The Deal in 2020 A Delphi study of the future of the employment relationship - Prepared by Wilson Wong and Jane Sullivan with Laura Blazey ...
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The Deal in 2020 A Delphi study of the future of the employment relationship Prepared by Wilson Wong and Jane Sullivan with Laura Blazey, Alexandra Albert, Penny Tamkin and Gemma Pearson
Acknowledgements
The authors would like to thank our Delphi experts (Appendix 2) who were so generous in
contributing their time and their considered thoughts in an intense exchange over October and
November 2009.
Our thanks also to our Expert Challenge Group (Appendix 3), the delegates at the HRN Europe
Conference 2010 in Vienna, the Non-executive Board and Executive Team at the Pensions,
Disability and Carers Service (Department of Work and Pensions), and our programme
sponsors for participating in the road-testing of the scenarios.
Special thanks to colleagues who have contributed, shaped and supported this process,
especially David Shoesmith for the proofing, Ian Brinkley, Sezis Okut and interns Divya
Adusumilli and Justin Klug for Section 3, Ben Reid for his skilful turn of phrase and report
roadmap, and Marianne Huggett for her insight and good humour.
2 The Deal in 2020
Contents
Foreword 5
1. Executive summary 6
1.1 People management assumptions 6
1.2 Drivers of change 7
1.3 Implications for people management 8
2. Introduction 10
2.1 Planning for the future or worrying about the present 11
2.2 Exploring future possibilities using the Delphi Technique and scenarios 14
3. The future of work and the context for work 17
3.1 The Delphi drivers 17
3.2 Other factors that will shape the future of work 30
4. Scenarios for the future 40
4.1 Scenario 1: Status Quo 40
4.2 Scenario 2: Globalisation 42
4.3 Scenario 3: Eco-centrism 45
4.4 Scenario 4: Tribalism 47
5. Implications for people management – early indicators 51
5.1 Reflections on the challenges for people management in the next decade 51
5.2 People management implications of the scenarios 62
6. Challenges for HR 74
6.1 The first challenge 74
6.2 The second challenge 74
6.3 The third challenge 75
7. References 76
Appendix 1. Delphi methodology 81
Appendix 2. Biographies of the Delphi expert panel 84
Appendix 3. The Future of HR programme Expert Challenge Group 92
Contact details 94
The Deal in 2020 3
Contents
List of Figures
Figure 1: The four scenarios 8
Figure 2: Delphi 2020 report roadmap 10
Figure 3: Forecast claimant count for unemployment UK. Treasury vs. Independent analysts 22
Figure 4: Economic growth forecasts UK. Treasury vs. Independent analysts 22
Figure 5: Immigration patterns into the UK 30
Figure 6: Projections regarding the ageing UK population 31
Figure 7: Life expectancy at birth of males and females in the UK 32
Figure 8: Inflows of foreign workers into selected OECD countries 1998 and 2007 33
Figure 9: The four scenarios 40
Figure 10: The antecedents, levels, conditions and consequences of employee engagement 59
Figure 11: CEO remuneration vs median earnings (1999 = 100) 60
Figure 12: A comparison of the growth of executive salaries in the public and private sectors
1999 and 2008 61
Figure 13: Scenario 2: Globalisation 66
Figure 14: Scenario 3: The rise of the green economy 70
Figure 15: Scenario 4: The rise of tribalism 73
4 The Deal in 2020
Foreword
As for the future, your task is not to foresee it, but to enable it.
Antoine de Saint-Exupery (1900-1944)
Only time travellers can experience the future first-hand. For the rest of us, the future is
constructed of one’s hopes and fears, expectations, speculations and dreams, the things that
shape and lend meaning to life’s passage. The difference between foreseeing the future and
enabling it lies in the power we have to act on those things over which we have control. That
requires awareness of one’s direction of travel and potential impediments. Of course, there will
always be discontinuities that shift the course of history. 9/11 was one such moment. We believe
that there are clear benefits to imagining and acting on a future yet to be.
Every decision we make is informed fundamentally by our time horizon (Zimbardo & Boyd,
2008) and the manner decisions are framed in time (Wong, 2008). Offered £50 today or £100
in a year, which would you choose? What if you’re offered £50 in five years and £100 in six?
Imagine that taking hold of the future is like facing up to a climbing wall. Every spur, overhang,
or buttress is a possible approach to success or an encumbrance. This report leads us away
from the certainties of the here and now to a world of options and probabilities.
We take an expedition to 2020 using a methodology named after the Delphic oracle at the
Temple of Apollo that systematically identifies which drivers are likely to shape the employment
relationship over the coming decade. By synthesising these drivers into four different but
plausible futures, we present a scaffold, a climbing wall with trend data and expert opinion
providing the holds and crevices to enable us to approach our future, and to inform our choices
based on an extended time horizon.
We have drawn on a luminous universe of thinkers to produce this report. We stand on the
shoulders of giants, humbled and excited by the possible conversations we hope this report will
encourage. Our thanks to everyone who has made this such a stimulating journey.
We shall leave you with a final cautionary note from a much loved friend -
‘Would you tell me, please, which way I ought to go from here?’
‘That depends a good deal on where you want to get to.’
‘I don’t much care where –’
‘Then it doesn’t matter which way you go.’
Lewis Carroll (Alice in Wonderland)
Wilson Wong and Jane Sullivan
23 June 2010
The Deal in 2020 5
1. Executive summary
If you cannot accurately predict the future then you must flexibly
be prepared to deal with various possible futures.
Edward de Bono
This report, the third in a series examining the evolving employment relationship between
employers and employees (what we call ‘the Deal’), sets out to expose the key drivers that
are likely to influence the nature of the employment deal in 2020 and imagines three distinct
scenarios that throw up a range of issues for people management.
