Lessons from the Future of Work Commission: Building Wealth from the Ground Up

Good morning, and thank you for attending today’s Future of Work Seminar here in Wellington. I want to particularly acknowledge Beth Houston who has spent many hours pulling together the programme for today’s event, and to Olivier and the staff here at the CQ Hotel for their forbearance. I also want to acknowledge all of the presenters who you will hear from today. They have an incredible range of backgrounds and interests and are of course busy people so I thank them very much indeed for spending some time with us today. As we have tried to do at every stage of the Future of Work Commission programme you will hear a range of views today. The easy thing for a political party to do is simply work out what we think the policy path forward is, and go and get people who already agree with us to support that view. We have attempted to turn that approach on its head in this project, by opening ourselves up to a range of viewpoints and ideas on what the future of work is and what we can do to shape it.

This necessarily means that not everyone speaking today agrees with each other on both the issues we are facing nor on how we should deal with them. That is a healthy way to debate issues, albeit one that takes a bit of managing for some of my dear friends in the media. What I know is that all our speakers share the view that decent, meaningful work is an essential part of the future of fair and prosperous country. We really value their contribution.

I want to particularly thank David Coats for his participation. I will introduce David more fully shortly, but to have someone of David’s international experience and insight on work matters is truly appreciated.

Today I want to talk to you about some of the lessons we have learned in the eighteen months that our project has been running, and the economic direction that it is taking us.

But before then a brief recap. Andrew Little established the Future of Work Commission as one of his first acts as Leader. I want to thank Andrew for asking me to Chair the Commission. Who knows how I would have filled my days otherwise! In all seriousness it has been a real privilege to lead this work.

We set ourselves a big goal- to report by the end of 2016 on the vision, direction and policies for an economic and social programme to enable New Zealanders to confidently face the changing nature of work and have sustainable, fulfilling and well paid employment in the coming decades.

- Decent Work

- Lower Unemployment

- Higher Wages

- Greater Economic Security

- High Skilled, Resilient Workers

In our centenary year the Labour Party has been re-asserting the importance of decent, fulfilling sustainable work as part of the core of a fair and decent society. Whatever the changes, Labour is, and wants to remain the party of work and the party of workers.

In early 2015 we established our Commission External Reference Group including a range of business people, union leaders, academics and community representatives. With their help we established six work streams – Income and Employment Security, Technology and Its Impact, Education and Training, Economic Development and Sustainability, Māori and Pasifika. For each workstream we have had two lead MPs who have coordinated the work. Some of them are with us today, and I thank all of them for their hard work.

We produced a work survey which has been completed by thousands of New Zealanders. We produced six discussion papers which have attracted hundreds of submissions, several background papers on particular proposals and in March held a two-day conference featuring four major international speakers Robert Reich, Guy Standing, Jan Owen and Goran Roos.

At last count we have held well over 100 public events, engagements with businesses and workers, schools and community groups on the work of the Commission. Thousands of New Zealanders have engaged with our work, and we are very grateful for that.

In March we released our Ten Big Ideas document that gives a snapshot of the work of the Commission and the major areas that we will focus on in our final report. That document has been updated to take account of a couple of announcements in recent months and is available for you today.

In November we will produce our final report. It will be a mixture of practical policy ideas, areas for further work and an indication of the direction of travel we wish to take to meet the goals of the project.

So what have we learned after eighteen months?

When we commenced our Future of Work Commission 18 months ago, the world was a different place. Britain was a member of the EU, the idea of Donald Trump as the candidate of a leading party in the US election was a joke, Bernie Sanders was the little heard of Independent Socialist Senator from Vermont, Jeremy Corbyn, UK Labour backbencher was preparing to defy his party whip for the 489th time and Australia was the number two ranked rugby team in the world.

One of the main themes to emerge from the Future of Work Commission study is that change in work is happening at an unprecedented pace. If nothing else is a reminder that world is changing faster than ever, these seismic political events should do so.

They also all have at their core some of the critical issues that we have encountered as we have undertaken our work. The impact of unemployment or underemployment and marginalisation from the benefits of globalisation being just a couple of these.

Interestingly, also in the period since the Commission was launched both the IMF and OECD have released papers on the impact of inequality on economic growth that have effectively pronounced the death of trickledown economics.

The IMF study has suggested that raising incomes for the poor and middle class yields measurable improvements to the national economy. Increasing the income share to the bottom 20% of citizens by one percent results in .38% jump in GDP growth, whereas in contrast increasing the income share of the top 20% if citizens yields a decline in GDP growth by .08%.

The OECD for its part has made its case saying that “economic growth is most damaged by the effects of inequality on the bottom 40% of incomes”.

