Monday, March 15, 2004
The jobs are going west (or rather, east)
When I was in the fifth Form at high school, our geography teacher predicted that automation would one day cause the demise of many jobs. (He also told us that Blenheim - my home town - had a true Mediterranean climate. I wish I had realised the implications of that, as Blenheim later became the sauvignon blanc capital of the world, with consequent skyrocketing land prices. Back then, I could have picked up several acres of stony river bed for a few dollars, and I would now be rich beyond imagining!)
We didn’t understand what our teacher meant about automation – after all, this was back in the early 1960s, and computers were scarcely dreamed of. But he was right, perhaps in ways he didn’t really comprehend himself at the time.
At the beginning of this month, Time Magazine’s cover article documented the huge structural shift that has resulted in 2.3 million jobs vanishing in the United States, with another 3.3 million projected to leave the US by 2015. It’s largely the consequence of “outsourcing� – relocating production and services to low-cost countries. The types of jobs most at risk include telephone call centres, computer operators and data entry, business and financial support, paralegal and legal assistants, diagnostic support services, accounting, book-keeping and payroll services.
It’s a combination of simple economics, the globilisation of the workplace, and modern communications technology. The price of labour is the main driving force. The typical annual salary of a computer programmer in the US is up to $80,000. This compares with a $30-40,000 salary for a similar job in Canada, Ireland or Israel, or about $11,000 for the same job done in India.
Time observes that the latest jobs shift marks a fundamental change in the way companies do business. Intrinsic to outsourcing is the replacement of the employer-employee function with a third party contractor. And without a social contract binding employer and employee, long-term jobs are an illusion. Thanks to technology, more kinds of work can now be spun off into contracts rather than tied to employees. Once a person's labour can be reduced to a contract, it matters little whether the contract is filled in India or Indiana; the only relevant issue is cost.
There are some deep things going on here. The whole dynamic between employer and employee is changing. No longer are the two dependent on each other, and loyalty is greatly diminished on both sides. Employees are reduced to units of production.
Outsourcing also ironically runs counter to the current political imperative in the Western world to encourage immigration, which is needed to offset the population decline which is resulting from lower birth rates in nearly all developed countries. Is this another example of how short-term expediency will hasten the demise of Western culture?
A summary of the Time article can be read at The Jobs Letter.
When I was in the fifth Form at high school, our geography teacher predicted that automation would one day cause the demise of many jobs. (He also told us that Blenheim - my home town - had a true Mediterranean climate. I wish I had realised the implications of that, as Blenheim later became the sauvignon blanc capital of the world, with consequent skyrocketing land prices. Back then, I could have picked up several acres of stony river bed for a few dollars, and I would now be rich beyond imagining!)
We didn’t understand what our teacher meant about automation – after all, this was back in the early 1960s, and computers were scarcely dreamed of. But he was right, perhaps in ways he didn’t really comprehend himself at the time.
At the beginning of this month, Time Magazine’s cover article documented the huge structural shift that has resulted in 2.3 million jobs vanishing in the United States, with another 3.3 million projected to leave the US by 2015. It’s largely the consequence of “outsourcing� – relocating production and services to low-cost countries. The types of jobs most at risk include telephone call centres, computer operators and data entry, business and financial support, paralegal and legal assistants, diagnostic support services, accounting, book-keeping and payroll services.
It’s a combination of simple economics, the globilisation of the workplace, and modern communications technology. The price of labour is the main driving force. The typical annual salary of a computer programmer in the US is up to $80,000. This compares with a $30-40,000 salary for a similar job in Canada, Ireland or Israel, or about $11,000 for the same job done in India.
Time observes that the latest jobs shift marks a fundamental change in the way companies do business. Intrinsic to outsourcing is the replacement of the employer-employee function with a third party contractor. And without a social contract binding employer and employee, long-term jobs are an illusion. Thanks to technology, more kinds of work can now be spun off into contracts rather than tied to employees. Once a person's labour can be reduced to a contract, it matters little whether the contract is filled in India or Indiana; the only relevant issue is cost.
There are some deep things going on here. The whole dynamic between employer and employee is changing. No longer are the two dependent on each other, and loyalty is greatly diminished on both sides. Employees are reduced to units of production.
Outsourcing also ironically runs counter to the current political imperative in the Western world to encourage immigration, which is needed to offset the population decline which is resulting from lower birth rates in nearly all developed countries. Is this another example of how short-term expediency will hasten the demise of Western culture?
A summary of the Time article can be read at The Jobs Letter.