Trying to predict the future is an unenviable task. The mysterious unknown becomes the
blindingly obvious through the course of time, yet it is usually hindsight not foresight that
provides us with that clarity of vision. In the world of work some predictions (the demise of the
job for life, the rise of the portfolio career) have stepped wide of the mark while others (the
impact of technological advances on worker mobility) have struck gold. Even if predictions
do not come to pass, anticipating the future helps us to plan for the changing expectations
of employers and employees and the implications of change on the working world and wider
society.
This report demonstrates the value in reflecting on the future of people management. It
aims to provide those responsible for people management, with a number of considerations
that potentially could affect the nature of the employment relationship, and highlights their
instrumental role in shaping and responding to these challenges.
1.1 Any discourse about the future of people management lacks context without consideration
People of the changing nature of organisational context, employment models and the employment
management relationship (‘the Deal’). That the future of HR literature tends to largely ignore the interplay
assumptions between wider contextual factors and the future of the profession is of concern given that many
commentators see a vital role for HR as the architects of the agility that will enable organisations
to respond and adapt to these challenges. One only has to consider some of the changes
that have taken place in the last 100 years to appreciate the need for organisations to ready
themselves for further discontinuities.
What is clearly missing from the literature is a breadth of vision that encompasses the external
contextual factors that will shape organisations in the future and thus significantly impact
the role, impact and capability requirements of HR and those broadly responsible for people
management.
6 The Deal in 2020
Executive summary
The future of work literature highlights a number of key drivers that will impact work in the
future. Trend analysis emphasises the potential impact of changing demographics on the world
of work – in particular, population growth, the ageing nature of the population, the patterns
influencing the changing demographics in the workplace, the impact of migration; and the
growth of new industries with a particular focus on the knowledge economy. The data suggests
that organisations should be focusing on the impact of changing demographics on employee
health and wellbeing; engagement; the advent of new business models that will embrace
different forms of contractual flexibility and give rise to a more ‘hourglass’ shaped organisation
characterised by the talented elite and the less skilled masses; the combined impact of
changing demographics and technological advances on the potential and need for more flexible
models of work; the potential demand for a more mobile workforce; and the role of workplace
trust and control in a world where innovation and productivity will become even more central to
organisational agility and success.
1.2 In exploring the 2020 deal, The Work Foundation undertook a Delphi research exercise, inviting
Drivers a panel of experts from different disciplines to identify what they believed would be the key
of change drivers for shaping the employment deal in the next ten years. The expert panel agreed that
the following drivers will be the most significant: the growth of information and communications
technology (ICT); globalisation; faster economic growth in developing economies offset by
slower economic growth in developed countries, including the UK; social, economic and
workplace inequality; education and skills; the environment/climate change; and the changing
role of the State.
These drivers, alongside the review of trend data, have been synthesised into four scenarios
that could emerge over the next ten years. Scenarios 2, 3 and 4 deliberately assume
discontinuities, yet each is plausible, and designed to open up a reflective space for potential
future challenges to people management. Each scenario (2, 3, and 4) leads into a discussion of
the implications for people management reflecting on the way the future of HR has been framed
in the literature and whether the Delphi-led scenarios challenge those views. The report in no
way prioritises any scenario as its preferred future.
In the ‘baseline’ scenario, Status Quo, the Britain of 2020 is clearly recognisable – it represents
a continued trajectory of the trends we see in 2010, with no major shocks along the way. In
the second scenario, Globalisation, the market is deemed the most efficient distributor of
resources, and the private sector the main source of wealth creation. Scenario Three, Eco-
centrism, describes a world where the State, business and civil society are shaping the green
revolution and there is a society-wide consensus that sustainability is core and the need to
pass to the next generation a healthy planet paramount. The fourth scenario focused on the
The Deal in 2020 7
Executive summary
Figure 1: The four scenarios
No major shocks –
continuation of the • Unbridled market liberalisation
current state of play • Limited role of the State,
government abdicates to market
• Rise of civil activism – trade
unions and guilds; environmental
development, human rights and faith
• Environment and
resource constraints • Technology
• New technologies • Unequal access to health/wealth/
• Civil society opportunity
• Small State
• Business ideology dominates
• Pay and reward
• Geography
rise of Tribalism, fashioning a world where the market is inadequate to the task of distributing
resources for the ‘good’ of all, inequalities are widening and the stratification of society is stark
creating an increasingly fractured, tribal society.
1.3 The report outlines some key challenges for people management in 2020 – some of which
Implications are scenario dependent, and some which rely purely on the analysis of trend data. The core
for people implications are likely to strike a chord regardless of which scenario plays out; although the
management size, scale and scope of the challenge might be intensified or reduced by the synthesis of the
different drivers as predicted by our Delphi experts.
• The war for talent is predicted to intensify.
• The burden for skills will fall increasingly on employers who may shift the cost to
employees.
• Organisations may see the rise of new business models and a new organisational
hierarchy where power and status is aligned with an individual’s market value as
opposed to role, creating new implications for the balance of power in the firm of 2020.
• Organisations will move away from their current focus on generational diversity, and
Generation Y to an emphasis on managing life stage diversity.
8 The Deal in 2020
Executive summary
• The enabling power of technology combined with the environmental and fiscal need to
encourage greater flexible and remote ways of working will pose significant challenges
to leadership, virtual team dynamics, and remote people management.
• Predictions of greater globalisation and enhanced mobility of the workforce and rising
levels of structural unemployment may place pressure on organisations to shift to
models of increasing contractual flexibility.
• Employee engagement thinking should mature with recognition of engagement as
an attitude, shaped by core values, which then influences individual and collective
behaviour. Approaches to engagement will need to accommodate increasingly polarised
organisations that are less defined by place, and more defined by common purpose.
