Winning essay for our essay contest
As part of the Future Markets Consultation, students and young scholars were invited to participate in an essay contest. This essay was the winner in the category of young scholars. It was written by Fausto Corvino, researcher at the University of Turin.
Never in human history has wage income been so fragile and transitory. Even if precariousness were to be considered as, all things considered, desirable (or at least inevitable), it would have to be regarded as a negative externality of economic and technological development, and as such it should raise a problem of justice concerning the distribution of costs vis-a-vis benefits of cooperation. I will therefore argue that the main problem of those people who lack a fixed-term job, at least in Europe, is that they live as precarious workers in a world which is still designed for permanent workers.
We live in an era of unprecedented commodification and precariousness of labor. The first phenomenon implies that never in the history of humanity has the social income of such a large number of individuals (both in absolute and percentage terms) been dependent on wage income1. The second phenomenon means that never in human history has wage income been so fragile and transitory2. In this article I shall leave aside the commodification problem and focus instead on precarious employment. When it comes to precariousness, there are three main positions, not only in academic literature but also in the world of business, politics and more generally in public debate:
- The first position holds that precarious employment, or rather the possibility of changing workplace and tasks several times during one’s career, is a good thing. There two main justification for this. The first is based on the assumption that the permanent job is a monotonous thing, as former Italian Prime Minister Mario Monti postulated some years ago3. The second justification of the first position is that the flexibilization of work makes it possible to lower the cost of labor, and this creates economic benefits for everyone, including the workers themselves, who can enjoy the fruits of larger investments4.
- The second position holds that precarity is a bad thing, yet we have to accept it because in the phase of capitalism characterized by convergent globalization, lowering labor costs through fexibilization is the only way for more developed countries to compete with developing countries5.
- Lastly, the third position maintains that precarity is a bad thing, but we have the scope to fight it, possibly by increasing taxation on big capitals and striving for equality within single societies6.
In the first part of this short article, I explain why although my personal position fluctuates between the second and third one, and is even closer to the third one, I decide to accept the first position as good. My aim, in fact, is to show that even if precariousness were to be considered as, all things considered, desirable (or at least inevitable), it would have to be regarded as a negative externality of economic and technological development, and as such it should raise a problem of justice concerning the distribution of costs vis-a-vis benefits of cooperation. I will therefore argue that the main problem of those people who lack a fixed-term job, at least in Europe, is that they live as precarious workers in a world which is still designed for permanent workers. And I refer mainly to the system of norms and laws that regulate property rights (especially real estate rents) and access to credit.
More simply, precarious workers are asked to be flexible and mobile, to be ready to change jobs overnight. And empty periods between jobs are seen as a feature of life for young people today. Those, on the other hand, who control capital, and obtain real estate or financial income from it, are protected by a series of rules and laws that immunize them from the risks of precariousness. The latter, in fact, fall mainly on wage earners. To give an example, let us imagine that I, as a precarious worker at the university, with contracts renewable from year to year, decide to go and buy a new computer and ask for an installment. The shop will turn to a financial institute and the institute will tell me that it cannot install the purchase, or at least cannot grant me an installment beyond the expiry of my annual contract. This is the case even if I am sure that I will continue working – but I do not have a piece of paper to prove it. This means that even if it were true that my precariousness creates a collective advantage, in that it allows the economic system to be more fluid and to mobilize more investment (as opposed to a system with stricter labor protections), all the costs and risks of precariousness would fall solely on me, while financial capital would be completely protected from the risk that I might suddenly lose my labor income. The same would apply if I tried to buy a car, let alone a flat7. And the same asymmetry of protection exists between me and my landlord. If my employer decided not to renew my contract, he would be free to inform me on my last day of work. And I would have to look for a new job overnight, perhaps in a new city or a new country. But if I needed, for work reasons for example, to leave the house I live in, I would have to honor my contract and pay a penalty equivalent to three months rent, and then pay the new owner in advance and pay him a new deposit.
