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President of the Republic at the "Future of Work: Making It e-Easy"

13.09.2017

Welcome to Tallinn!

For centuries we have seen work and employment in a shift from the agriculture to the industry and from the industry to the services. Today, we understand that rapid technological development of ITC technologies provides the opportunity for something really new. This is happening. And it's happening almost everywhere in economy, in industry and absolutely wherever you look you see change. Countryside, townside, in society - everywhere. It may be shift exactly as general as there was with steam engines or use of electricity in the past. This time it is not so much moving jobs from one sector of economy to another. It will probably lead to a radical reorientation of work and is moving employment from the standard, well known and understood form to something which will be quite different.

I realize that yet recent data and the employment trend structures are mixed and they won't necessarily everywhere support this statement. The data shows that during last years there hasn't been much growth in non-standard forms of employment, at least not in EU.

But the data show to us, what has happened in the past and the existing trends. In times of disruption we usually are capable of fixing the weak signals of the future only. We have to go by these weak signals. And, after all, instead of seeing these early signals in the employment structure, it is possible to see them somewhere else, for example, on the scientists and innovators work tables, in younger generation's behavioral models and values etc.

At the same time I would like to point out that the number of self-employed people has already grown very rapidly in countries which have historically innovative employment forms. For example, take UK. The number of self-employed has increased by 30% lately, in absolute terms more than 834 thousand persons. Or the Netherlands: 45%. That means around 300 thousand persons.

At the same time industrial area jobs are indeed vanishing fast and we hear weird voices saying we need to therefore pay everybody a sustenance fee and get money for that from taxing - who? Robots. It sounds pretty absurd. I think it's as absurd as would have been taxing tractors. I really doubt that we would have reaped the full benefits to our societies from industrial revolution if we had decided to tax tractors and pay a sustenance fee to everybody who lost their job in agriculture. Of course, there is no denying that that transition was socially really painful and costly for majority of people, but that was because of lack of education, medical treatment and other social services we offer to people nowadays. It is not so scary - this change, this disruption for lower middle class and poor people. This time around, the deterioration of industrial employment can easily be compensated by the development of educational and social systems if we play our cards right. But we have to start playing now.

Instead of curbing people's ability to adapt by talking sustenance fees we should focus on the ability of modern technology to rise the earning capacity of the society as a whole, inclusively. We must not take technological development simply as something limited to the better industrial processes and therefore to job losses. It is not, it is a comprehensive change, and it reaches out to every single person, never mind their educational roles or social status.

In fact, if you think about it, you know it. Remarkable amount of jobs which are created by technology development are surprisingly neutral to the occupations or educations in their nature. I would call them equalizers. They are egalitarian opportunities. They are not reserved to clever, well-educated and tech-savvy. Yes, the last group - they do best by creating the technological infrastructure, but some of the quickest growing companies sell actually strikingly simple services or services we did not think existed at all.

Think chatting to each other, in long version we call in Facebook, and in shorthand, Twitter. Or think Uber and Airbnb, which allow people to turn their spare resource into service to others. These are big examples, but SME versions exist, of course, too, as we see here in Estonia. For example, a bookkeeper. A bookkeeper can work for 10 companies from any end of the world. I admit, their market is not global, as you need to know the laws, but it is much bigger than their physical range is when they are going to work by car, bus or train. Or take handicraft. It's a time-old available career option for people who do not wish to obtain high degrees, previously it was limited in its earning capacity. Two centuries ago by the ability to drive around local markets, or later, in the 20th century, by the ability to sign distribution contracts with, say, souvenirs stands. Today I can give you a real-life example: in Estonia we have a guy, who came here from South Africa. He lives in a little county of 8 thousand people. What he does - he produces world class bows and arrows. And his market is somewhere among the global billions of people, but what we know is that none of them live closer to him than 500 km, maybe even 1000 kilometers.

This example shows how technology enhances earning capacity and provision for those who deal with very traditional subjects and whose education might be quite limited. In addition, tech use and more free time for bigger number of people stemming from the efficiency gains creates permanently new jobs. We do not know yet, which ones. "Travelling YouTuber" is a job new job we know already, but the next one we do not know today.