• How organisations engender voice and involvement in the organisation of the future
begs consideration but it seems likely that relentless change, increasing inequalities in
society and the workplace, widening pay differentials, and limited social mobility may
create more opportunities for workplace conflict.
• Pay will continue to be highly competitive as organisations compete for the best talent;
there is likely to be a fall out in terms of employee engagement should the gap in
pay continue to widen and reward systems will need to encourage, rather than stifle,
creativity and innovation.
• Productivity will be key requiring a radical step change in the skill and attitudes of
managers to enable greater autonomy and control in the workplace.
The implications for people management are also considered in the light of each of the
scenarios, placing emphasis on different factors contingent on the primacy of each of the drivers
for change.
This report does not intend to provide a blueprint for HR to respond to significant changes in
the context. Instead, this report seeks to demonstrate that for HR to survive in an ever changing
future environment, it is vital that the profession looks beyond internal structures and regularly,
diligently surveys the road ahead. The future of HR lies in it being the architect of organisational
agility and adaptability and whilst HR has traditionally relied on restructuring and streamlining
to achieve its own agility, perhaps now is the time for the focus to shift externally if HR is to be
relevant and impactful in 2020. The challenges are immense, some recognisable, others less
so. What this calls for is a profession that is truly global in its perspective, business-aware, and
proactive as it supports organisations to strategically anticipate, plan for and address these
challenges to people management and organisational performance.
The Deal in 2020 9
2. Introduction
This report contributes to the ongoing debate on the future of work, and in particular the
future of the relationship between employers and their employees. There is no doubt that
the employment relationship has changed dramatically in the 20th Century (Wong, et al.,
2009, Chap. 3), and continues to evolve in the first decade of the new millennium. How HR
as a profession can respond to these changes is an issue at the heart of the Future of HR
programme of research. We begin this report by exploring the existing literature that envisions
tomorrow’s HR, seeking to answer the question: how ‘future focused’ is the future of HR
literature?
Figure 2 below serves as a guide to the main report:
Figure 2: Delphi 2020 report roadmap
10 The Deal in 2020Introduction
2.1 In exploring the implications for a ‘future proof’ HR, most commentators start with an
Planning for assessment of the current impact and effectiveness of HR as it stands today. For over a decade
the future or the criticisms of the HR function have seemed eerily consistent, and cluster around the following
worrying about issues: HR’s ability to think and act strategically (Tamkin, et al., 1997; Kujipers, 1995; Kuhns
the present & Amuso, 1993; Reilly, 2007); HR’s ability remain in touch with business priorities (Kujipers,
1995; Mirvis, 1993; Reilly, 2007); the extent to which HR add value to the business (Tamkin,
et al., 1997; Kujipers, 1995); HR’s relationship with management (Tyson & Fell, 1992; Skinner,
1981); and HR’s lack of clarity around its role or purpose (Tamkin, et al., 1997; Warnick, 1993).
While such consistency suggests that there is a clearly articulated view of where the sources of
ineffectiveness may lie, this alone does not clearly pave the way for the future of the profession
because of its focus on what HR currently does.
In moving beyond an assessment of current HR effectiveness, the future of HR literature turns
its focus towards those at the forefront of the profession, placing leadership at the centre of the
future of HR debate. The CIPD’s ‘Next Generation HR’ (Sears, 2009) emphasises the significant
role of HR leadership as the ticket to HR successfully securing its status as a strategic partner
in the future, and outlines that a new breed of HR leader is emerging – one with a real share
of voice and influence that acts as provocateur. This focus on HR leadership is also shared by
Strack, et al., (2008, p.3) who argue that ‘Excellence starts at the top…Ideally he or she (HRD)
should have the same status and power as the chief financial officer’.
The level of discourse about HR leadership in the literature suggests that there is something
of a perceived crisis in this area. These concerns about HR leadership are also reflected in
concerns about capability in HR more generally. There is a view that HR is suffering from a
dearth of appropriate and fit-for-purpose skills that enable it to add value today, let alone HR’s
relevance as it looks to the future, leading Reilly (2007) to question if HR is doing enough to
build future capability. Tamkin, et al., (2006) highlight that the dispersal of HR talent into distinct
populations (in-house and outsourced, generalist and specialist, administrative and strategic)
have left such communities isolated and separated in location, leadership, philosophy, aims
and stakeholder interactions. The fact that the skill requirements in each of these areas are also
different from each other makes the task of developing people into these roles all the harder.
The challenge of developing appropriate skills and capabilities in the future are, therefore, seen
as a consequence of the way in which the HR function’s teams are structured. Yet, restructuring
is, itself, one way that HR has attempted to ready itself for future challenges and bridge the gap
between current and desired effectiveness. In a survey for the Chartered Institute of Personnel
and Development, UK (CIPD), Reilly, Tamkin and Broughton (2007) found that 81 per cent of
organisations had restructured their HR function in the last five years, with 58 per cent fully or
The Deal in 2020 11Introduction
partially implementing the influential Ulrich model (1997). Although the debate continues with
regards to whether this is the optimum HR structure, Reilly (2007) highlights that such debates
about structure deflect from the important issues impacting the effectiveness of HR.
As Lambert (2009) emphasises, HR should be thinking less about model and structure and
more about need. Yet what appears to be lacking in the future of HR literature is an appreciation
of how those needs may change. While the future of HR literature clearly articulates the
challenges facing the function, it does so from a HR-centric perspective: examining its current
impact, its make-up in terms of leadership, skills and capabilities, and the effectiveness of its
current structure, and largely ignoring the wider contextual factors that have a significant impact
on the future of HR.
Furthermore, if and when the literature does look to the future, there appears to be a basic
assumption that the external environment outside the sector will remain the same. This glossing
over of the importance of the interplay between wider contextual factors and the future of HR is
of concern when attempting to ensure that HR is in some way future proofed. One only has to
consider some of the changes that have taken place in the last century to realise the potential
need for organisations to ready themselves for discontinuities.
