«What if employees revolted?»

News Mondays - Jérémie Bongiovanni

Last spring, Patrick Artus and Marie-Paule Virard published a book entitled What if employees revolted?. The authors' analysis of the forgotten class occupying the streets of France in recent weeks is disturbingly topical, and shows that their discontent is not just a passing uprising, but has deep roots. Diagnosis of a worrying situation. 

From bad to worse

The authors paint a bleak picture of the current situation. They note that incomes stagnated for 70% of households in developed countries between 2005 and 2014, while property prices rose. Industrial jobs have disappeared and been replaced by low-skilled jobs. The changing labor market, for its part, has driven 17% of unskilled and low-skilled workers into unemployment. Last but not least, the mediocrity of the French education system does not give cause for hope. In the PIRLS 2016 assessment, which measures the mathematical skills of fifty countries around the world, French CM1 pupils - aged between eight and ten - came in thirty-fifth, which is worrying for the world's tenth-largest economy.

Unfair distribution of risk

The first phenomenon described by the authors is the evolution of salaried employment in recent years. In theory, the employee should benefit from a fixed income, while the shareholder should assume the company's risks and therefore have a variable income - in the form of dividends. The authors note, however, that in recent years, the risk has been borne by employees, who have seen their incomes put under pressure, while shareholders, bearing less risk, have benefited from abnormally high rents. The importance of a flexible labor market, and therefore of a share of risk for employees, is emphasized in the book. What the authors regret is the asymmetry that accompanies it. They raise an interesting point here, given that a more flexible, and therefore riskier, labor market should, according to a fundamental principle of the market economy, be accompanied by remuneration for this risk. 

The «bipolarization» of the job market

A second fundamental trend analyzed in the book is the changing structure of jobs on the labor market. According to the authors, this change is leading to the disappearance of many industrial jobs and the emergence of low-skilled service jobs. On the basis of this observation, they question Schumpeter's theory of «creative destruction», since according to this theory, activities destined to disappear should be transformed into more productive activities. 

Nevertheless, we remain sceptical on this point. It is indeed a worrying question to know how and when the jobs destroyed today will be replaced. The idea of the end of work is unfounded nonsense (see also: A full employment society is essential). However, it would be equally foolish to deny that this development will have repercussions in the short to medium term. The jobs destroyed can be recreated elsewhere or in other sectors, making immediate adjustments impossible. As a result, periods of friction to allow this transition to take place seem, like the anxieties that accompany them, inevitable. The theory of «creative destruction» is therefore not wrong, but should be observed over the long term.

More worrying is the observation that the labor market is characterized by a gulf between the most sophisticated jobs, particularly in the technology sector, and the least sophisticated, such as in distribution. This «bipolarization» of the market raises real questions about the future of these low-skilled classes, who risk being marginalized and condemned to poverty. What's more, this concentration of jobs at the extremes of the spectrum will increase with the automation of many intermediate jobs.

Solutions

Although less convincing in its proposed answers, the book has the merit of developing hitherto little-used theses, and of raising awareness of this deleterious economic and - if not above all - social evolution. Faced with a phenomenon of this magnitude, we need to be able to take substantive measures and tackle this challenge head-on, without giving in to patronizing measures. The solutions lie in a long-term vision, encouraging work, mobility and above all training to enable these strata, trapped in their precariousness, to take their destiny into their own hands.

In the case of the «gilets jaunes», although his position is incredibly complex, Emmanuel Macron's address to the nation will have been disappointing. All he offered was a sticking plaster, a toxic plaster, for a much deeper evil. However, the crowd that had cast its opprobrium on the State, wailing like a toddler, calmed down as soon as a bottle - sweet but short-lived - was given to it. The protest movement will probably continue to lose steam over the coming weeks, but we definitely need to take a closer look at the diagnosis of this middle class before we find ourselves performing an autopsy on it in a few years' time.

Write to the author: Unemployment Middle class Emmanuel Macron Yellow vests marie-paule virard patrick artus wage-earning