The precariat as a new threat to human capital
‘’ Precarians of all countries unite’’
New social phenomenon
How do researchers interpret this phenomenon today? The precariat is a class of socially unsettled people who do not have full guaranteed employment. The precariat consists of workers with temporary or part-time employment, which is permanent and sustainable. The precariat is characterized by an unstable social position, weak social security, the absence of many social guarantees, an unstable income, and deprofessionalization. The employment relationship between the precariat and the employer is unequal. The social layer of the precariat personifies the alienation from the results of labor and from the whole society of significant social groups experiencing especially sophisticated forms of exploitation of their labor, their knowledge, their qualifications, and, ultimately, the quality of life. Who could imagine that Guy Standing and Klaus Derre would be right in their research of economics and labor relations, calling the precariat the Egyptian execution of the 21st century. They saw ahead that unemployment, due to automation, robotization and de-industrialization of the economy, will have the most sadistic form in the form of a precariat. The ideology of libertarianism and freedom of market relations gave rise to the ideology ‘‘every man for himself ‘’, which, in fact, under the sauce of freelancing, distorted market relations. The precariat is a fundamentally new entity of the 21st century. These are social groups constantly engaged in temporary work, involved in the black labor market, as a result of which such people have reduced social rights and their social status is infringed. In many countries of the world, the precariat reaches 40% of the working-age population. Thus, the precariat largely determines the face of modern societies — people who are not settled, dependent and angry with the state and society, which condoned the emergence of labor unemployment.
The precariat is a consequence of the negative impact of the globalization of the world economy. It is a product of neoliberalism with a flexible labor market that allows for rapid changes in wages (especially downward) and employment. The precariat feels its unstable social position; for people of this social class, various options for behavior are possible: resignation to the situation, attempts to adapt, asocial actions. Many informally employed who consider themselves to be the “middle class”, in fact, are not this class due to status uncertainty. Representatives of the precariat identify themselves minimally with the professional community (freelancers) in which they may be located. Representatives of the precariat are characterized by “a personal position of non-involvement and a mental non-belonging to a socially acceptable professional morality for a given profession, … an internal reference to the morality of another environment, professional or non-professional.” In general, psychologists consider such a lack of professional identity to be the most important sign of professional marginalism, which, like a virus, is already eating away at the entire professional environments.
Another reason for the rise of this modern phenomenon is higher education, which does not meet the professional needs of the market. This is also the direct fault of the state. The phenomenon of excess education affects, in particular, the system of social and labor relations, when the overproduction of specialists with a high level of education does not meet the demands of the labor market at the moment. As a result, graduates are forced to accept jobs that often do not require higher education and qualifications. This in turn limits the employment opportunities for people with secondary education. Employment in a job that is not related to the graduated specialty is becoming an obvious problem, leading young people to the group of precariously employed. According to sociological studies, in the world, up to half of part-time people have an education that does not correspond to the work they are doing.
In recent years, the scientific circles of modern socio-humanitarians have been actively discussing and studying a new threat to the world, which consists in the rapid formation of a new class — the “precariat”. Guy Standing has the most detailed description of this phenomenon. He worked for many years at the International Labor Organization and noticed the process of emergence in the modern global world of a special class of workers, identical to the phenomena of Western European countries, which are described above. In modern societies, middle class people are more likely to be at risk, especially in unstable societies with low per capita incomes; retirees due to low pension; migrants. Plus, the coronavirus pandemic is hitting the middle class today. Standing argues that if modern societies are unable to understand the essence, purpose and role of the precariat in the present world, a political collapse of world significance can occur. After all, the precariat as a new class already numbers many millions of its representatives all over the planet due to the peculiarities of the economic development of modern mankind. The phenomenon poses a threat to the state as a social instrument, since the state itself works for the interests of a microscopic minority, giving rise to a precariat and leaving it out of the bounds of life.
