Americas Choice: Class Conflict or a New Social Contract at Work The Future of Work Conference Thomas A. Kochan MIT Institute for Work & Employment Relations.

America’s Choice: Class Conflict or a New Social Contract at Work

The Future of Work Conference

Thomas A. Kochan

MIT Institute for Work & Employment Relations

MIT Workplace Center

London

June 23, 2003

The Issue: Mismatch of Policies & Institutions with Work & the Workforce

Key Facts:

– Changes in Work & the Workforce– Policies & Institutions Designed in 1930s

Result:

– Mismatch creates gap between winners & losers and limits economic performance and innovation

– A breakdown in the old social contract

The Challenge

– Break the policy impasse by reframing the debate, engaging new voices, & building on local innovations

– Building a social contract for the future

The Puzzle: Why the Deafening Silence?

Decade of boom & bust leaves working families with:– Stagnant, declining incomes– Increased inequality– Longer working hours– Less retirement savings; fewer health care benefits– Broader job insecurity– Breakdown in trust in corporate leaders– Loss of worker voice in society

Current government policies producing:– Further cuts in services & jobs – Tax policies that further increase inequality– Deep divisions over war policies – Direct attacks on workers, unions, and core values

One Scenario: An Era of Tension, Division, Conflict, Decline, and Potential Backlash

Government service cuts at state & local level International tensions and anti-Americanism intensify Anti-globalization protests Racial tensions Widening income inequality—domestic and global Work and family conflicts Loss of confidence in key institutions Growing sense of Helplessness High potential for backlash and extremism

An Alternative Scenario: A New Social Contract

Engaging the Public: Can it be a force for Change?

Revisiting basic values: The moral foundations for work

Work & its Role in Society

Expanded View of the Key “Actors” & Institutions

Multiple Stakeholder View of the Firm

Expanded Roles for Unions/Associations

Expanded Role for Labor Market Intermediaries & Community Groups

Recast Government as a Catalyst for Change

Starting Points: The Moral Foundations for Work

Efficiency: Necessary but not Sufficient Work as a Source of Dignity and Personal Development A Living Wage Respecting Diversity & Equality of Opportunity Solidarity & Social Cohesion: The Common Good Voice & Participation Local Control: Solving Problems at the Source Integrating Work, Family, and Community Responsibilities A Social Contract

Economic Function

• security

• standards

of living

• efficiency

• quality

goods &

services

Individual Value

• dignity•

respect•

identity•

voice•

social interaction

World of Work

Place in Society

family

community citizenship

A Holistic View of Work in Society

The Firm & its Multiple Responsibilities

The Firm

Shareholders& Customers

UnionPartnerships

Communities

Labor MarketNetworks

Employees

Suppliers &Contractors

GovernmentAgencies

The Challenge

“Managing a company, not a share price, means balancing the requirements of shareowners, customers, employees, and communities. And managing a company for the long-term, not just the short-term, requires building sustainable value for shareowners and customers and employees and communities. And these relationships of sustainable value require real trust and real candor.”

Carly Fiorina, CEO, Hewlett Packard, October 12, 2002

The Opportunity

“There has never been a time when corporations have had the reach, the resources, the knowledge, and the expertise to make a difference that we do today. Now, more than ever, corporate leaders have an opportunity to redefined the role of the corporation on a world stage; to leverage our ability to improve the live of people, communities, and nations for the better.”

Carly Fiorina, CEO Hewlett Packard, October 12, 2002

Realities: Changing Role of the Firm

The New Business Model: Core Competencies– More difficult to perform labor market functions– Unstable boundaries: Unstable Partnerships– Premium on Flexibility; Adaptability to Uncertainty

Increased Role of Knowledge/Human Capital– Knowledge “Workers” or “Work Systems?

Must Work Collaboratively with other Institutions Today’s Reality: Diversity in Organization Forms Transparency, Trust, & Accountability: Laws, Leadership,

& Employee Voce

Multiple Purposes of the Next Generation Unions

NextGeneration

Unions

PoliticalVoice

DirectParticipation

CoalitionPartner

Mobility &OccupationalCommunity

CollectiveBargaining

StrategicPartnerships

The Realities: Void in Worker Voice

Workplace– Pre-depression levels of union membership– Representation Gap increasing

Collective bargaining in decline– Can’t take wages out of competition– Declining power of the strike

Enterprise—struggling to find a forum– Partnerships, ESOPS, Shareholder Resolutions….

Absence of voice in national political affairs

Will there be a Next Generation Labor Movement?

Diverse Labor Force Wants & Needs Diverse Forms of Participation & Representation

Unions as Extended Networks Require:– Continuous membership over full career– New approach to membership recruitment– New sources of power– New coalitions– Different structures--coordination across union

boundaries Question: Can the labor movement adapt and

reform or will it require a rival movement?

Emerging Labor Market Institutions

Labor Market Intermediaries &

Community Groups

Job Matching

CoordinatingNetworks

InformationServices

Family Advocacy& Services

Training & LifeLong LearningWorker

Advocacy &CoalitionBuilding

Intermediaries & Community Groups

Multiple Functions– Job Matching– Life Long Learning– Advocacy: Living Wages; Work & Family– Institution Building

Major Challenges: – Sustainability– Building Power– Moving to Scale: Having a National Impact

Government: A Catalyst for Change?

Government

Linking MacroPolicies

SupportingMobility

Investing inHuman Capital

Experimentingwith Self-

Governance

Setting &EnforcingMinimumStandards

UpdatingLabor Law

Experimentingwith ADR

Promoting State& Local

Experiments

Current Realities

Demise of the U.S. Department of Labor

– From the days of George Shutlz & John Dunlop– To a silent White House Puppet

Current Assaults on Worker Rights

– Department of Homeland Security: “Collective bargaining cannot be allowed because it is a threat to national security.”

Continuing Business-Labor Gridlock

A Shadow Government Policy: A Realignment of Roles

Federal Govt. as Catalyst for Change

Increased Role for State & Local Govt.

Increased Role for International Agencies

– ILO, IMF, World Bank, WTO…and NGOs

A Comprehensive Reform/Updating of labor and Employment Law

Greater reliance on private institutions for enforcement/dispute resolution

Return to Professional Leadership in Labor & Employment Policy

The New Approach in Action: Building a Family Centered Labor Market Policy

Firm-Based “Family Friendly” Policies

Employee Participation to Support Use and Adapt Government Regulations

Collective Bargaining to Expand Coverage

Networks to Promote Family Based Model

State, Federal Policies to Fill Gaps, Extend Coverage, Provide Resources, Support Local Adaptations & Experiments

Making it Happen

New Ideas

More Innovations

Public Engagement

Full Range of Voices:

Labor, Management, Community Groups, Women & Family Advocates….

National Leadership?