In New Zealand new statistics have emerged in just the last few months showing that wealth is concentrating in the hands of the few. The top 10% have 60% of the wealth up from 55% five years ago. To look at it another way in just the last eight years the share of growth in our economy that has gone to labour has shrunk from 50% to 37%, meaning the average household has lost out on $13,428 per year since 2009.

This message that the economy is not delivering for many people has been a theme of the hundreds of submissions and dozens of public meetings and engagements. Those messages have been matched by the stories of the opportunity for decent work to be the core of a fairer society. The choice future governments have to make is if we are prepared to take the actions to seize that opportunity.

Starting a project like this we had many assumptions. One in particular has proved to be true. The intrinsic value that New Zealanders put on work. At a public meeting in Albany earlier in the year after my presentation a man who had sat attentively at the front came forward and asked, with tears in his eyes, if I could do anything to help him get a job. He had skills, qualifications, but work had eluded him lately. He wanted to work. Money was important to him of course, but he made clear what really mattered was that he wanted to feel useful. This scene was repeated at many of the 100 or so public meetings and engagements we have done.

Work matters – it is about the choices it gives you, but also a sense of fulfilment, dignity and meaning. In that light the importance of better recognising unpaid work, raising children and looking after elderly relatives has also been a feature. While the nature and experience of work is changing fast, the intrinsic values have not.

One of the other assumptions going into this exercise was the need to talk about what jobs people would do in the future. This is a difficult exercise, because of course we don’t actually know.

But from talking to young people in particular there was a desire less to talk about the jobs that they would do, but the work that they would create. Work as a 40 hour a week exercise, directed by someone else, undertaken in the same location each day is both not a reality for many, but also not desired. We have met many people, young and old, who are seeing enormous opportunity through technology, social entrepreneurship, new ways of organising work, shared value creation and less hierarchical business models to create decent work.

Yet alongside this the insecure experience of those in precarious work has also been driven home time and again. The people with no guaranteed hours of work, at the whim of a contractor or simply not paid enough in two jobs, let alone one, to make ends meet. Addressing this is a priority for Labour as we move into the next phase of our work.

The importance of education and training has hit home time and again. We have never claimed to be able to predict the future in this project. And there is genuine debate as to the extent of the change in work. We have taken on board studies such as that put together by NZIER that 46% of jobs in New Zealand are at high risk of automation in the next 15-20 years. That number has been challenged, particularly if the study is about whole jobs or tasks within jobs.

My view is that in the end the exact numbers do not matter, the change is real. And in the absence of certainty, offering the opportunity to learn to adapt, to take on new skills and to re-train are essential parts of our future approach.

That is why the first two major announcements that we have made from the Future of Work Commission have been in the area of education and training. In late January Andrew announced our Working Futures policy to provide three years free post-secondary school training and education. This is a vital investment in giving all New Zealanders the confidence to face a changing world of work. Just as the first Labour government recognised the role of secondary education for all, we believe it is our responsibility to make training and education for life a critical focus of the future.

We added to this announcement a project called the Young Entrepreneurs Programme that will give 100 young New Zealanders the support to take their business ideas forward with a grant equivalent to the three years free, and the support of business mentors. We have to recognise for some young people the best route is not straight to training or education, but the chance to branch out into the world.

Whatever path that is being followed by young New Zealanders they need to be much better prepared for the changing world of work at school. This is definitely not to say that we should be narrowing the focus of what is being learned. Quite the opposite in fact. Throughout our consultation we have been told that what employers are looking for are people with what we used to call soft skills or what Jan Owen from the Foundation for Young Australians calls enterprise skills. The ability to collaborate, be creative, ethical and empathetic, to solve complex problems and to be digitally and financially literate are what is wanted.

This points to the importance of not only looking to encourage participation in the so-called STEM subjects that will drive innovation and added value creation, but also the arts and design. As one person recently put it STEAM’D.

In July we announced our policy for a major reform of what we have called Careers Advice or Guidance. We want every student starting high school in New Zealand to have a career plan that they update through their schooling. We want to professionalise careers advice so it is no longer the responsibility of overworked teachers, but is coordinated by dedicated staff. It is also vital that careers is integrated into the learning experience of every student through classroom work and time spent in flexible programmes outside of school. We see the delivery of this as a partnership between schools, teachers, businesses, training providers and the community. This will be a major reform and will see $30 million of additional funding once it is fully rolled out. We owe nothing less to our young people. We simply cannot stand by while more than 70,000 young people aged 15-24 are not in work, education or training.

One of the major drivers in the project has been technological change, and there is no doubt in my mind that it is altering the experience of work at an unprecedented pace. The jury is out on what that will mean for long term for levels of employment, but digital equality remains a vital goal for this project.

