Business Management

Unemployment Up – What Does This Mean for Small Business (and Young People) Like You?

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unemployment is up - what does this mean for small business and young people? YBKBS magazine
By Marc Ford, Coach, Author and Editor at YBKBS

“The problem with the race to the bottom is that you might win…”

Seth Godin

Today it’s been announced that the unemployment rate has gone up to 4.1% (a rise from 3.9% the previous month) (SOURCE:BBC NEWS). And yes devastating for the extra thousands of people who have lost their job. Perversly many commentators have said it’s ‘better than expected’. But once again the 18-25 age bracket are once again hit and still is an ongoing problem in the UK and despite the goodwill of many think tanks, quango’s and community interest groups, their actions have been so far, regrettably, ineffective.

It’s a problem that could and probably will damage the economic and technological growth of the UK for decades to come without some serious and laser focused intervention from someone, and probably not Government, to get a wave of action and some serious momentum behind them to make a change. But with that will come other problems for the self employed.

Because it’s not only the young that are flooding our potential market, it’s also a ‘skilled’ workforce that have become used to seeing people work from home and see some of those businesses thrive. And they all have to start somewhere and will try to introduce their new ventures without real or genuine consideration of the market around them. 

It’s a new race that no-one wants to win but doesn’t want to win either. It’s the small business version of the ‘Race to the Bottom…’

The race to the bottom

In the 2008 global money crisis, the chance to work from home or go self employed were snatched up by millions of people across the world. They were either ordered to work from home or ‘let go’ with people citing the economic crash as one of the main reasons.

A very similar phenomenon is very likely to happen in response to the Covid-19 pandemic. This time it will affect a greater number of people, in new ways and many of them will sleepwalk into it in the name of remote work. They may think they’re merely switching their place and time of work, but are about to discover that they are also likely to be adopting a new, insecure and worse-paid form of work.

I want you to ask yourself this question: “If you can do your job anywhere, can anyone do your job?”

I’m really hoping that a s proud individual or business answer the answer to that would be “No.” For many reasons you may answer that, but when people or businesses start to look at tenders for jobs, projects and services, they perhaps won’t think that way.

The US is further along this path than the UK, at least in the short term. A report from Bloomberg highlights how a rush to freelancing sites as traditional work dries up is applying downward pressure on incomes. On just one of these sites, Freelancer.com, used by 46 million people, “pay for an average job has dropped by about 20 percent in the past six months — partly the result of more people competing for the available projects.” The chilling thought in amongst this was my shock in seeing how many “Directors’ of businesses I came across almost ‘begging’ for gigs at a fraction of the cost of what they were actually worth.

This shift will not just be marked by the availability of traditional jobs but also the nature of the work people do. The lockdown has driven a new obsession with productivity. We are again talking about work as the exchange of money for units of labour. But there is also a now a realisation that after a ton of years telling people they couldn’t work from home because the business wouldn’t be able to function with that model, those same businesses are wondering why they pay tens of thousands of pounds in rents for offices that are no longer needed, plus the compacting issue is the end of the furlough scheme in October…we could see a new ‘breed’ of freelancers and the self employed.

Once it reverts to that, firms will ask themselves what for them is a perfectly rational question.

If you can do your job anywhere, can anyone do your job?

They will inevitably answer yes, probably. Their workers will find that shorn of the context of the traditional workplace and job structure, and with work boiled down to labour transactions, their work can indeed be done by anyone, and probably more cheaply.

This competition won’t just be driven by local markets. People will end up competing against others within very different sorts of economies and with different personal circumstances. The marketplaces for these competitions already exist and are becoming far more sophisticated. They are not just forums to allow people to find work when jobs are unavailable.

Not everybody will do well out of this new era of work, however well new platforms are built and designed or however much we redesign the ‘work’ that used to be done. Many, perhaps the majority, will do badly, including the young, the old and the less well off. It won’t only be their finances that suffer. It will be their mental health and wellbeing too.

So while some will thrive, for most people, their experience will be of a race to the bottom. These trends were already evident before this year’s lockdown. Some people saw it coming, including Alana Semuels in this article in The Atlantic.

It’s possible that the western economies will still decide that this latest wave of outsourcing is, on the whole, beneficial, too. But the usual mantra told to people who have lost their jobs to outsourcing – “Get more education, get more training…” – doesn’t make sense in an economy where educated people across the world are competing: On Fiverr, I found someone in Pakistan offering to do architectural designs for just $5…wtf?

For the many talented people who now have a global platform to sell their services, Fiverr and other sites represent a huge opportunity. The people who prosper are “the cream of the crop”… One recent paper has predicted that a Matthew effect could begin to dominate the global gig economy, in which the most successful workers do better and better. Everyone else, though, is going to do worse.

This will have to be addressed at a political level because businesses will tend to do what is best for them. Some questions may be answered, but it will ultimately depend on society and politicians grasping the consequences, and especially those who stand to do well from it all. The ignored have a tendency to make themselves known at some point…

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