Why we have to liberate our labor markets

Reading time 6 minutes

Today we see a new generation growing up with disruption all around them, facilitated by technology, easy to use and very, very cheap. Free distribution through the internet, hardware for a couple of hundreds of Euros with processing power that is sufficient to get a NASA or Tesla rocket to the moon and back. And all kinds of Software Development Kits (SDK’s) available for free and easy to use. Building mobile apps is a piece of cake and web services for data storage, hosting websites, e-commerce etc. are accessible for a handful of Euros a month.

This generation will set new rules for B2B and B2C markets without even knowing it is disruptive. To share a light on this, let’s go back some decades.

                                    Old school economics

Industrial power was about scale, the bigger the company, the more it could do. Labor (cheap) enabled production and expansion, factories were to be built without restrictions, money came cheap, consumers easy to find (exploding wealth in Western Societies), business was long term and predictable. Companies like IBM, Ford, General Electric, Philips, Kodak, Siemens easily grew their work forces into 400.000 or more.

While our wealth grew substantially from the early sixties into the eighties, labor became more expensive and as a result, production work was either automated or outsourced to China or other low cost countries (India and Eastern Europe for IT).

                      Education for all – the rise of the knowledge worker

High level education became available for everybody and a new generation found its way into the business world; Knowledge workers, moving away from ‘old school’ production, into financial services, technology and software development. The rise of companies like Microsoft, Oracle, HP, SAP, Nokia, Cisco and many other ‘tech’ companies are a result of this.

The first wave of internet businesses (early nineties), mobile services and an abundance of capital allowed for uncontrolled growth. A collapse in 2002 was inevitable, however, the internet claimed victory on a global scale.

Despite this collapse, knowledge workers got hooked to digital tools and platforms (cloud services) to become more productive and are considered by companies to be highly valuable assets; many companies today claim their employees are the most valuable assets they have.

You could argue that many companies don’t act like it, and you might be right. In today’s world, employees no longer accept this; they want interesting work, they like working abroad and are looking for purpose. Money is a result, not their main driver.

They built their business on open source software (almost free of charge) and they believe that sharing expertise and knowledge is a good thing we can all benefit from.

Take for instance young kids, developing games or mobile apps; they learn how to do it by being part of a community, they share insights, rather than developing a ROI model, or check the possibilities to become profitable. They believe in sharing and free usage and will all become professionals someday……………what do you think their behaviour will be like once they join a company?

                          A new way of organizing a business

Imagine a company without Intellectual Property Rights (IPR) and without labour, what would be the reason of existence of a company?

That’s why a new type of organization will arise, to accomplish a specific task, defined by its community of workers aligned to it. A new labor model allowing this organization to scale up rapidly, to serve a specific need; and then (maybe) dispose the organization after it has done its job.

Some characteristics could be that they do not seek for durability or permanence and they seek their own dissolution. The success would be based on how quickly they can deliver value and enable their ‘employees’ (members) to reap the benefits of their contributions.

It could be a networked, global set up, using block chain technology to allow for payments, protect IPR and contracts and also share how each individual in this network contributes to the project, the quality she/he delivers and how they behave as team members.

(A bit similar to how you can provide feedback on how your Uber driver serviced you while driving you home the other night).

It would also make regulation become obsolete. An organization set up as such would break every rule in security and investment regulatory framework.

Now of course there are all kinds of objections possible; lawyers and investors will object because they believe that isolation and control of knowledge has a lot of value. And then there is copyright law and patent law. But it could be a sustainable model from which all parties benefit. 

That’s why we see a new employment model coming up.

                          Freelance or mercenary model

Many larger companies today, still insist professionals are to be on the payroll. This is easier to manage and serves predictability in planning and costs. There are all kinds of middle management layers that accommodate for this and many companies have governance in place and security regulations that do not allow for external people to have access to company information.

He, but wait a minute, didn’t we already see that modern working professionals want to share, work together and cooperate with one another? That today’s working professionals, highly talented and motivated, want to contribute and look for purpose rather than a corporate career?

Expectations are that 50% of current S&P companies will be replaced over the next 10 years; since 1955 nearly 9 out of 10 S&P companies are either gone or merged.

This fundamental shift in businesses is inevitable, facilitated by cheap and free (digital) tools, digital platforms and digital professionals (consumers).

                         Consequences of this new model

This shift however, also has impact on how we, as professionals, contribute to society; we pay taxes. If working relationships change and become more flexible, the labour markets should adjust; a large chunk of governmental spending is based on the taxes paid by working class people like you and me.

Many politicians still believe that they can regulate the labor markets, but each and every European labor market is facing dramatic and inevitable changes, forcing us to build a liberated and revised system. Whether they like it or not, by 2030 more than 50% of the European workforce will be working as freelancers (research by PWC 2018, EU Commission Future of Work 2017).

                                Making it a bit personal

Last year I paid a visit to an event in Tallin, Estonia; Latitude59. An event where tech meets capital, where tech talents from 58 different countries got together to listen to each other, share knowledge and insides, in short I had a very good time😊.

The opening speech was performed by The President of Estonia, Kersti Kaljulaid; finally a politician on stage with a vision on how robotics, education, technology and innovation should be brought together and how it impacts society and civilians, people like YOU and ME!!

How our education systems should deliver STEAM students (Science, Technology, Engineering, Arts and Maths) and above all, compassionate human beings, allowing us to bring people and technology together. After all, compassion is something robots do not possess………………………..

She also praised entrepreneurial spirits enabling us to learn, work, innovate and cooperate better and faster; working in a flexible and international environment, supported by governments.

(Estonia is well known for its services to register new businesses and sophisticated digital services for its civilians).

Last but not least; she insisted on SME networks (small & medium enterprises) being more valuable than large enterprises, not only from an innovators perspective, but also from a social and ethical behavior perspective (tax evasion by large international corporates).

                          So why sharing all this with you?

It is my ‘good news’ message; there is so much potential in start-ups, talent, such a vast amount of people willing to start a new company and employ like minded people. 

Another amazing thing I see is that many initiatives are started because people believe they can contribute to society and improve the lives of others; not primarily go for the big bucks, but think about the environment, cleaning up the oceans with a system that swallows plastics.

Thanks to (cheap) technology, working together, sharing and the right mindset!!

So, thanks for reading, if you wanna share your opinions or provide feedback, feel free.

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