State is guilty
The precariat must be understood in the context of globalization and the evolving fragmentation of classes. Globalization began in the 1980s. The idea was to create a global capitalist market system — that is, to open up labor markets around the world for migration, capital, and so on. And along the way, the governments, with the support of the IMF and the World Bank, began to move towards the commercialization of all institutions and mechanisms. There was pressure on wages and benefits in wealthy industrial countries such as Sweden, France, Britain, Germany and the United States, as the global labor supply tripled literally overnight, with the arrival of China, India, and a little later — Russia and all other countries of the former Soviet Union. Since then, power has shifted towards the financial sector, and inequality is widening everywhere — in China, Russia, and the UK. One consequence of this has been the emergence of a multilevel class structure that is superimposed on the entire global economy. At the very top of the state is plutocracy: oligarchs and other elite; everywhere there are some extremely wealthy “super citizens” who play leading roles in politics and other aspects of public life. Right under the plutocrats and elites is the salariate — people with long-term job security, bonuses, pensions, health insurance, and everything else; but their number is decreasing. Let’s not forget that both the Soviet system and the socially oriented states of Western Europe were built precisely for the needs of the proletariat. But the problem is that in the course of global capital production the layer of the proletariat is constantly shrinking. The precariat arises and grows under the proletariat. Below the precariat there are only the poor, lumpenized people living and dying on the streets without any connection with society. And today this is a global problem everywhere.
The precariat has three characteristics. Firstly, these are their production relations: they have no guarantees of employment, guarantees of a job … in general, any of the seven types of guarantees that are not provided by the state, since it is global — it is an inhuman phenomenon. And they also do not have a professional identity — this is a very important point. Today they have one job, tomorrow another. But the precariat also lacks a sense of confidence in the future. Another aspect of these same relations of production is that the precariat spends a significant part of its time on work that is not counted or paid. This is not work, this is just work — taking care of ourselves, retraining, interacting with the bureaucracy — huge amounts of work that are not recorded anywhere. The precariat is characterized by specific distribution relations. It mostly has to rely only on direct monetary compensation for labor, if he can get it at all. The precariat cannot count on the state, on pensions, unemployment benefits, medical bills. So, it suffers to a very large extent from the economic uncertainty created by the state itself. And third, the precariat has a special relationship with the state. More and more people in the precariat do not have the same rights (civil, social, political, cultural and economic) as other citizens. Thus, precarians experience the loss of rights, guarantees and professional identity — these are their three key characteristics. As a consequence, they suffer from anxiety, alienation, anomie and anger as a result of the previous three points.
This anger spills over into the growing demonstrations, the Occupy and Antifa movements — all these protests that we see — because now the precariat is made up of three groups, and this is why it is dangerous. The first group is the old proletariat; people who are angry because they don’t have what their parents had. They listen to neo-fascists, extreme rightists, political demagogues, populists, nationalists. And these politicians play on their fears and incite them against migrants, minorities, women and so on — those who, in fact, make up the second group of the precariat — are generally disenfranchised and extremely vulnerable. And the third group is educated youth. Those who went to university or college and thought they would have a career, a ticket to a decent life. And when one graduated, one found that he had bought a lottery ticket, which gives almost nothing, but it costs more and more to get it. So, we have a feeling of bitterness against all the old politics — socialism, neoliberalism, Christian democracy. All these old systems are not attractive to the precariat. The precariat is not only a victim. It has a sense of dignity and that it can define the contours of a better society and fight for it. So, they are not apolitical, quite the opposite. Only they do not see in the old political parties and programs that would reflect their interests. It is not known what this will result in the future, since the result can be a new kind of discriminatory totalitarian political regimes, which does not bring anything good for the future world development. And in economic terms, the dominance of the black-market economy is everywhere.