According to McKinsey, the average organisational life span is falling, reduced from 45 years
in 1955 to a mere 11 years in 2010, resulting in a greater need for mobility across occupations
and industry. There has been a broad shift in the UK’s economic base from manufacturing to
service and knowledge based industries. The decline of trade unions, the increased numbers
of women entering the labour market, outsourcing, globalisation, mergers, and downsizing
have all impacted the employment relationship (Taylor, 2001). And let’s not ignore the rise in
workplace focus on engagement and corporate citizenship, health and wellbeing, equality and
diversity, and workplace flexibility. The impact of technology on the changing face of work and
the employment relationship has been immense and will continue to be a key driver of change
over the next ten years.
Yet, the ESRC Working in Britain in 2000 survey (Taylor, 2002b) highlighted that many of the
commonly held assumptions about the changing world of work need to be questioned regularly.
Whilst work is changing, in the early part of the new millennium it was clear that there was a
wide gulf between the hyperbole and rhetoric of work in the UK, and the day to day realities.
The evidence stubbornly failed to support the widely held view, for example, that the UK was
witnessing the emergence of a new kind of employee relations, the death of the job for life,
and the much hyped shift away from permanent and full time work to a portfolio of short term
contracts and part time work.
12 The Deal in 2020Introduction
The employment relationship has changed dramatically in the 20th Century (Wong, et al., 2009).
Donkin (2010) asserts we should not ignore the extent to which our social attitudes and value
systems are integral to our relationship with our work, and as they continue to evolve over the
next ten years, employers will need to embrace and understand this to build businesses that
are embodied by the people who work for them. However, factors such as the global economy,
the environment, advancements in technology and the changing demographic have and will
continue to impact on how we work, the shape and nature of organisations, and state of our
employment relationship. Any discourse about the future of people management lacks context
without consideration of the changing nature of organisational context, employment models and
the employment relationship (‘the Deal’).
In setting out a blueprint for the future of the HR profession for the CIPD, Sears (2009)
outlines three key elements to HR’s role in future – as the designer of future-proof cultures, as
organisation guardians and commentators, and in the development of future fit leaders. Yet in
promoting the concept of organisational equity as the focus for sustainable performance, there
is a continued focus on HR to be more strategic and to take a longer term view, but without
consideration of what the wider contextual factors affecting the future needs of organisations
might be.
There is broad consensus that in future HR needs to be more sophisticated, strategic, and
focused on need. These arguments are not new. There are other challenging perspectives out
there – talent management and pipelines may look different (Sparrow, et al., 2008; PWC, 2009).
Wellness, diversity, workforce planning, and ethics may become core areas for HR (Lambert,
2009). Donkin (2010) focuses on the critical nature of performance management, the need
to establish diverse employment pools, and the challenges in managing diverse contractual
arrangements. The literature generally concurs that the engagement of employees will continue
to be a key priority for organisations and a core specialism for HR in the future, yet as stated
by Balain and Sparrow (2009, p.23) ‘Employers need to better understand the individual and
collective factors that are associated with, shape and explain the employee’s relationship with
the organisation’.
While these examples represent an acknowledgment of the changing future context, PWC’s
Managing Tomorrow’s People project provides a challenge to the bulk of the literature that
is steeped in the status quo. It takes a tentative step into the future, exploring the possible
organisational and employment models and the potential role for HR, by creating three artificial
but feasible future ‘worlds’, as a starting point for understanding the possibilities and challenges
for people management in the future.
The Deal in 2020 13Introduction
There is a plethora of literature focusing on the future of HR, but little acknowledgment of the
trends and potential discontinuities likely to affect people management in the future. As outlined
above, much of this literature is relatively short term in its focus, and much of it castigates HR
as a floundering function that needs to sharpen its game to ‘survive and prosper’ or bemoans
the ‘bad press’ that HR is afforded. This discourse has unquestionably absorbed an immense
amount of time, energy and resource, but few clear prescriptions for success have emerged.
What emerges from the literature is a remarkably inward focus on the profession – few
commentators are looking at or even considering the very real possibility that the employment
relationship and business models might change, beyond a consideration of the next generation
entering the workplace. Those papers that do cast into the future are inevitably doing so on the
assumption that the societal and organisational context and the employment relationship will
see little change. Similar to a doctor discussing the future of the medical profession without due
consideration to the advent of new treatment technologies or diseases, it is vital to consider the
broader societal, organisational and economic contextual factors in any discussion of the future
of HR.
The purpose of this report is therefore to use a specific methodology, the Delphi Technique
(see Appendix 1), to explore the wider contextual factors that may affect the future of people
management and to provide a platform for the HR function to begin to consider some of the
potential future challenges they may face.
2.2 Futurology is peppered with difficulties and some would argue a futile game. However,
Exploring future successful organisations are those that are thinking strategically, anticipating future changes,
possibilities and then building the flexibility and agility to navigate those changes successfully. Future
using the Delphi methodologies are now regularly deployed by organisations for strategic planning, risk
Technique and management, leadership away days and so on. It is a way of focusing management beyond
scenarios their day to day imperatives. Back-casting is one familiar technique where planners work
backwards from a specific future date in order to identify what needs to be done to achieve a
specific desired end state, and also to assess if the end state is at all attainable within the time
and resources available. This is similar to road mapping which is used in central planning. A few
more examples of how the future can be discussed in the present are:
• Cost-benefit analysis of possible future circumstances;
• Decision modelling (weighting anticipated choices and consequent decisions);
• Econometric modelling;
• Focus groups;
• Forecasting using estimates of the probability of certain things happening;
14 The Deal in 2020Introduction
• Horizon scanning of what is already ‘on the horizon’ and likely to happen relatively
soon;
• Scenarios (Internally consistent alternative takes on – usually – a particular point in the
future);
• Trend analysis (analysing and projecting past trends into anticipated futures);
• Visioning (developing a compelling but descriptive vision of a desired future harnessed
usually by those in leadership in order to rouse people to action).