The way we view technology is one of the things that we have learned a lot about in this project. Like clockwork whenever we have a major conference on the Future of Work, Simon Bridges puts out a media release about the Dominos pizza delivery robot trial. He did it in March, and he has done it again yesterday. Yes, New Zealanders we have the great honour to be the venue for DRU’s trial runs. This is interesting, but it raises an important distinction. We don’t want New Zealand to just be the place where others test their technology, we want to be the country that designs and develops that technology, that explores its uses and its limits. That works out what it means for people and how it adds to our well-being and standards of living. As computer scientist Alan Kay has said, the best way to predict the future is to invent it.

Ultimately technology itself is not the end point in the discussions of the future of work. It needs to be viewed as part of the means to creating decent work.

For all the changes, the future of work must be about people and how we can support them to build lives of dignity and worth. We need to be able to answer some core questions.

How do we support our people to be resilient in the face of change?

How do we support income security in an era of precarious work and the so-called gig economy?

How do we provide sustainable economic development that is focused on decent work?

The framework for approaching these questions that we are developing is the notion of building wealth from the ground up.

The challenge has been laid down to those of us on the progressive side of the fence to describe what is the alternative if trickle down really is dead? What is the economic paradigm that will meet the challenge of world of less secure work, more automation? What approach will give us the chance to take the opportunities provided by new technology, a new spirit of social entrepreneurship and the driving imperative of climate change?

My answer is that we need to begin to build wealth from the ground up. When I say wealth I do not just mean financial wealth, but the sense of wealth and value that comes with decent work. This is an approach that takes our purpose in managing the economy to ensure a fair share in prosperity.

Because there is a significant risk that in the future of work we could see inequality grow. If we allow the invisible hand of the market to dictate how this new world evolves we will leave many people further marginalised.

As much as the idea of the Brexit campaigners was utterly misguided their slogan was powerful. Take Back Control. That is what many people feel that they are no longer in control of their own lives or economic destiny. The opportunity exists in the future of work to address these issues in a constructive way that is based on a fairer share in prosperity.

There is also significant opportunity to use the changing technology, patterns of work and movements of people to give that fairer share.

The foundations for this wealth and value are what is guiding the outcomes of the Future of Work Commission.

It will require a tax system that remains simple, fair and collected but corrects the imbalances that exist between the productive and speculative parts of our economy. It will also require a tax system where everyone pays their fair share, including multinationals.

We need an education system that delivers the resilience and attributes that will give all people opportunities to learn, train and re-skills throughout their lives.

We need an active labour market policy that guarantees a just transition for those who lose their job, and gives income and employment security to workers. We cannot simply wait for people to lose their jobs and then look to find them new work.

We also need to provide support to help create work opportunities. We need to work smarter to get finance to people with the best ideas not just those with the connections or accumulated wealth. The growth of social entrepreneurship needs support and encouragement, as do new models of doing business including cooperatives, employee share schemes and other shared wealth ventures.

We have had significant feedback from small businesses around these ideas, and a full small business package will be part of our policy going into the next election. Dealing with issues around access to capital, training, efficient relationships with government and access to skilled staff are all part of that plan.

We also need to seize the opportunity to promote local, low carbon and environmentally sustaining projects. I have been introduced during this project to the idea of “glocalisation”. That while we live in an ever globalising world full of opportunity and challenges, there is an increasing desire to buy local and a need to invest in projects that support our environment, our climate change goals and create decent work.

In the regions we received a clear message on how our Future of Work project can support growing wealth from the ground up. Without fail in our consultations we have heard the deep feelings generated in response to the neglect of economic development outside of our big cities.

As one person from local government said to me their greatest fear was that they would go from being the most deprived region in New Zealand to the third or fourth because then no one in government would pay attention to them.

We have to have a more comprehensive approach to growing work and wealth in our regions. This means the government acting as an active partner in regional economies supporting businesses, iwi and local government to create work opportunities. Labour has already committed at $200 million fund to do this, as well as using the power of government procurement to enhance industries in our regions.

This approach is a straight alternative to the Koru Lounge economic approach of the current government. We want wealth to be generated not by those who have the inside running but those with the best ideas.

As you can see there are many lessons to learn from our work, and more to come, including from today.

I want to finish with one final lesson from the Commission’s work. There is huge reason to be optimistic about how New Zealand faces the future of work. We are blessed with terrific natural resources, innovative and creative people and solid foundations laid by previous generations.

With a commitment to implementing what we have learned through a mix of policies, directions and collaborations, we have within our grasp the ability to make the future in New Zealand one of shared prosperity, where we measure our success on the opportunity and hope we give to each and every person. I look forward to the discussions today that will add to that picture.