States everywhere are playing Russian roulette with retirement benefits. I think we are actually seeing the slow death of pensions at all, except for a highly privileged minority (which serves the oligarchy and the states that serve them). And the problem, of course, is that you can pay contributions to the pension fund when you are 20 or 30. But by the time you reach 60, the government will have increased the retirement age and minimum seniority. Moreover, inflation will make your contributions significantly less than your real income. In addition, contributions to the pension fund are shifted from the company to the employee, who pays the ever-increasing contributions. In my opinion, there is such a mess and corruption in pension systems that young workers should not rely on any kind of pension at all. A situation is emerging when millions of people around the world, having reached retirement age, are forced to continue working in the labor market, because their pensions are much less than they expected. The loss of these guarantees is an important aspect of the precariat. The only ones who receive good pensions are the salariat.
But in fact, everywhere in society there is just chaos, and this is also a process of financing the highest echelons of power, plutocracy and salaria. In fact, I think it would be much better for the precariat if the state moved away from using such pension fund pyramids and moved towards universal basic income and national sovereign wealth funds that could invest and distribute income among all citizens. The precariat needs to get rid of illusions, which, in general, do not deceive anyone. The illusion of libertarian competitive freedom to choose and manifest one’s abilities in the open market. The precarians are not stupid, they understand very well that the state works for the interests of a microscopic minority, and they are left behind. And today the state, among other things, is still strengthening its surveillance functions — the state is increasingly invading the private lives of people. And the problem is that the precariat lives on the border of society and is immersed in an environment of minor violations, crimes that are increasingly being recorded somewhere. Accordingly, precarians fall to criminalization, imprisonment, fines, and so on. The state forces them to behave in a certain way, which is very difficult in their position. As a consequence, all of these people are much more susceptible to criminalization than those in other wealthy parts of society. The last one can usually avoid the establishment of a criminal record on them. Sometimes they are still so stupid that they break the law, but even then, they often get away with it. And the precariat is increasingly being monitored. The dictatorship of the social rating system will also be directed against them. The state, in essence, is against non-conformism. It happens all over the world. We’ve seen what the US has been extradited in recent years; huge leak on how they follow everyone. And the point is not only that with the help of this surveillance people are caught and convicted, because they cannot afford a lawyer, for example. It stays with you for life. Today, if you did something at the age of 17, this information will remain in the records until the end of your days. About a minor offense, an accident in your youth, employers and the state will know 30 years later. A frightening situation
Only one conclusion suggests itself — the freelancer and the self-employed are not romance, but a new oppressed class! Even a pandemic proves this thesis once again. In most countries of the world, government assistance programs during the coronavirus pandemic did not affect the precariat. Guy Standing (precariat ideologue) published a column in the Financial Times in April this year, where he criticized the UK government aid program. “This distribution structure will turn out to be one of the most regressive policies in the labor market. Someone with a salary of 2,500 pounds will receive an allowance of 2,000 pounds, someone with a salary of 1,000 pounds will receive 800. Representatives of the precariat who do not have a salary in the contract, or it was formed, for example, from a tip, will not receive anything “. There is publicly available information about the kind of support individual entrepreneurs (also representatives of the precariat in fact) receive around the world. The “Corona Crisis” will lead to the growth of the precariat: in the face of growing unemployment and economic failure, companies will seek to hire people for project work, but not for the everyday needs. Businesses will strive to shift to piecework wages, especially when working remotely. The share of contracts under an indefinite employment agreement will also decrease, the share of temporary contracts, the attraction of self-employed people, as well as the format of project employment, that is, the form of employment of the precariat, will increase. Business representatives talk about this as a tool for increasing efficiency for the company and an incentive to work “for results” for the employee. But in reality, this will only increase inequality growth. The reference to the proletariat that economists made when they introduced the concept of the precariat turned out to be more significant than they might have anticipated. At the end of the nineteenth century, workers in factories were also largely disenfranchised, but over time they turned into a class, and then into a political force. The newly formed trade unions began to seek better working conditions from employers, and over time, thanks to trade unions, workers received most of the rights that they have in a developed society. At the end of the twentieth century, the role of trade unions began to weaken. This made possible the emergence of the precariat as a mass phenomenon. For now, the precariat is still a huge group of people, but still “underclass”, as the classics of economic thought somehow describe. But if freelancers unite, they will have a real opportunity to claim their rights and demand their fulfillment.