The Work Foundation has chosen the Delphi Technique to explore the future drivers of the
employment relationship because Delphi provides a methodology to project how the current
state of the employment relationship might change in a manner that requires fresh capabilities
and thinking for management. The Delphi Technique is an established, accepted method for
achieving a broad convergence of opinion from a diverse group of subject specialists who
are posed questions on a certain topic area. Developed at the Rand Corporation in the 1950s
(Dalkey & Helmer, 1963), the method involves a structured discussion on a specific area with
the purpose of guiding the discussion towards a broad consensus. The method seeks to move
beyond the limitations of ‘what is’ to begin a conversation of ‘what could/should be’ (Miller,
2006).
The methodology was also determined by the area of inquiry. The Delphi method was chosen
because expert judgment rather than statistical method was appropriate (Jolson & Rossow,
1971). Rowe and Wright (2001) reviewed studies contrasting Delphi against using individual
experts, against traditional group consultations and against statistical analysis of survey
consultation and concluded that the Delphi results, when properly administered, were five times
more accurate than traditional groups and 12 times better than statistical surveys. The core
features of the Delphi approach are:
• Iteration – to try to build a consensus among the experts;
• Controlled feedback – where only information and opinions relevant to the question is
fed back to the panellists;
• Some form of statistical aggregation of their responses – using frequencies rather than
probabilities; and,
• Anonymity – to control for the halo effect due to the differing areas of expertise.
The key drivers of change, as prioritised by the experts from the Delphi methodology, and from
the literature review, have been combined to create four scenarios for 2020, including one that
assumes a continuation of current trends, and three that mark a significant departure from the
The Deal in 2020 15Introduction
current path. Since the drivers stand somewhat in isolation, it was necessary to synthetically
aggregate them into scenarios so as to create a space in which to explore possible futures
and people management implications. These scenarios provide the ‘big picture’ context and
are designed to enable the reader to consider the possible implications of the interactions of
several key drivers of change. From there we can then start to reflect on some of the people
management implications for the future.
It must be emphasised that the scenarios are not the product of a scenario planning process.
The scenarios are synthetically devised in order to provide the platform from which interested
readers can explore from a future space, the employment relationship in 2020. These scenarios
were, however, road-tested with diverse executive groups, our sponsors, our expert challenge
group, the Delphi experts and with Work Foundation colleagues for internal consistency. The
scenarios are described at a level of detail to generate discussion on people management
in 2020 without providing an overload of information. The people management implications
emerged from consultations with a large number of people on the drivers and the scenarios.
The discussions on people management owe their focus to the Delphi drivers but were not part
of any of the rounds during the Delphi exercise.
16 The Deal in 20203. The future of work and the context for work
The Work Foundation’s Delphi research (Appendix 1), combined with a scan of the ‘futures’
literature highlights a convergence of opinion regarding the trends that are most likely to shape
the employment relationship over the next ten years. Our Delphi experts focused on seven
key drivers: globalisation, ICT, the environment, slower economic growth in the developed
economies vs. strong growth in parts of the developing world; a smaller role for the State;
social inequality; and education and skills. The futures literature also identified some of these
factors – particularly information and communications technology (ICT), the environment
and globalisation – in addition to focusing on the ongoing pressure to improve productivity
and performance, increasing flexibility in when, where and how we work; the impact of new
economies (eg low carbon and knowledge); and the imminent demographic changes, especially
the emphasis on generational differences and the ageing population.
Some of the ‘futures’ papers, for example the ESRC series, were written well before the onset
of the 2008 recession and so their predictions are largely based on a cycle of continuous
growth whereas the present study was conducted during the recession. Both are clearly works
in progress subject to regular review but provide a shape to the future to make longer-term
strategic thinking possible. The employment relationship over the next decade will inevitably be
shaped by the choices made by governments, businesses and consumers in response to their
estimation of the future. For example, public services across many developed countries will face
cuts in the next few years. Then as now the shape of the public sector deal will impact the way
it attracts, retains, and engages high quality recruits. The enormous challenge over the next
decade is how to do this when public resources are severely constrained.
This section explores the views of our Delphi experts, our review of the trend data that supports
these drivers, and reviews the existing literature on the future world of work to develop a rich,
and broad picture of the elements shaping the future of work.
3.1 The Delphi exercise identified seven key drivers that our expert panel broadly agreed will shape
The Delphi the future of work and potentially impact on the shape of the employment relationship in 2020.
drivers
3.1.1 The growth/ubiquity of information and communications technology (ICT)
There was a clear consensus amongst the Delphi experts that the future of work will be shaped
by ICT. At work, ICT will facilitate greater flexible working and global networking. Individuals
may find themselves working simultaneously for multiple employers engaged in a variety of
tasks linked virtually to each using a plethora of devices, networks and intermediaries. ICT may
also be deployed for work standardisation, surveillance and be more invasive of private spaces
although somewhat mitigated by the benefits of socialisation. Private and work time will become
increasingly permeable as the worker-consumer internalises a culture of 24/7 responsiveness
The Deal in 2020 17The future of work and the context for work
as a norm. Gaps in employment may become the custom and the subject of personal
choice and/or market conditions. There will be styles of work that potentially circumvent
present employment regulation. The emergence of live language translation, large consumer
databases, and profiling of customers will change the relationship between consumer-citizen
and businesses/the State. It will enable the mass personalisation of services and encourage
innovation in services delivery, creating new business models, and further globalisation.
