in their earnings and leaves them without the employment protections enjoyed by“standard” employees.
Read the complete chapter on pp. 35-39 of the 2017 Global Risk Report