March 2002, Vol. 125, No. 3
New economy employment
Book reviews from past issues
New economy employment
. Geneva, International Labour Office. Available from ILO Publications Center, P.O. Box 753, Waldorf, MD, 2001. 371 pp. $34.95.
World Employment Report 2001: Life at Work in the Information Economy
The bulk of the current World Employment Report is devoted to the effects of information and communication technologies (ICT) and their institutional setting upon employment, working conditions, educational and training requirements, and the opportunities ICT appear to offer for business enterprise and poverty amelioration in developing countries.
Introductorily, however, the Report highlights the persistent problem of worldwide unemployment and underemployment, a problem that afflicts one-third of the world’s labor force of 3 billion men and women. The estimate includes the working poor, poverty being defined in terms of earnings of $1 per person per day. While prospects for an improvement in the employment situation were "bright" at the time the Report was written, this belief assumed continued strong economic growth in the United States "as engine for the rest of the world." The more recent slowdown in growth compels modification of that expectation.
Employment conditions have in fact deteriorated, at least in some areas. Employment in the formal sector in Latin America, for example, declined to 53.6 percent in 1998 (down from 57.2 percent in 1990), as has wage employment (to 69 percent from 72 percent). Segmentation of the workforce remains pervasive in the industrial countries, staffing systems being reorganized into a core of skilled (or primary) personnel, and "peripheral" workers, such as temporaries or subcontractors. This secondary workforce has few if any career prospects, few training opportunities, and little if any protection against unemployment or ill health.
ICT and the analysis of their employment effects lies at the core of the Report. The first question its writers ask is whether ICT defines, or helps to define, a "New Economy." Just what is this "New Economy?" Does it hold the promise of full employment that the writers postulate, provided there be a "good match" between technology, institutions, and policies? A detailed exposition of the concept is provided by the January 2001 Economic Report of the President (Washington, U.S. Government Printing Office). The entire Economic Report, including each of its chapters, is framed in terms of the New Economy. It is characterized, according to the Council of Economic Advisors who wrote the Economic Report, by "rapid productivity growth, rising incomes, low employment, and moderate inflation." These have resulted from "mutually reinforcing advances in technologies, business practices, and economic policies." Indeed, despite more recent downward revisions, the trend in productivity growth steeped between 1995 and 2000 to an average annual rate of 2.7 percent, which compares with a rate of 1.5 percent for the preceding 22 years. However, the more recent steep in the trend rate still runs below that for the earlier post-World War II period, say, for 1950–72, which was 3.1 percent—"golden years," as some remember the period—but a "new economy" was not then proclaimed.
The Economic Report of the President does not deal explicitly with the employment effects of ICT innovations. It does mention, however, that manufacturing firms have "embedded" information technology in their production processes, and it cites significant productivity advances—not all of them necessarily attributable to such technology—in the making of machine tools and steel. We might add that even as the index of manufacturing production rose 32 percent between 1995 and 2000, to its highest level for the post-World War II period, manufacturing employment remained virtually unchanged, also running well below its 1979 peak.
The World Employment Report does not deal extensively with embedded ICT. It is more centrally concerned with the opportunities generated by the knowledge and information processing services offered by ICT. It does mention, however, that the integration of world financial markets by ICT gave rise to "massive job destruction" in consequence of its role during the financial crisis in South-East and East Asia, Brazil, and the Russian Federation in the late 1990s. It may be objected that, when the employment effects of the financial crises of earlier periods are recalled, it is institutions, not technology, that have been lain at the root of resultant job destruction.
The theme that informs much of the Report is competitive pressures, and these pressures unquestionably affect the quality of work and of working conditions in ICT firms, to which the Report devotes some lengthy sections. Considerations of competitiveness often decide the balance between the upgrading of skills so that the worker may perform multitask work, and downgrading to single-task tending of an ICT device (for example, data entry). ICT also facilitates the externalizing of work that, it would seem, reinforces the polarity between multitask and single-task work just mentioned. Thus, subcontracting and outsourcing permit companies "to take advantage of lower terms and conditions prevailing in different sectors and countries, and to avoid commitments to develop fair and integrated employment systems negotiated for direct employees." Employers also engage temporary workers when they encounter demand fluctuations. Where healthcare insurance, pension rights, or childcare are linked to employment—rather than being citizen rights, as they are in some countries—standard employment contracts do not cover temporary workers, let alone subcontractors.
Heightened intensity has characterized much ICT work, and has led to "the application of just-in-time principles to all phases of such work" so that "unproductive time" is banished, "zero delay" established. Zero delay is enforced or reinforced by monitoring devices permitting constant surveillance, thus driving slack from the work processes by also enabling the number of operations per unit of time or of clients served to be counted, or certain behavioral characteristics (for example, tone of voice) to be scanned.
Trade unions appear, on balance, to lack the strength to help remedy such quality-of-work problems. The fiercely competitive environment in which ICT firms operate has "an unsettling rather than an empowering effect on most workers." A dominant concern is employment insecurity. Although historically unions have to an extent mitigated this problem, and have enhanced workers’ sense of empowerment and productivity, membership has tended to decline, especially among younger workers. More generally, jobs in telecommunications have dropped worldwide—by 10 percent in the United States between 1983 and 1999, by more than one-half in Great Britain, and more than one-quarter in Germany. In many countries, privatization has spelled loss of civil service status, hence of job protection, for the employees involved. Such jobs were unusually unionized, and their privatization weakened the unions.
An example of the difficulties unions—or more generally, employee representation—face are call centers (10,000 of which exist in the European Union alone). They offer "a curious paradox." The "call center model is often scarcely distinguishable from the Taylorist organization of work, not of the 1970s, but of the 1930s," and should be fertile ground for organizing. Evidently, it is not. A key reason cited by spokespersons of one international union, and quoted in the Report, is that "new technologies used for surveillance and control reduce the amount of social interaction between workers in the workplace, and this undermines union activity, as well as workers’ capacity to organize…"
Like previous work by ILO, the Report discusses the job-creating and job-destroying effects of ICT, albeit without coming to any definitive conclusion. Productivity in the manufacture of computers and other electronic equipment has resulted in significant job losses. ICT-related services, by contrast, have generated large numbers of jobs; and ICT employment in the United States represents about 6 percent of total employment. ICT services, however, are "tradable," and will be increasingly located in countries offering lower labor costs, provided connectivity exists and English is mastered (at least by management). Tradability also affects higher value ICT services. The salary of a systems designer in India, for example, runs to less than one-quarter of his American counterpart; of a project leader to little more than one-half; of a quality assurance specialist to about one-third. Tradability—which is, of course, also conditioned upon meeting the necessary educational requirements—is likely to vastly intensify worldwide competition in ICT services, and modify their expansion potential domestically.
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