Where have all the jobs gone?

The latest World Development Report of the World Bank couldn’t have chosen a better theme: jobs. The advanced countries debate the issue of austerity --- with most policymakers in Europe and the US ranged to varying degrees on the side of austerity and some economists, most notably Paul Krugman, leading the charge against the “austerians”.

The reality on the ground, however, reflects a combination of both arguments; in the US, the Obama administration walks a thin line between some fiscal tightening and a calibrated stimulus.

The debate on how much the governments of the West should manage their fiscal deficits to fight recession may sound academic: a lot of words over very paltry stakes.

No one on either side of the debate would deny the growing numbers of the vulnerable, that many of them are paying the price of sins not committed by them.

That is evident from the latest US statistics on jobs for April; the unemployment rate remains at around 7.5 per cent, down marginally from 8.1 per cent a year ago, but markets cheered because some jobs were added in retail, wholesale, food and business services sectors.

But these have not dented the picture of joblessness for African-Americans, Hispanics and adult whites, both women and men.

More worrying is the fact that unemployment remains high among teenagers (16-19 years), those with high school and bachelor degrees. Equally, the data show that among the unemployed the largest number were “job losers and persons who completed temporary jobs.”

To hold that austerity is a short-term sacrifice, which involves rollback of social security, is to miss the point that unemployment is not just a cyclical problem but a structural one; both, the Keynesian and the “austerian” approach may lead to some sort of revival, but it is possible that neither will lead to a firm uptick in employment — not at least the way the world or national economies had seen in the past decades before the end of the millennium.

What we may be witnessing is a drastic change in the terms of engagement with the workforce, with the odds tilted against it.

State of jobs

The World Bank’s World Development Report 2013: Jobs has the usual hand-on-the-heart homilies about the role of private enterprise in creating jobs that can empower the poor, lift them out of their hardships; jobs in fact work wonders for everybody and everything — jobs “foster diversity.”

But the report’s thoroughness, its mindfulness of the facts and trends it seeks from the voluminous data, forces the writers to point to contra-indications, forces that are re-shaping the volume of jobs available — they are shrinking — and the nature of employment itself.

This is what the WDR notices after reminding us that growth has created jobs, that it has helped lift millions out of poverty (look at China) and added to skills (India): “Yet in a majority of countries, both industrial and developing, the share of labour in total income is declining. This trend, which has been observed since the mid-1980s and early 1990s, has been attributed to various forces…”

Those forces are now redefining the terms of employment, the distribution of employment opportunities, in turn affecting the volume of employment and tilting the gains from growth towards an increasingly smaller section of the populace in almost every economy experiencing it.

The first agent changing the face of employment is technological progress. The WDR finds “technological progress biased toward skilled workers”; second, the spread of education enhances global competition “undermining workers’ bargaining power.

The entrance of China and India in world trade has doubled the size of the globalised labour force, hence reducing the price of labour relative to that of other factors of production.”

Nature of employment

Technological progress and global competition have rendered outsourcing the most efficient option to retaining a fixed contingent of workers in domestic hubs and assembly lines: the WDR terms that process both offshoring and outsourcing — splintering of jobs.

Few changes in the production process since Henry Ford introduced the assembly line (that Charlie Chaplin immortalised in Modern Times ) have perhaps been as profound as the job splinter — with firms able to realign their supply chain management and extend it globally.

What those same private firms that the World Bank assumes creates jobs have done is to simply export them around the world.

But offshoring is accompanied by another form of splintering reflected in outsourcing locally. Firms on both Wall Street and Main Street in America increasingly are outsourcing their IT work in back offices locally if they are not offshoring them to Bangalore, Pune or the Philippines.

The skilled labour that run their back-office, and increasingly even front office operations, are not on payroll; they are hired by third party private employers who are like the contractors at Indian construction sites fitting job requirements with requisite available labour.

The WDR has a term for such “flexible” employment — Temporary Staffing. It has become widespread enough to have earned itself the label of an “industry”.

The report informs us with open-eyed wonder that the process “seen as irrelevant outside of high-income countries” a decade ago is “now growing rapidly in some developing countries, even beyond large cities.

This growth is often viewed as a response to the complex regulatory framework facing employers. Temporary staffing also allows more flexibility in the management of peak workloads and in adjusting staffing levels up or down in line with business demands.”

The crux of flexible work

Temporary Staffing, a post-modernist globalised spin for contract or casual labour has acquired corporeal form and legitimacy.

In 1997, the International Labour Organisation framed the private Employment Agencies Convention, or C181, a charter for the temporary staffing market to gain wider acceptability. To date, 27 countries have ratified the convention, the spirit and content of which pitches for the global adoption of temporary, flexible labour markets and private employment agencies as the mediators between labour force and capital.

The Indian Staffing Federation, an apex body of private employment agencies at work mostly among the IT sector, is busy canvassing for the recognition of “Staffing” as an ideal choice of employment.

Staffing not only provides manpower, but fulfils “dynamic business requirements, keeping costs as variable and not fixed, and outsourcing non-core activities to vendors who do them best.” It recognises the stigma of “temporary” employment and promises to erase it with “retirement benefits and employment security.”

Here’s a thought: Why not start with construction workers?

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