In sort, both real estate and financial rent are protected from the risks of the precariousness of my job. I will seek to explain why it is unfair, and I will maintain that a more just allocation of the costs and benefits of precariousness-led growth could be obtained either by loosening the safeguards for capitalists (e.g., by providing special house contracts for precarious workers that allow them to terminate it at any given time, if it is justified for work reasons, or by obliging financial institutes to give credit to precarious workers also beyond the duration of their fixed-term contracts). If these safeguards were really loosened, two things may occur. In some market interactions between the capitalist and the precarious worker, the capitalist may not record any loss: i.e., I obtain a job-contract renewal or a I find a new job and I manage to pay all my installments; I leave the house and the landlord has no difficulties in finding a new tenant. In some other interactions, the capitalist may lose something, and his loss would mitigate the burden of my precariousness: i.e., I cannot find a new job and I cannot pay the installments, hence the financial institute would shoulder part of the costs of my purchase or of my delay in paying installments; the landlord does not find any substitute and he does not get the rent money for a couple of weeks.
I maintain that even if the latter occurs, we should look at it as a just outcome, because it would lead to a fairer allocation of the costs of precariousness. However, I also introduce here a second proposal, in addition to changing the set of norms and rules that safeguard the interests of capitalists, that is supposed to make my proposal more acceptable to capitalists: an online, peer-to-peer evaluation system, such as those in use for restaurants or hotels, on a voluntary basis, to assess the reliability of precarious workers in fulfilling contracts and repaying debts.
The aim of this system is to make it possible for capital investors to assess the level of reliability of the precarious workers with whom they interact and the frequency with which the risks associated with their precariousness have turned into an actual loss of income.
I – The Unfair Distribution of Costs and Benefits of Precarious Labor
Is it fair that I should be the only one to run the risks associated with my precarious condition and that I should also protect all the others who interact with me on the market, while the latter are entitled to a full profit even if I lose my job against my will? My answer is no. Precariousness is not a choice, it is a necessary condition of life and work today. Anyone doing research in the university, for example, has no other way but to start as a precarious worker. And so do most people who embark on a career as a lawyer, doctor, architect, engineer, bartender, pizza maker, designer, gardener, and so on. If this is true, it means that it is not right to treat precariousness as a private matter, but rather it should be placed in the right social framework, looking at it as a sort of negative market externality, i.e., as production costs not internalised by some subjects (capitalists which reduces production costs thanks to flexible work) and therefore passed on to others (the precarious workers). The task of politics, with respect to these costs, is to share the absorption or mitigation burden among the members of the social community, ensuring that those who gain from their provision are the first to contribute to this collective effort.
Let’s draw a simple parallel with greenhouse gas emissions. If we had not started burning fossil fuels from the second half of the 18th century onwards, there would have been no engine, no industry and no economic growth. Greenhouse gas emissions are therefore, on the one hand, instrumental in the creation of wealth (or at least they certainly were until we had the technology to produce without polluting), and on the other hand, they are costs that are not internalized by companies, but passed on to the community. Some people are more exposed to the negative consequences of these emissions, such as those who live in areas most affected by atypical weather phenomena (e.g., rain and floods), those who live in cities that sooner or later will be overwhelmed by rising sea levels, or those who are more vulnerable to sudden changes in temperature (e.g., the elderly). And of course, the more time passes, the more extreme the phenomenon becomes, if left unchecked, with desertification, incalculable damage to agriculture, and the spread of viruses to non-tropical areas as a result of the northward or southward migration of the vectors of this virus (insects and micro-organisms)8.
In the face of climate change, no one would adopt the attitude that prevails, as institutionalized, with respect to precariousness: “do you live in an area that is constantly ravaged by rain and floods? We’re sorry, you’ve been unlucky; you could have been born thirty years earlier, or in a less exposed area”. Anyone involved in climate justice or climate diplomacy knows that since the Rio Declaration on Environment and Development in 1992, the aim of the international community has been to affirm the principle of “common but differentiated responsibility” with respect to climate change mitigation and adaptation9.
My theory is that there is no reason why precariousness should be seen differently. There are some who gain net benefits from mobilized labor, and others who gain more costs than benefits. In aggregate terms, the benefits still outweigh the costs, so the problem is a fairer distribution of the benefits rather than a paradigm shift. And with respect to this, the struggle for the restoration of a twentieth-century past, beyond the empirical question of whether or not it is achievable, risks becoming a sterile wall-to-wall, which also ends up serving the interests of those who, within the current paradigm, continue to enrich themselves on the backs of the precarious workers, because it diverts attention from a much more pressing and current problem.
