Risk Sharing and the Employment Relationship

Thinking Like a Social Scientist lunchtime lecture series

In this lunchtime series of lectures, a selection of LSE's academics from across the spectrum of the social sciences explain the latest thinking on how social scientists work to address the critical problems of the day. They survey the leading ideas and contributions made by their discipline, explain the types of problems that are addressed and the tools that are used, and explore the kinds of solutions proposed.

The employment relationship is one of the fundamental institutions of advanced industrial societies for sharing the risks of economic life, in this case, between employer and employee. It lies at the heart of our concept of the modern business enterprise as a coordinator of human economic activity. Its open-ended nature enables firms to hire labour before their detailed production plans are known, which is essential in an uncertain world. It also provides workers with greater predictability and protection in the provision of their services. It emerged as the dominant contractual framework for organising the buying and selling of labour services in all the advanced economies in the last century at a time when the national economy provided the framework for our thinking about economic and social issues. Yet in recent years, it has come under great pressure to change, and many argue it is in crisis. New forms of temporary employment have developed to provide firms with more flexibility, both within and between economies, and these challenge some of the benefits that workers derived from steady employment. Employment law and labour rights have also often taken the employment relationship as their starting point, and struggle to adapt as the relationship itself evolves. Many national social security systems have grown up around the employment relationship, often linking social insurance to employment. These too are under pressure to change on budgetary grounds, as employers balk at high social charges, and because of assumptions about gendered employment patterns which are no longer appropriate. What is the future of the employment relationship, and what the major policy choices that we face in this area? Can it once again become an institutional focus for both economic prosperity and social justice?

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