Through an explosion of connectivity devices the individual will discover new ways of
association, possess multiple identities, participate in temporary communities of interests and
use virtual self-promotion professionally and at leisure. Those with ICT skills that add value
to business processes will be in demand, ensuring a competitive advantage for the most ICT
literate – there may be some generational advantages here. With the ubiquity of ICT set to
intensify, there will be concerns regarding personal privacy and possible State intrusion/control.
The Delphi emphasis on ICT is supported by the broader literature. Bradshaw, et al., (2009)
illustrate the extent to which new technologies have changed how we live and work in the last
decade. One quarter of the population now uses the Internet. In 2008, the amount of time spent
on the Internet for business and leisure by the average person in the UK had more than doubled
since 2004. The average online spend per UK Internet user almost tripled between 2003 and
2007. Ten years ago Internet banking barely existed, yet today 22 million adults use the Internet
for their banking and this is set to increase. In 2009, 65 per cent of UK households were set up
with broadband, an increase of 7 percentage points on the previous year. In 2002, there were
one billion mobile phone subscriptions; this had increased to four billion by 2009.
Bradshaw, et al., (2009) predict a range of technological developments over the next decade
that will impact on how we work including personalised web based applications, cloud
computing, real time interaction, always-on web features. In the next three years it is anticipated
that 50,000 professional service robots will be installed worldwide, and that nearly 12 million
service robots for personal use will be sold. They predict a continuation and intensification
of global wind energy and biodiesel capacity. They also anticipate the rise of shared local
suburban ‘work hubs’ as ICT enables more flexible ways of working.
3.1.2 Globalisation
The Delphi experts were evenly divided as to whether the next decade will be dominated by
a deepening of the globalisation project (possibly at regional level) or if the intensification of
global interconnectedness will provoke robust resistance at local level leading to localisation of
some markets and the beginnings of a protectionist backlash. Indeed there was a compelling
18 The Deal in 2020The future of work and the context for work
argument by a minority of the Delphi experts that triggers for one direction or another could
subsist simultaneously within and between regions.
About half of the experts felt that labour standards would continue to be led by the developed
countries. The remaining half argued that perhaps there would be a disconnect between the
developed countries and the fast emerging developing economic powers.
The OECD (2005) describes the term ‘globalisation’ as, ‘a dynamic and multidimensional
process of economic integration whereby national resources become more and more
internationally mobile while national economies become increasingly interdependent. The
dynamics of globalisation is necessarily pervasive and encompasses, inter alia, the political,
economic, legal and technological’ (p11). Driven by the certain increase in trade in goods and
services, deepening of cross-border capital flows, and combined with the development and
spread of technologies, labour markets will become more integrated in 2020. The World Bank
forecasts a threefold rise for global trade in goods and services to $27 trillion by 2030 (World
Bank Institute, 2007).
The Delphi experts believe that globalisation will be most keenly felt by the workers in the
relentless pursuit of cost efficiencies, shorter product cycles, greater service innovation, and the
anticipation of (unpredictable) consumer behaviour. Although there is a traditional preference for
hiring locally (Rudiger, 2008), global cost arbitrage will encroach into jobs traditionally regarded
as knowledge-based. The Tomorrow Project (2007) argues that globalisation will contribute to
further off-shoring of the ‘middling’ white collar jobs that can be done cheaper and competently
in the developing economies. There will be increased standardisation and intensification of work
as jobs become more mobile. The global labour pool will far exceed the available jobs. Far from
moving away from Fordism, technology will allow for new permutations enabling standardisation
of work while allowing increasing personalisation of the customer experience. The consensus
is that there will be a fault line between the full worker-citizen and the rest; this pattern of elites,
worker-citizens and the work-disenfranchised can be seen within and between cities, countries,
regions and sectors.
The literature indicates that one of the key factors contributing to accelerated globalisation has
been the rise of the middle class consumers in the BRIC economies – Brazil, India, China,
Russia and similar growth economies – creating a larger, global demand for new products
and services. As a consequence, new formidable transnational companies originating from
developing countries will thrive. Just as the consumers in developed countries benefited
from trade liberalisation in the twentieth century, so too will the consumers from fast-growing
economies.
The Deal in 2020 19The future of work and the context for work
It is widely believed that the interconnection between globalisation, migration and skills will
increase in the next decade (Brinkley, 2009b; Deloitte, 2006; Lambert, 2009). To date, the
integration of emerging economies into global markets has underpinned a fourfold increase
in the effective global supply of labour, particularly in the form of low-skilled workers. This
trend is expected to continue (see World Bank, 2006) – China and India alone are expected to
add over 300 million workers to the global labour pool by 2030. For the foreseeable future at
least, the comparative advantage of these developing economies will remain in low to medium
skill activities (BIS, 2009). This will increase the competitive pressures on UK firms in these
sectors. There is a narrowing of the divide in the research capabilities of the developed and fast
developing countries facilitated by the mobility of highly skilled brains through collaborations,
trans-national corporations and migration.
However increased globalisation also raises tensions. Donkin (2010) argues that national
variations in labour legislation have generally hampered attempts to create greater
harmonisation of labour practices across European States. In particular, different regulations
exist with regard to the hiring/firing and the contracting of temporary and agency workers. In
today’s expanded European Union, including some former Soviet bloc countries, the labour
markets of the individual states are at different levels of maturity bolstering the argument for
different standards. Also the issue of sustainability will be important to many TNCs. As they
(re)locate to new places, the welfare of both their employees as well as the communities they
impact will be of direct concern. Corporate social responsibility will be a core business activity.
3.1.3 Economic growth in developing economies/slower economic growth in developed
countries, including the UK
The experts overwhelmingly subscribed to the view that growth in the developed countries
would be constrained in the coming decade with the risk of stagnation/sluggish growth.