Precarization of the economy — threatening prospects
Only one conclusion suggests itself — the liberalization of the economy, labor and public administration leads from permanent guaranteed labor relations to unsustainable forms of employment, leading to an almost complete loss of social and labor rights by the employee, including underreporting of wages, lack of paid leave, sick leave and other social conquests of the 20th century. Precarization describes the process of transition to precarious labor relations in which the worker cannot provide himself with a living wage. The middle class, which peaked in the 1970s, is slowly but surely sinking to its present precariat state. Automation, outsourcing and a technological shift in the balance of power have already dramatically weakened their position. Robotization and the introduction of artificial intelligence will make the “weak” people simply unnecessary. To the extent that the invention of the internal combustion engine made horses unnecessary in the early twentieth century. There are already hundreds, if not thousands, of studies on the prospects of replacing people with robots by industry and individual economy. And their conclusions are similar. According to economists Karl Frey and Michael Osborne, in the United States, a country that is a leader in technological progress, by 2033, under the onslaught of robotization, 47% of jobs are at risk of disappearing. The World Bank has calculated that for China this share may be as high as 77%. The International Labor Organization estimates that even in countries such as Cambodia, Indonesia, the Philippines, Vietnam and Thailand, 56% of workers are at risk of automation.
Many economists tend to believe that fears are exaggerated. Their criticism can be reduced to the thesis that the world economy has been going through the process of automation continuously at least since the beginning of the first industrial revolution, but in the end nothing bad happens — new jobs are being created. However, critics do not fully realize that artificial intelligence is able to replace a person completely, possessing skills that until recently were considered exclusively human (recognition of images and sound, their algorithmic processing and transformation, fine motor skills). Areas of activity where a person can be more productive than a machine, apparently, will be less and less. The likelihood of automation of a particular profession in the future depends largely on three main features of the work process — the degree of routine and uniformity of the operations performed by the employee, the implementation of interactions with customers, counterparties and other participants in the business process using standard interfaces (for example, standard forms of documents, template communications through voice or text communication channels) and the presence of accumulated data sets that can be used to train an artificial intelligence system designed to replace an employee.
The formation of a precariat has long been in the area of interest of economists. Meanwhile, the rapidly growing digital economy in recent years is able to give odds to all these processes. Here, there are tendencies even more dramatic than in the last 50 years, a shift in the balance of power to the detriment of the “weak”. In the case of the gig economy, the owners of capital are essentially the owners of the algorithms. Many, if not most, modern high-tech companies, and even more so tech startups, do not really have any tangible assets. Their main asset is often an algorithm and a means of communication — a platform, mainly in the form of a mobile application for a particular activity. The classic case here is, of course, Uber. The algorithmized structure of the gig economy allows you to bypass all the formal rights of employees, inherited from the “classic economy” — health insurance, minimum wage, retirement benefits, formal written contract, severance pay, benefits, etc. Few full-time employees of Uber receive good salaries, although their well-being is incomparable with the income of the owners of the company. But 2 million drivers around the world have an income of just over $150 per month. Uber does not consider drivers to be its employees and does not provide them with any kind of social package — for them drivers are only a parameter to the mobile application. All of this is very good for the owners of algorithms and clients, but at the same time it is a trend that sharply intensifies precariatization, polarization of jobs, inequality and further weakening of the “weak”. In countries with strong social security networks (the Netherlands, France, Germany, Sweden), uberization still weakly threatens to erode the middle class, but for the United States and some other states, the situation may become more acute in the near future.