To sum up, job creation will continue beyond industrial age as it did beyond agricultural period, the transition should be more tolerable to vulnerable classes of poor and uneducated due to existing social systems and the democratic nature of this transition, which creates opportunities for all social classes.

And now this brings me to the Alice in Wonderland issue. You remember, when the cat vanished, the grin just lingered on? If we talk about the disruption to current jobs and indeed, working habits of people, we need to test whether our governance models are sustainable through these disruptions? Or will our tax base, let's take a simple example, social tax base, simply vanish together with industrial jobs? If we do not believe that the grin will always stay on without the cat, we need to assume that social security model built on industrial model of work, it cannot survive if the industrial model itself is gone.

Indeed, new jobs and income methods – if you are not able to call youtubing a job yet – they are free from physical location, therefore geographically simply not attributable to one state, and they are not easy to define as being employer, employee, understanding what's benefits from assets, or is it work. Tricky! Even worse, everybody is doing more than one thing to more than one customer. And everybody - we are not talking big companies here. Entity will be a person. The economy is much more centered on each individual and his or her creation of added value than on enterprise as such. Add to this the fact that people tend do all these varied things intermittently and take long breaks if they can afford – and more and more can afford - to simply live their lives until money runs out. Thus working 12 months a year, 8 hours per day and 30 years, then retiring, this is not an option for younger generation that they want to take.

But we offer them societal support if they do. What is the result? Lots of people simply opt out at early years of their career of our social models, only to plan to opt back in once they need these services – medical services, putting kids through school, etc. And if you look how we have built our services system, pension systems are the only ones which do not allow full benefits if you opt-in later in your career, because some of the potential to put money into your pension pillars is lost. But medical, educational, all other systems are 100% vulnerable. Yes, of course, we can tell people to work the old-fashioned way or go uninsured. It will not deter them, they will go uninsured. We lose the best part of the tax income from the life cycle value creation of each individual – the years between 20-35, maybe longer, if the need to have and school kids is not there. And they will then later opt in. I think it is not sustainable or tolerable for governments any more than it is sustainable for them to be the last ones forcing people to present themselves physically to apply for services.

Governments really need to start thinking how they will replace the current models' tax river flowing in from lifetime of careers defined as employee, employer, enterprise, independent worker, renter – with new streams. Governments will have to fly like bees from flower to flower to get taxes in There will not be a river, there will be an intermittent trickle from varied streams. And it may not be any more linkable with any geographical state at all. We are right now spending our time hunting down huge companies to make them pay their fair share of tax in every country. Imagine now trying to come to terms with every digital job nomad on where they need to pay their taxes? Yet we want them to pay, and I'm sure they want to pay. They want to be somehow connected to our society's social security network. But the effort to stay in one place, one job, permanently, or with certain allowed gaps in order not to lose benefits, this simply does not fit their understanding of work and life. We force them out with inflexibility, unless we offer them quickly easy, flexible opt-ins. I'm not sure I have an answer to this disruptive development and on how to come to terms with it, but I see we need to tackle this as quickly as possible. Those who go quicker will win, digital and other nomads will dock in only at places which offer them more flexibility in paying taxes and earning benefits.

That's the next societal disruption, changing the perception about jobs and social models built upon the old perceptions. And this disruption is already happening, but governments all around the world are still grappling with the previous one – the digital disruption to their services model. As an Estonian I am relieved we can already concentrate on the new challenge, as the old one for us is solved, but I want this for all other Europeans as well. I want first that their governments will not be the last ones to force them to go to offices, to queue for anything. Then I want people to be able to work geographically independently, without thinking that if they do so there will be constrains on the social security of their lives. And then I want Europe to have the understanding that actually, Europe has the competitive advantage in this game. Because we are the only high-income region in the world which already has some understanding that pension plans are portable, social security needs to follow people if there is free movement of people. We have the advantage. We need to take it in hand and start thinking. Because jobs are anyway going into Internet. Our people and our businesses are already there. The missing link is government and thereafter social services by the government. Think about it today as well.

Thank you for listening!