The new Job Realities are changing basic Economic and Political Fortunes around the World. The major developing countries like China, Brazil, India, Indonesia among others dictate economic tunes because their rapidly expanding manufacturing base are the lowest cost producers in the world. One only has to look at what happened in the Climate Negotiation in Copenhagen and the current Intellectual Property Negotiations to see the rising power of the developing countries.
The developing countries have some of the fastest growing economies. And they are not shorting on what got them there. constantly improving infrastructure such as transportation, communication, education,and health as required. As a result they win continuing growth in new investments. But their he most important ingredient is : huge stocks of quickly trained labor eager to work for comparatively low wages [30-70% less than in developed countries] that still amount to 3 to 10 times what they have been able to earn ever in the past. The numbers are staggering:
China has a 700-900 million low wage pool
India has a 650-800 million variously skilled low wage pool.
The key advantage to these developing countries is very low cost of living and these huge labor pools.
Western companies know very well that trade favors lowest cost producers even in the face of non-trivial transportation and support/maintenance costs. One can see this in the second decline of manufacturing jobs in North America, Europe and parts of Asia. Even other low wage developing countries such as Vietnam, Palestine, and Algeria have lost jobs to the developing countries, particularly China. with its currency pegged to a low rate. A report in Businessweek catches the basic conundrum. The OutSourcing fears of 2006-2008 :
Ever since the offshore shift of skilled work began a political flame war a few years ago, it has been portrayed as the killer of well-paying jobs “at home.” These “Benedict Arnold CEOs” hire software engineers, assembly workers, design engineers and IT staff (not to mention credit-card bill collectors and computer help desks) to exploit the low wages of poor nations. United States workers suddenly face a cutthroat threat, with even highly educated tech and service professionals having to compete against legions of hungry college grads in India and China, as well as in the Philippines, willing to work twice as hard for one-fifth the pay…..
The prime motive of most corporate bean counters jumping on the offshoring bandwagon has been to take advantage of such ‘labor arbitrage’ — the huge wage gap between industrialized and developing nations. And without doubt, big layoffs often accompany big outsourcing deals.
Nonetheless, because all companies are now operating in a global business ecology, the offshoring issue at this point seems to have become a matter of business survival, an attitude that is emerging in corporations across the U.S. and Europe in virtually every industry.
Moreover, “multinationals based in France, Germany, Spain, Japan, Canada, Australia and elsewhere have recently begun adopting offshoring so they can compete with other multinationals based out of the United States and the United Kingdom — the traditional offshore service buyers,” said international management consulting firm A.T. Kearney’s “Execution Is Everything: The Keys to Offshore Success” report earlier this year.
They were stark then and in the meltdown of 2008-2009 they have come to full fruition. The financial crisis of 2007-2009 allowed job exporting on a massive scale. This is the fundamental problem facing the US and developed countries.
The problem is that there is not enough work to go around in the developed economies as more jobs are exported. And governments are at the behest of their plutocratic financial overlords who in the US now have virtually unlimited campaign financing and lobbying powers courtesy of a January 2010 Supreme Court decision. But government are also boxed in by ever increasing partisan bickering. Finally, getting out of the box solutions is going to require a frankness and courage that simply is not in the cards as everybody is a Tea Party member – irascible about deficits and overspending but not willing to forgo any of their own perks and government payments and perks.
It appears like in the 1930’s it will take a second and massive world-wide double dip recession, to get attention directed towards looking at better then an incremental moves from the status quo. Meanwhile burgeoning climate, hard resource limits, and political instability may make recovery ever more imperiled. This all reads like a Commissario Guido Brunetti mystery – stark, lovable but ultimately bleak.