Ideally, the omnipotent algorithm is needed only as a temporary solution, until more advanced technologies appear soon. Cars without drivers are a matter of the near future, and Uber shareholders will soon no longer need 2 million self-employed: they already have capital to buy or rent a multimillion-dollar fleet of autonomous cars and add to them an algorithm that provides transport at the request of the client. The term ``sharing economy’’, handed down to Uber and some similar companies, is often misleading about its supposedly altruistic nature. Nobody just shares anything with anyone, just the algorithm and the application allow you to rationalize the use of this or that good and increase the return. While people from the wonderful new world of the digital economy have not yet been completely ousted, it is necessary to optimize their activities, in particular by building total control over them. The opportunities offered by new technologies are impressive. Expensive and unreliable supervisory systems for employees (due to the fact that they were based on people who, in turn, had to be monitored) are rather successfully replaced by cheap and reliable algorithms. At the same time, the possibilities of routine resistance among hired (still) workers in many areas are dropping to almost zero. The client benefits from a cheaper and better service. But the workers completely lose the possibility of routine resistance, the balance of power shifts towards the owners of capital. Further, the economics of the precariat went through the people of the so-called creative professions — IT specialists, designers, etc., who are engaged in freelancing. They are sometimes represented as adherents of a freedom-loving spirit, independent of the strict and petty regulation of official (state, joint-stock, private) enterprises and organizations. But their nonconformity, the lack of external everyday control in fact turns out that this ostentatious and sometimes somewhat attractive independence is struck by the same restrictions as the entire precariat: defenselessness, lack of social guarantees, leaving a person alone in case of unforeseen life circumstances. deprivation of stability and confidence in the future. They can only rely on themselves in difficult times, which is not always possible.
Social consequences of the precarization of the economy
The appearance of the precariat in the historical arena means the emergence of unforeseen economic, social, political, cultural and moral effects, which in their significance and impact on the life of societies and states surpass the destructive processes and their consequences known in the past. How is it shown? With the emergence and spread of flexible employment policies, social inequality began to sharply increase. The class structure characteristic of an industrial society has given way to a more complex, but no less class-conditioned one. All material and financial resources are increasingly concentrated in the hands of a small group of people in the world. 3% of the world’s population owns 70% of the world’s wealth, and this figure has a steady upward trend. Unprotected or poorly protected populations continue to grow. Moreover, this includes representatives of the middle class, that is, they are a potential source of precariat. Employees of various fields of activity claim to replenish this new community, with whom they conclude short-term contracts, which is practiced on an ever-increasing scale. In other words, more and more workers are becoming suspended, forming a kind of loose, indefinite and unstable human mass. Due to this state, this class is not the basis for social support of official policy, because it has no reason to see in its position a satisfying stability. And although the precariat has not yet recognized itself as a “class for itself,” this can happen in exactly the same way as it happened with the proletariat, which for a long time was a “class in itself”. Many social groups that make up the precariat have a blurred deformed consciousness, which manifests itself in a variety of actions — from anomalous behavior to destructive activities associated with criminal, delinquent behavior. There is also a spiritual and moral degradation of the personality, the loss of ideals, faith in justice and the correct structure of the world. And it’s true — just look around!
All this allows us to conclude that we are dealing with a fundamentally new social formation, which at the present time still to a large extent bears the lines of uncertainty. The social groups that make up it do not have a sense of solidarity; they are poorly or not at all organized. But history knows many cases when a person with obvious qualities of a strong leader, one might say, a leader, joined the confused, passive, socially divided groups at one fine moment. And then came what the descendants spoke of as unlearned history lessons. Deja Vu! How to deal with this phenomenon, or is history worth dealing with the situation on its own? I think that the state as a social institution should return to its roots and become an institution of social justice and guaranteed life support for its citizens, otherwise social collapse and reactionary behavior of the precariat are not far off.
Sergey Golubev (Сергей Голубев)
Crynet Marketing Solutions, vtorov.tech, EU structural funds, ICO/STO/IEO projects, NGO & investment projects, project management
