Jobs and globalisation

Promise or threat

“There has never been an economic discontinuity of this magnitude in the history of the world–these powerful forces are allowing companies to rethink their sourcing strategies across the entire value chain”. So said Mark Gottfredson of Bain & Co., quoted in the New York Times (19 August 2004). This may be hype, but is there smoke without fire?

Sure enough, some of this hype is marketed by the business services industry that wins from “outsourcing”, but governments still take it seriously.

Alas, any serious discussion of the potential offshoring of jobs is hampered by the absence of reliable data on employment developments. The ILO’s Employment Report 2001 estimated that up to 5% of service sector jobs in the US and western Europe (2-10 million) could potentially be offshored to lowwage economies. A much quoted report by Forrester Research estimated in November 2002 that 3.3 million US service sector jobs would move offshore by 2015. The sectoral impact could be larger in financial services, for instance. The OECD has also produced figures, saying 20% of certain IT-related tasks were “potentially offshoreable” (OECD Observer No 245, November 2004).

The European Foundation for the Improvement of Working and Living Conditions, for the second quarter of 2004, found 163 cases of company restructuring leading to nearly 60,000 job losses, compared to the creation of slightly more than 16,000 new jobs. A part of this reflects a shift to new member states.

The hype of many business commentators goes beyond the data, but there has nonetheless been a worsening in relations between trade unions and employers. Business attitudes are increasingly dictated by international competitiveness and global “fads”. This does not just affect OECD countries, nor is it North-South. From the US, through the EU, to the Philippines, the threat of relocation to an offshore site is now a standard ploy in wage negotiations.

Put plainly, the acceleration of international offshoring and the relocation of industrial and service sector activities, whatever spin economists put on it, have heightened the sense of job insecurity among many groups of workers, and not just blue collar ones. To them, talk of long-term benefits is not a comfort. To them, globalisation is a threat to decent living standards.

What can we do? No, the response must not be for national borders to be permanently closed to flows of physical capital or goods. But neither can we accept passively the working of economists’ “relative price effect” in terms of labour. Whatever the regression, one we must avoid is a “race to the bottom” in employment standards.

A “whole of government” policy response in the industrialised countries is now needed to deal with the consequences of offshoring on jobs. Governments must guarantee core workers’ rights on a global basis. A specific focus is needed on stopping the spread of abuse of labour rights in export processing zones and in supply chains.

OECD governments in particular must encourage dialogue and negotiations between trade unions and businesses, supported by targeted regional and industrial policies, as well as active labour market policies to help affected communities. The OECD Guidelines for Multinational Enterprises should be a benchmark for good practice in managing change. Trade unions and forward-looking employers are negotiating these issues both at the national and international level through the sectoral Global Union Federations, leading to the conclusion of global framework agreements. The focus of such agreements must be to achieve early negotiations to maintain sustainable employment, avoid compulsory lay-offs, and to promote internal firm-level redeployment and up-skilling. Workers’ rights must be respected and developed everywhere and companies must recognise and negotiate with trade unions, wherever they are. Sufficient time must be allowed for the socially acceptable management of change. This may at times require the use of trade measures allowed for under the WTO Agreement on Safeguards.

These are neither unreasonable demands nor business constraints. On the contrary, by addressing the employment dimension more fully, structural adjustments would be more sustainable. Only then will globalisation become a promise, not a threat.

©OECD Observer No 249, May 2005




Economic data

E-Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly


Online edition
Previous editions

Don't miss

  • Africa's cities at the forefront of progress: Africa is urbanising at a historically rapid pace coupled with an unprecedented demographic boom. By 2050, about 56% of Africans are expected to live in cities. This poses major policy challenges, but make no mistake: Africa’s cities and towns are engines of progress that, if harnessed correctly, can fuel the entire continent’s sustainable development.
  • “Nizip” refugee camp visit
    July 2016: OECD Secretary-General Angel Gurría visits the “Nizip” refugee camp, situated between Gaziantep and the Turkish-Syrian border, accompanied by Turkey’s Deputy Prime Minister Mehmet Şimşek. The camp accommodates a small number of the 2.75 million Syrians currently registered in Turkey, mostly outside the camps. In his tour of the camp, Mr Gurría visits a school, speaks with refugees and gives a short interview.
  • OECD Observer i-Sheet Series: OECD Observer i-Sheets are smart contents pages on major issues and events. Use them to find current or recent articles, video, books and working papers. To browse on paper and read on line, or simply download.
  • Queen Maxima of the Netherlands gives a speech next to Mexico's President Enrique Pena Nieto (not pictured) during the International Forum of Financial Inclusion at the National Palace in Mexico City, Mexico June 21, 2016.
  • How sustainable is the ocean as a source of economic development? The Ocean Economy in 2030 examines the risks and uncertainties surrounding the future development of ocean industries, the innovations required in science and technology to support their progress, their potential contribution to green growth and some of the implications for ocean management.
  • OECD Environment Director Simon Upton presented a talk at Imperial College London on 21 April 2016. With the world awash in surplus oil and prices languishing around US$40 per barrel, how can governments step up efforts to transform the world’s energy systems in line with the Paris Agreement?
  • Happy 10th birthday to Twitter. This 2008 OECD Observer interview with Henry Copeland said you’d do well.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Once migrants reach Europe, countries face integration challenge: OECD's Thomas Liebig speaks to NPR's Audie Cornish.

  • Message from the International Space Station to COP21

  • The carbon clock is ticking: OECD’s Gurría on CNBC

  • If we want to reach zero net emissions by the end of the century, we must align our policies for a low-carbon economy, put a price on carbon everywhere, spend less subsidising fossil fuels and invest more in clean energy. OECD at #COP21 – OECD statement for #COP21
  • They are green and local --It’s a new generation of entrepreneurs in Kenya with big dreams of sustainable energy and the drive to see their innovative technologies throughout Africa. blogs.worldbank.org
  • Pole to Paris Project
  • In order to face global warming, Asia needs at least $40 billion per year, derived from both the public and private sector. Read how to bridge the climate financing gap on the Asian Bank of Development's website.
  • How can cities fight climate change?
    Discover projects in Denmark, Canada, Australia, Japan and Mexico.
  • Climate: What's changed, what hasn't, what we can do about it.
    Lecture by OECD Secretary-General Angel Gurría, hosted by the London School of Economics and Aviva Investors in association with ClimateWise, London, UK, 3 July 2015.
  • Is technological progress slowing down? Is it speeding up? At the OECD, we believe the research from our Future of ‪Productivity‬ project helps to resolve this paradox.
  • Is inequality bad for growth? That redistribution boosts economies is not established by the evidence says FT economics editor Chris Giles. Read more on www.ft.com.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at www.oecd.org/careers .

Most Popular Articles

Poll

What issue are you most concerned about in 2016?

Unemployment
Euro crisis
International conflict
Global warming
Other

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2016