The institutions that govern work were built for an economy that is changing. Whether they can adapt before the adaptation is no longer possible determines whose interests the transition serves.
The Adaptation Challenge
The institutions that govern work — employment law, labour market regulation, social insurance, collective bargaining frameworks, and the professional licensing systems that govern who can do which work — were built for an economy in which the primary employment relationship was stable, long-term, and clearly classifiable as employment rather than independent contracting. The economy those institutions governed was the economy of the large manufacturer, the stable service employer, and the professional corporation — an economy in which the employment relationship was the norm and the exception was the marginal self-employed worker at the edges of the formal economy.
The economy that is emerging — in which platform-mediated work, gig arrangements, AI-augmented work, and remote global work are growing shares of total economic activity — is not primarily the economy for which those institutions were designed. The labour protections that are conditioned on the employment relationship do not cover the gig worker. The social insurance that is funded through the payroll tax does not cover the freelancer. The collective bargaining right that enables labour market power for employees does not apply to independent contractors. The professional licensing system that protects consumers from unqualified practitioners is not adapted for the global marketplace in which practitioners from multiple jurisdictions provide services across borders. Each institutional form was built for an economy that is changing faster than the institutional adaptation that serves the workers the economy is changing around.
The institutions that govern work will either adapt to the economy that is emerging or they will govern only the fraction of work that resembles the economy for which they were designed. The governance question is whether the adaptation is driven by the workers whose interests labour institutions were built to serve, or by the employers whose interests are served by the regulatory arbitrage that institutional lag enables.
Discussion