Politicians just don’t get it: the change in employment is the big story of our age

People clearly want work freedoms, not ‘rights’ – yet the Government has catastrophically failed to move with the times

Amajority of people working in the new “gig” economy – that infamously unregulated conspiracy for exploiting the unemployed and desperate – are engaged in it by choice, and are more likely to be satisfied with the income that they receive than other kinds of workers. And furthermore, according to last week’s report from the Chartered Institute of Personnel and Development, they are as likely to agree as to disagree (36 per cent to 35 per cent) that “the gig economy should not be regulated and companies should compete to offer workers fair pay and benefits, even if it means less income and job security for people”. Imagine that. There is a considerable tranche of the population that wilfully chooses freedom.

Of course, if offered the siren inducements that Big Government and Big Unions are inclined to dangle – like, say, paid holiday time and employment protection “rights” – they wouldn’t say no. Who would look a gift horse in the mouth? So asked the leading question of whether they think their employers might be trying to have their cake and eat it by offering work to people who must still remain officially self-employed, they tend to agree. But the salient point is that they don’t seem to mind all that much: the employers may have advantages but so do they. What they appear to want is pretty much what their employers want: flexibility, the possibility of instantly adapting to new circumstances, choice in their life arrangements and escape from the overweening control of bureaucracies of all kinds.

This is the new social and economic reality, which almost no established political party has begun to address. It is the monumental shift in work patterns – and social expectations – which has followed on from the great post-industrial apocalypse. So far, politicians have responded to this phenomenon either by telling systematic lies – the Donald Trump message (“we can restore your traditional industrial jobs”), or the Geert Wilders-Marine Le Pen message (“foreigners are taking away your traditional industrial jobs”), or by making pointless attempts to force the new labour market into the hidebound regimen of the old one. Hence, the Treasury’s determination to drum as many self-employed people out of business or, at least, into more administratively neat, minutely monitored, heavily circumscribed categories, as possible.

Under the guise of protecting them from abuse and insecurity, the Government wants to enfold them in that deadly embrace of regulation and “rights” that helped to kill off the old traditional forms of employment.

The Chancellor clearly believed, in his tragic ignorance, that holding out the hope of matching some of the benefits of regular employment, such as paid parental leave, to the selfemployed he would reconcile them to a rise in their National Insurance contributions. It is a measure of how wildly out of touch political leaders are with the reality of working life that he actually thought that this would work. In truth, the real scandal of that calamitous Budget move was not that it broke a manifesto pledge that should never have been made, but that it went in precisely the opposite direction from which forward-thinking fiscal planning should be going.

Instead of embracing the trend toward self-employment (of which on other occasions and in other contexts, the Conservatives speak so approvingly), and what it represents in terms of Britain’s vigour and vitality, Philip Hammond seemed determined to bring it into line with the old taxation patterns. The self-employed were to be made employed people, rather than having their unique role, with all its innovativeness and attendant risks, celebrated and valued.

Faced with a new picture of a growing class of independent earners who did not conform to the existing tax-paying formulae, the government would hit them with raised taxes and then smother them in growth depressing benefit structures as compensation. Surely, they must think, this is what everybody wants: security and free money from the state (under specific conditions) in return for paying a bit more tax.

That, after all, has been the political received wisdom for a generation. But real people, it turns out, are braver and more adaptable – more open to change and new opportunities – than governments, which will cling to their outdated assumptions even as they are being destroyed by them. Enveloping all that self-employed casual work – as it used to be known – which constitutes the “gig” economy, in the full panoply of rights, regulations and statutory benefits would immediately set it in the same legalistic concrete which has destroyed employment in the older sectors of the economy.

I have always hugely admired the elegant simplicity of the economist Art Laffer’s rule about benefit dependency: if you pay people to be poor, you will get more and more poor people.

So here is a matching one for workplace benefits: the more expensive you make it to employ people, the fewer people will be employed. If businesses escape paying the employers’ National Insurance contribution – which is, in effect, a payroll tax – by not actually employing their workforce, they can afford to expand and thus offer more actual work to more actual people, thus bringing about more actual economic growth. Is that clear enough – even for the Treasury?

But the Conservatives, having barely survived one head-on crash with the new economy, still seem undaunted. They apparently believe that the only thing wrong with their decision to make the self-employed pay both the employer’s and the employee’s contributions to National Insurance (presumably on the principle that they are their own employer), was that it breached an earlier election commitment.

Could everybody please wake up and smell the vitality that is bursting through in spite of all the limitations and restraints that government is attempting to place on it? There is a monumental social and economic revolution taking place which requires proper understanding and leadership. The terrifying rise of populism, nationalism and resentment of outsiders is only a superficial reaction to a much larger historic change which has been enabled by the new technologies and which individual innovators are uniquely placed to lead. The decline of traditional employment, not just in the old, factory-based industries but in all the attendant businesses that served them, is the biggest story of our time. The governing parties have no vision of what this will mean for the structure of taxation or the role of government. The populist opposition simply makes use of the confusion to promote inchoate rage.

A source of optimism is that individuals, with their indomitable ingenuity and resourcefulness, are coming up with answers: they are innovating and inventing and creating in the limitless ways that human intelligence can muster – and they are finding their way through. At least until governments find ways to suppress and discourage them. The European Union has been the all-time champion at devising barriers to economic flexibility and vitality, with the predictable consequence that youth unemployment in many member countries is now at its highest levels in living memory.

The huge opportunity offered by Brexit is to allow our national government to escape from that mindset and to re-think the basic questions of employment, taxation and the role of government in the workplace in the 21st century.

Unfortunately, the Tories are doggedly insisting on remaining in the second half of the 20th, and Labour is locked into the 19th.