Richard Cree 13 Jul 2017 06:53pm

How the Taylor Review could impact the world of work

Judging by the media coverage expended in recent years on the changing nature of work, and the hollowing out of the workforce, you’d be forgiven for thinking that a sizeable chunk of the population has shifted to a combination of self-employment, zero-hours or life in the gig economy

Caption: The gig economy has grown hugely in recent years.

Through this lens there is no more important document published this week than Good Work: The Taylor Review Of Modern Working Practices. Setting aside the obvious challenge to the “most important publication of the week” title from the Great Repeal Bill, the Taylor Review is (as it rather nicely proclaims for itself) good work. But does it matter as much as we think?

The report itself contains some surprising statistics, not least the fact that over the last 20 years (a period of major upheaval in the labour market) the percentage of people in full-time permanent employment has only dropped marginally. In 1997, full-time employment as an employee as a proportion of total employment stood at 64.6%, today for all the talk of seismic change, it stands at 63.0%.

Meanwhile, over the same period, the proportion of employment that is part-time has hardly rocketed. It is up to 26.2% from 25%.

As is often the case, the numbers don’t tell the whole story. The Taylor Review is about more than hard statistics, although it is underpinned by plenty of robust analysis.

The report is more about the need to prevent exploitation, about rebalancing the relationship between employers and employees, about fairer psychological and legal contracts and about making sure everyone gets a fair deal.

The report sets out some clear headline proposals. Of these the most notable is replacing the current status of “worker” (the tier between employee and self-employed) with something called “dependent contractor”.

While this sounds like a plan to create something better suited to describing the situation faced by many in the new economy, even if all the proposals were implemented will it make enough of a difference? While the government has made encouraging noises about listening to and taking on board the report’s recommendations, the question is whether it will have the courage to tackle changes to employment law at a time when it is not exactly in a strong or stable situation.

One striking omission from the Taylor Review is a lack of detail on what should happen with regards to tax. While the report suggests that someone’s employment status (as defined under the new tiers) should “naturally” be reflected in tax status and vice versa, there is little evidence that such a match-up would come naturally.

On Thursday morning, Matthew Taylor took part in a roundtable discussion held at ICAEW with think tank CoVi and some of the profession’s brightest tax minds to discuss the tax policy implications of the proposals. As Philip Hammond’s NICs Budget U-turn earlier this year shows, this is a sensitive political area. What is less clear is whether we are now entering an era where someone’s work tax status is going to become a moral, as much as a legal issue.

When one considers the relatively limited proportion of workers and jobs likely to be affected, will the return in purely monetary turns (extra revenue to the Revenue) merit the possible expenditure of political capital? But I think this is to miss the point of the report. This stuff really matters to those involved, this is not just policy, but is real people’s lives. Reducing it to numbers or statistics doesn’t do it justice. At the start of the report, Taylor suggests that we live in an age of deep scepticism towards policy making.

One reason is precisely because too much policy is driven by theory and ideology, by financial outcomes rather than the needs of people. In fairness to Taylor, his report has been crafted through a process of getting out and about and talking to people beyond the usual cast of academics and policy wonks. There is a warmth and humanity to the report, and its desire to see everyone achieve “fair and decent work with realistic scope for development and fulfilment” is laudable (although I remain sceptical as to how realistic this ambition is – some people just take a simpler, transactional approach to work and aren’t bothered by or don’t expect development or fulfilment).

The complexities of tax policy make it unlikely that much will change in the short term in that area. But whether Taylor’s other proposals for immediate action, or his long-term ambitions, get implemented is in the hands of government. Whether they end up achieving what his report suggests they might, is less certain still. What is more likely is that the trend towards more flexible forms of working – and of employing people – will continue. While most of us will remain safely ensconced in permanent, full-time work, it is right for policymakers and governments to do everything they can to see that Taylor’s ambitions for decent and fair work for all are achieved. Good work indeed, Mr Taylor.

Richard Cree is editor-in-chief of economia