The Social Contract Between Employers & Employees


The concept of a “social contract” is an old one, going at least as far back as Plato. It came into its prime in the early part of the Age of Enlightenment through the writings of Thomas Hobbes, John Locke and J.J. Rousseau. Concerning the specific nature of the “social contract” between employer and employee, there is as yet no real agreement on what this did, or does, entail. What all writers on this subject agree on is that the present era of globalization, recession and downsizing has radically altered the older nature of employer and employee relations.

The “Old Contract”

Diane Byster, a professional career counselor, holds that, in general, the older social contract governing the workplace revolved around security. Job security was seen as dependent on good work, company loyalty and seniority. Like all writers in this field, she sees the modern era as one of downsizing and globalization, which has radically altered this contract in favor of the employer. For her, the new contract revolves around the “self-reliant” employee, one to whom a firm owes no benefits at all.

The “New Contract”

As of the time of publication, the old contract based on loyalty and job security has broken down. The scramble for jobs is intense, and workers are seen as “earning” their jobs and their position, rather than having it be a “reward” for good behavior and solid work. Byster goes even farther and holds that the present “contract” is really not a contract at all, but is slowly developing to an entirely new view of work. Workers are not seen as “employees,” but people who can be hired and removed at will, on an “as needed” basis. Although Byster doesn't make the observation, the evolution of the term "human resources" for the handling of employees is emblematic of such an approach.

Business Ethics

If Byster and others are right, or even partly right, this raises powerful new questions for ethics. Under the “old contract” there was an expectation of fairness, embodied in the idea that good work and reliability earned one good pay, benefits and even a say in important company decisions. This is no longer the case. Globalization means that American workers are competing with hundreds of millions of others at any time. If a firm can move overseas or even hire immigrants to work for less, then there is no “contract,” but workers, it seems, should just be happy to have a job at all. In such a model, the firm has all the choices, while a worker has few.

Firm Empowerment

For business writers John Edwards and Steven Karau, the “old contract” was a basic meritocracy. Today, this is no longer the case. Edwards and Karau hold to the “as needed” basis for labor, where workers are seen as utilitarian machines that can be used and then discarded when no longer needed. The euphemism for this is “employee self reliance,” which empowers firms to control labor through the constant threat of termination, investment overseas, outsourcing, or hiring others who will work for less. The “contract,” if it exists at all, is that firms now have the “right,” if not the “obligation,” to do whatever it takes to compete globally, and their obligations to workers are reduced in order to enhance their efficiency.

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