Although there is no room here to fully articulate the theory, I guess that the main argument is quite intuitive, and I would limit myself to summarize it in the following terms. The current distribution of costs and benefits of precarious work runs counter any account of justice as reciprocity, either understood as self-interested reciprocity or as fair reciprocity. Both versions of justice as reciprocity build on a same basic argument: socio-economic rights are a consequence of the contribution that single individuals make to the cooperative surplus. From this perspective, society can be interpreted, quoting John Rawls, as a “cooperative venture for mutual advantage”10. The first position about precariousness (it is a good thing), the one I strategically accepted at the beginning of this text, relies on the argument of the cooperative surplus to justify the precarisation of labor: in a world in which labor has been mobilized we are all aggregatively better off than we were before (i.e., we can sustain acceptable levels of GDP growth within single countries). The same holds true for the second position (it is not a good thing, but we cannot do anything about it): given the competitive pressure from developing countries, the best thing we can do in more developed countries to continue production is to lower production costs by cutting labor costs.
The idea of justice as reciprocity, however, presupposes a division of the progressive increases in wealth resulting from social cooperation. Individual shares of this surplus can be more or less equal depending on whether we interpret reciprocity as self-advantage or as fairness. In the first case, all contributing members would advance a claim on the cooperative surplus and they would bargain from their specific position (which is given by both natural talents and social assets); at the end, we can suppose that they would reach an agreement, in which the most powerful parties would give room for negotiation to the weakest parties, under the threat that the latter withdraw their contribution and the cooperative surplus decreases (or even disappears). Conversely, is we identify reciprocity with fairness, we should introduce some moral premises in the bargaining situation, as for example Rawls’s veil of ignorance, and ask how we would distribute costs and benefits of precariousness if we did not know if we will turn out to be either a capitalist or a precarious worker11.
It is quite likely that from the perspective of justice as fairness we would ameliorate the condition of precarious workers at the expense of capitalists much more than if we take reciprocity to be self-interest. I do not have enough space here to articulate this thought, however, what suffices us to demonstrate is that both interpretations of justice as reciprocity would recognize workers a lower share of the costs of precariousness than they currently have.
Accordingly, the way precarious workers are treated in the majority of developed countries is unjust, especially in the face of the safeguards that the norms and laws recognize to other economic agents. Thus, we should do something about it.
II – The First Proposal: Loosening the Guarantees Protecting Real Estate and Financial Rent
Although much of what I maintained so far and will hold in the next few pages applies almost everywhere, and could be seen as a historical rather geographical condition, I shall focus from now on the European Union. This both because the European Union is one the world regions where the surge in labor precarisation has been more evident12, and because the European Commission, the European Parliament and EU leaders have recently agreed on a recovery plan that brings new and future generations into the center of post-Covid-19 Europe13.
Far from intervening in national and communitarian budgets with new taxes or new expenditure commitments, European institutions could redistribute in a more equal way the burdens of precarious labor through adopting two simple EU-level norms.
- European workers on fixed-terms contracts must be allowed access to special rental contracts that derogate from the general legal protections that are in place in single countries to safeguard landlords. This can happen in many ways, and obviously there is no time here to discuss such a technical issue. One hypothesis is that European precarious workers (where obviously the notion of precariousness would have to be defined in terms of contract duration) should be allowed to interrupt their rent contract at any given moment, without having to pay any penalty, when this is justified by demonstrable work reasons.
- European workers on fixed-terms contracts must be granted access to credit, with the possibility of repaying their debt in installments extending beyond the duration of the existing employment contract. The credit granted to a precarious worker will obviously be weighted according to the average income received by the applicant, and it may be less than the credit granted to a permanent worker with the same income, but within the limits determined according to a range that is to be established.
The primary effect of both proposals would be to shift the risk of precarious employment from labor to capital. The secondary effect is that at least some of the income losses stemming from precarious employment will be shifted from labor income to real estate and financial income. My first normative argument is an ideal one, and it holds that both types of effects are fairer than the current status quo (in which all risks and losses fall on wage labor) and are therefore they are a requirement of justice. My second normative argument is a non-ideal one: the loosening of safeguards for capital should be accompanied with a method through which capitalists can distinguish between counterparts that are trustworthy and correct and counterparts that are unreliable. This second normative argument aims to address two powerful objections that can be raised against the first argument: precarious workers could abuse protections (i) and (ii) to cheat capital, and capitalists would never accept these two norms, so the latter would never get the political support necessary for their adoption.