According to Mokyr (1990) the three main sources of economic growth are growth in market
size, investment in physical and human capital and technological change. The experts were
evenly divided as to whether the developed economies would benefit equally from the robust
growth in BRICs and other fast growing economies. All were agreed that a main driver for
growth will be innovation, both in the developed and developing economies, and that the former
will maintain the advantage in the coming decade. A concern is the inability to address the
widening socio-economic inequalities especially in economies where structural unemployment
is persistently high. There was no agreement as to the level of State intervention to redress this,
if at all. There was also no agreement on whether the State would be more interventionist in
economic planning by actively backing emerging sectors (eg green technology).
20 The Deal in 2020The future of work and the context for work
The trend data suggests that the UK’s nominal Gross Domestic Product will grow modestly
from US$2546 billion to US$3101 billion by 2020 (Wilson & Stupnyteska, 2007). This reflects a
common pattern across most of the developed economies for slower or even sluggish growth in
the decade from 2011 to 2020, relative to faster growth in the BRICs.
The UK labour force is projected to continue growing over the coming decade, although at a
slower rate than in noughties. The number of economically active people is expected to reach
32.1 million in 2020, equivalent to an increase of 6.7 per cent from 2005. The economic activity
rate of people aged 16 and over is projected to fall to 61.7 per cent in 2020, while the activity
rate of people of working age (16-59/64) is projected to rise to 79.8 per cent in 2020.
Unemployment is forecast by the Treasury to be in the region of 1 million by 2014-2015
assuming growth averaging about 3 per cent in the intervening period (see Figures 3 and 4
on the next page). This forecast has been reduced to an average of below 2.5 per cent over
the same period in the pre-budget report (OBR, 2010). Unemployment trends are probably
too optimistic given that the biggest source of new jobs has been in the public sector (Brinkley,
2009b). Cuts and constraints will limit jobs growth funded by the public purse (Brinkley, 2009b).
Sectors on which the UK has relied, the financial sector, private consumption, manufacturing,
property and extraction (oil and gas) are likely to be more modest contributors to the country’s
GDP in the decade to 2020. More positive job growth is predicted to be found in the creative
industries, manu-services (where manufacturers derive higher value added from knowledge
services than from the manufactured product), green technologies and services linked to the
new economy.
In February 2010, Credit Action reported that personal debt stood at £1.464 billion, 0.9 higher
than a year earlier. This translates to every UK adult holding an average debt of £30,328
(including mortgage debt) (Credit Action, 2010). It is anticipated that private debt, originally
fuelled by a property boom and access to cheap credit, will constrain private consumption in the
developed world.
In the next decade, the BRIC economies will be economic and political powers as a result
of their sustained high economic growth, their expanding defence capability, and their large
populations. Research by Goldman Sachs predicts the BRICs could become as big as the G7
by 2032, about seven years earlier than originally anticipated, with a possibility that China could
become as big as the US by 2027 (O’Neill & Stupnytska, 2009; see also Wilson & Stupnytska,
2007). Between 2000 and 2008, the BRICs contributed almost 30 per cent to global growth in
US dollar terms, compared with around 16 per cent in the previous decade. Since the start of
the financial crisis in 2007, some 45 per cent of global growth has come from the BRICs, up
The Deal in 2020 21The future of work and the context for work
Figure 3: Forecast claimant count for unemployment UK. Treasury vs. Independent
analysts
2
1.8 1.8 1.8 HMT (March)
1.8
Indept (April/Feb)
1.6
1.6 1.5 1.5 1.5 1.5 1.5
1.4
Millions of claimants
1.3 1.3
1.2
1.0
1
0.8
0.6
0.4
0.2
0
2009 2010 2011 2012 2013 2014
Source: HMT 2010 Budget; Forecasts for the UK economy, HMT April 2010
Notes: All figures claimant count. HMT is forecast to 2012; assumed claimant level for public finance planning purposes
for 2013 and 2014. ‘Independent’ is an April average forecast to 2011, February average forecast for 2012 to 2014
Figure 4: Economic growth forecasts UK. Treasury vs. Independent analysts
4% 3.5%
3.3% 3.3% 3.3%
3% 2.6% 2.5%
2.3%
2.0%
2%
1.3%
1.0%
1%
0%
2009 2010 2011 2012 2013 2014
-1%
-2%
-3% HMT (March)
Indept (April/Feb)
-4%
-5%
-5.0% -5.0%
-6%
Source: HMT 2010 Budget; Forecasts for the UK economy, HMT April 2010
Notes: All figures GDP growth. HMT is forecast to 2012; assumed growth rate for public finance planning purposes for
FYs 2013-2014 and 2014-2015. ‘Independent’ is an April average forecast to 2011, February average forecast for 2012
to 2014
22 The Deal in 2020The future of work and the context for work
from 24 per cent in the first six years of the decade. Long-term projections suggest that the
BRICs could account for almost 50 per cent of global equity markets by 2050. BRIC economies
will likely account for more than 70 per cent of global car sales growth in the next decade, with
China expected to account for almost 42 per cent of this increase (O’Neill & Stupnytska, 2009).
Examining the impact of the recession on the wider developing world, the World Bank (2010)
cautioned that scarcer credit and more expensive financing, coupled with severe limits to
transfers of grant aid from the developed countries would dampen growth. This reflects
increased risk aversion, a more prudent regulatory stance and the processes introduced to curb
the exuberance during the noughties. Unsurprisingly, there will be wide disparities in economic
growth within and between developing countries. Global GDP growth is forecast by the World
Bank at a very modest 2.7 per cent in 2010 (World Bank, 2010, p. 2).
The BRICs and their globalised firms will be hungry for production cost advantages,
opportunities to expand their consumer base, and a global supply chain of natural resources
and producers. What is less clear is how these countries will exercise their growing power in
relation to established international powers in shaping the rules of engagement.
