The future of work and its implications for social protection and the welfare state

Franziska Gassmann & Bruno Martorano

#2019-039

During the twentieth century, welfare states were instrumental in confining economic and social inequalities in Europe. Stepping into the twenty-first century, labour market risks have transformed. The unprecedented technological transformation has changed the way we work. The trend towards new forms of employment is no longer a marginal phenomenon. People switch between jobs, type of employment or (temporarily) leave the labour force. Across OECD countries, 16% of workers are self-employed and another 13% are on temporary employment contracts (OECD, 2018b). Employment became more precarious and labour market relations much more diverse. This raises the question how societies can take on the opportunities, challenges and risks that the rapid technological development may bring. The changing nature of work along with other challenges, such as demographic ageing, changes in family structures, globalisation of trade, or migration necessitates adaptations to the welfare state in order for it to continue functioning effectively and efficiently. This paper reviews the challenges for universal social protection in a rapidly changing world of work and discusses policy options for social protection systems that protect and stimulate human development. We first review current trends and predictions as to how the future of work might look like. New types of jobs and forms of employment are already on the rise, which has effects for individual workers and society. We then discuss the implications for social protection and the welfare state. The changing nature of risks associated with new forms of employment may require a redesign of current social protection systems. The discussion provides possible solutions and country examples on changes in social protection systems and financing strategies, including reforms of current social insurance schemes, social assistance programmes and active labour market policies.

Keywords: non-standard employment, social protection, Europe

JEL Classification: H55, I38, J21

  


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