Labor market policy seeks, at base, to fulfil two aims, and these remain unchanged. One—and note that I say ‘one,’ not ‘first’—is to promote the efficiency with which labor markets function. It does so on the empirically well-grounded premise that inefficient labor markets are a constraint on wellbeing and economic growth, and that well-designed labor market policies can improve both outcomes. The other aim of labor market policy is the protection of those people who participate in labor markets, acknowledging their dual economic role as both factor of production, but also as the main consumer of that which is produced:  consumption through labor income is the major component of aggregate demand. Protecting people at work or wanting to work thus makes purely economic sense beyond the ethical imperative to do so. 

This is thus a large role assigned to labor market policy – policy that lubricates economic growth while protecting those who contribute to the same. We might want to protect labor on many grounds; on grounds of equity and fairness, as we interpret these, on grounds of solidarity, or on grounds of basic human rights, as we understand them. 

The protection of labor market policy, however, is only as good as its inclusiveness. This has always been a problem for developing countries, and is now a re-emergent one in developed countries. In this short note, there are two points I would make on the matter of labor market policy and inclusion. Both points hinge on the concept of status in employment.

The first point is on what has not changed in status in employment and, thus, on the abiding irrelevance of labor market policy. The geography of this problem is the developing world and, particularly, least developed countries. Good labor market policies that only work for a distinct minority of the labor force. Take Nepal. Great policies (often), in an economy which is overwhelmingly agricultural, overwhelmingly informal – and in agriculture itself overwhelmingly focused on subsistence farming. Labor market policy is frankly irrelevant to the majority of people at work in the country.

As to the second point, the issue is that those once covered by labor market policies are now less so, and the reason is a change in the status of employment. As with those historically excluded from protection, labor market policy has its task cut out for it in the second instance, when the change in status in employment excludes those once covered by good policies. 

Take the case of the transition countries of Central Asia, with the legacy of its policies, regulations, and institutions suited in Soviet days to what was then a largely wage-earning labor market. Labor markets in the region now resemble those of any lower middle-income developing country – a high share of ‘default’ self-employment, informality, and in many countries an ‘absentee labor market’ through emigration. In short, a lot of those whom labor market policy was supposed to cover have fallen through the widening cracks of statuses in employment that simply didn’t exist in 1990.

In ‘advanced’ countries, a structural transition in labor markets has been afoot for some time. OK, a bit of hyperbole flies above the empirics, but there can be little doubt that the assumption of a regular, full-time job, with employment security in stable conditions of protection, has been gradually eroding. The share of temporary, part-time and, indeed, interim or casual labor in developing countries is on the rise in advanced countries.

It is also true that different manners of engagement in the labor market can be voluntary, rather than involuntary, and that more options on how the labor market can be engaged can be efficient on both the demand and supply side of the labor market. Indeed, it has been argued that the relative absence of part-time work opportunities in Central Asia has constrained the growth of the labor force participation of women.

That said, there are grey areas. Take the sharing or gig economy – e.g. the Uber ‘driver-partner.’ For the vast majority of Uber drivers, driving is a second job. Uber drivers appear to value the flexibility and control they have over their hours. They can (to some extent) ‘take it or leave it.’

The question in terms of labor market policy is whether an Uber driver is an employee or an independent contractor? The jury is out on this question. In my own country, Uber drivers are independent contractors (self-employed) in Florida, but they are ‘employees’ in California. Whether one is an employee or self-employed matters greatly as to whether one is covered under labor or commercial law. It is the change in status in employment that erodes the meaningfulness and coverage of labor market policy. 

We need to grapple with some notion of what could be called ‘protected mobility’ – protecting the worker in his or her status at work and his or her mobile trajectories in the labor market. Some solution fulfills the twin goals of labor market policy, whether it means a non-contributory pension for the subsistence farmer in Nepal, or pension portability for the gig economy worker.