3.1.4 Social, economic and workplace inequality
There was a broad consensus amongst the Delphi experts that income and wealth disparities
are widening in developed economies while opportunities for social mobility are limited. It
was commented by one expert that the traditional paradigm of wealth-through-work will be
challenged by very low economic growth in the developed countries.
What is less clear is how these inequalities will be addressed. The panel was divided between
society accepting sporadic civil unrest from those unable to find a route out of (relative) poverty
as an acceptable consequence of the widening inequalities; aggressive policy intervention by
the State to redistribute wealth (to limited effect); an acceptance that inequality and limited
social mobility is the status quo or possibly all three. Many workers will struggle to maintain
‘good’ work and some foresee that autonomous groups of workers will fight to control the means
of production (brain cartels). A number of the Delphi experts predict that many knowledge
workers will tolerate higher job insecurity in exchange for better work. The global socio-political
landscape is likely to be varied, possibly with the return of autocratic rulers and the rise of
extreme socialism.
Legal immigration into developed economies will be more restricted through tighter numerical
limits and tougher conditions in the developed economies. Migration patterns will flow from the
economically poorer countries to the relatively wealthier ones, underpinning the global nature of
The Deal in 2020 23The future of work and the context for work
the labour markets. The question is whether border controls will be any more effective for illegal
migrants.
Research from Clarke and Lord (2010a) and The Tomorrow Project (2007) also anticipate that
the widening gap between the skilled and the unskilled is likely to give rise to the polarisation
of jobs, and an hour glass structure in organisations that reflect a new society – an intellectual,
knowledge based elite, a thinning out of the ‘middle jobs’ and a broad base of low skilled, low
value jobs. Such a trend could be detrimental to social mobility, making it harder for people to
‘climb’ the ladder from the low paid to better paid work as the gap between the high value and
the low skilled work widens.
The Future Foundation (Clarke & Lord, 2010a) research found that a sense of inertia already
exists amongst those who are likely to be in the bottom rung who are less likely to proactively
keep their skills up to date, compared with those are likely to be in the elite group, who are
currently focusing on their skills. However, this study agrees that outsourcing of mechanical
and monotonous tasks is likely to continue, and that globalisation will contribute to the bulk of
the ‘tedious’ and middling ‘white collar’ jobs being pushed off-shore leaving the UK as home to
new, interesting, high value work. Although this echoes some of the sentiments of Brinkley’s
(2009b) vision for the UK’s knowledge economy in 2020, perhaps the view put forward by the
Future Foundation is a little optimistic ignoring the social impact of a large swathe of people who
will be economically displaced by job standardisation, off-shoring and the decline of presently
significant economic sectors.
There is some disagreement about the extent to which low value and dehumanising work will be
automated or off-shored by 2020. Whilst The Future Foundation predicts that the most excluded
group in the future will be largely male, research by Toynbee in 2003 (cited in Donkin, 2010)
found that some 80 per cent of the lowest paid occupations are undertaken by women. Although
the current recession has hit ‘male’ jobs the hardest, the gender pay balance has not shifted –
women continue to have lower status and lower pay.
Estimates from the Annual Survey of Hours and Earnings (ONS, 2009b) estimated that nearly
1 per cent of jobs in the labour market are paid below the national minimum wage. People in
part-time work were more than twice as likely as people in full-time work to be paid less than
minimum wage, with 1.5 per cent of part-time jobs and 0.7 per cent of full-time jobs falling below
the minimum wage. Jobs held by women were more likely to fall below the minimum wage than
jobs held by men (1.1 per cent compared with 0.8 per cent). This was due to the greater number
of women in part-time jobs.
24 The Deal in 2020The future of work and the context for work
These figures do not measure non-compliance with the national minimum wage legislation as
the survey did not distinguish between categories that might include those exempted under
the law like trainees or apprentices. In the baseline scenario, this situation is unlikely to be
addressed in any significant way and those at the bottom of the work pile are likely to even
increase beyond 1 per cent. The studies suggest strongly that in the decade to come, poor
quality jobs will constitute a significant portion of available employment.
The issue of (relative) income and wealth inequalities should not, however, be conflated
with social mobility. Saunders (2010) argued Britain was not significantly different from other
equivalent European economies and that policies directed at narrowing social inequalities were
largely ill-conceived.
3.1.5 Education and skills (The skills gap)
Although education is a global industry, the Delphi experts talked about this driver from a UK
perspective. They agreed that employees and leaders in successful organisations would be
agile learners, able to innovate and thrive in fast, competitive environments. They felt that
employers expected the State to deliver higher educational standards and ‘creative, disciplined,
respectful’ workers for the knowledge economy. Meanwhile businesses also appear to drive
skills development despite some fear of staff being poached. ICT will enable intuitive e-learning
tools and new ways for learners to access education. Although the State will continue to accept
responsibility for education, public spending constraints will fuel increasing marketisation
of education, which might preclude a linear education pathway due to choice and cost. The
education sector will need to evolve to meet the needs of lifelong entry and re-training.
With greater structural unemployment, there will be greater emphasis on individuals taking
ownership of their skills with the State maintaining policies that encourage lifelong learning.
There is a concern that even if knowledge workers accepted that they had to invest in keeping
their skills current, lifelong education may be prohibitive for many.
There is a rich literature focusing on the future prospects for skills and education in the UK. The
current skills gap is predicted to get worse (Brinkley, 2009b; Bradshaw, et al., 2009), such that
the competition for talent will continue and be evidenced on a global scale (Deloitte, 2006). The
ESRC Future of Work series (Taylor, 2003) highlighted the importance of skills as key to closing
the productivity gap between the UK and other developed economies, and to the UK being able
to compete effectively in markets where high value/high quality goods are demanded.
The UK has made progress in closing the productivity gap with its main European competitors
(namely France and Germany) in recent years. Further progress is still to be made particularly
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