III – The Second Proposal: A Peer-to-Peer Evaluation System for Precarious Workers
The non-ideal claim of my normative proposal can be accommodated through an online, voluntary evaluation system for precarious workers, a sort of Tripadvisor or AirB&B for workers on fixed-term contracts. It would work in this way. Every time a precarious worker enters into a market relationship with a capitalist, be it to rent a house or to buy a computer on installments, the capitalist expresses a judgement on the reliability and seriousness of the worker with respect to her contractual commitments. The assessment will be recorded on the worker’s online profile – assuming, of course, that the worker wishes to subscribe to the online platform. A precarious worker who has always fulfilled her contractual duties, either because she has never lost the job or because she has proved capable of finding the right economic backing (from friends, relatives, and so on) for moments of joblessness, would score high on her profile.
A worker can then attach her positive assessment to the request for rent or credit. This will help the capitalist to quantify the risks related to a possible market interaction with the worker, and of course, in case the assessment is very positive, it would push the capitalist to overcome his qualms. If out of ten purchases, the worker has always paid all her installments, why not also grant her the eleventh purchase? If in the last seven years the worker has never abused her special tenancy agreement, why should she start doing so now?
Living without any form of income other than that of fixed-term contracts is a risky affair. At any moment you can find yourself without money on your current account. If it is true that precarious work makes the overall economic system more fluid and efficient, or even if it is not true and hence precarious work is a sad but inevitable drift for more developed countries, it is not fair that the risks of precariousness fall only on workers. Thus, I have put forward a European proposal to correct this injustice: loosening the guarantees to real estate and financial capital. However, the risks of precariousness do not necessarily translate into loss of income. Many people move from one precarious contract to another, or even when faced with unemployment they manage to find alternative economic backing. I therefore made a second proposal: introducing a European online platform, through which workers can receive feedbacks, on a voluntary basis, from the capitalists they interact with. The more positive the evaluation track of the worker, the greater the chances that capitalists will accord her access to their assets.
- See Guy Standing, “Labor recommodification in the global transformation”, in Ayşe Buğra and K. Ağartan (eds), Reading Karl Polanyi for the Twenty-First Century: Market Economy as a Political Project (New York: Palgrave Macmillan, 2007), pp. 67–94. See also Fausto Corvino, Global Justice, Markets and Domination: A Cosmopolitan Theory (Cheltenham, UK, and Northampton, MA: Edward Elgar, 2020).
- See Joseph Choonara, Insecurity, Precarious Work and Labour Markets: Challenging the Orthodoxy (New York: Palgrave Macmillan, 2019).
- Timothy Whitton, “The Growth of Precarious Employment in Great Britain”, Revue Française de Civilisation Britannique 12, no. 2 (2003): 1-16, 1-5.
- See Arne L. Kalleberg, Arne L. “Globalization and Precarious Work.” Contemporary Sociology 42, no. 5 (2013): 700–706.
- See Guy Standing, The Precariat: The New Dangerous Class (London-New York: Bloomsbury Academic, 2011), pp. 155-183.
- See Philipp M. Lersch and Caroline Dewilde. “Employment Insecurity and First-Time Homeownership: Evidence from Twenty-Two European Countries”, Environment and Planning A: Economy and Space 47, no. 3: 607–624. See also Standing, The Precariat, pp. 40-45
- Simon Caney, “Justice and the distribution of greenhouse gas emissions”, Journal of Global Ethics 5, no. 2 (2009): 125-146,
- William Sweet, Climate Diplomacy from Rio to Paris: The Effort to Contain Global Warming (New Haven/London: Yale University Press, 2016).
- John Rawls, A Theory of Justice – Revised Edition (Cambridge MA: The Belknap Press of Harvard University Press, 1999), p. 4.
- See Allen Buchanan, “Justice as Reciprocity versus Subject-Centered Justice”, Philosophy & Public Affairs 19, no. 3 (1990): 227-252.
- Bas ter Weel, “The Rise of Temporary Work in Europe”, De Economist 166, no. 4 (2018): 397–401.
- Maarten Verwey, Sven Langedijk, and Robert Kuenzel, “Next Generation EU: A recovery plan for Europe”, Vox, 9 June 2020, retrievable at https://voxeu.org/article/next-generation-eu-recovery-plan-europe