Digital technologies are once again transforming global value chains and, with them, the structure of the global economy. What do businesses, citizens, and policymakers need to know as they scramble to keep up? Digitally enabled supply chains initially increased efficiency and dramatically shortened lead times. Capital was mobile; labor less so. Economic activity (production, research, design, etc.) moved to any accessible country or region that had relatively inexpensive labor and human capital. With only a slight lag, complexity became manageable, and global supply chains’ linear model (something produced in country A is consumed in country B) gave way to a more complex model with more fragmented but more efficient supply networks. Meanwhile, a dramatic shift occurred on the demand side, as emerging economies grew and became middle-income countries. Developing country producers, who in an earlier era accounted for a relatively small fraction of global demand, became major consumers. Global supply networks shifted again, accommodating fragmentation and dispersion on both the supply and demand sides of their structure, a process sometimes called technologically enabled atomization: the division of supply networks into finer and finer parts, breaking the bonds of proximity and the resulting transaction-cost constraints that previously prevailed. For example, many services related to intermediate and final demand require knowledge, expertise, information, and communication for their delivery. What they do not require is geographical nearness or the physical movement of goods. They represent a large share of the global economy, and they are gravitating rapidly toward the tradable sector, with increasingly powerful digital and information technology chasing imperfectly mobile human resources and new rapidly growing markets. In the course of this transformation, millions of people joined the global economy, with wide-ranging consequences–many of which remain challenging–for poverty, prices, wages, and income distributions. Now comes a second, potentially even more powerful, wave of digital technology that is replacing labor in increasingly complex tasks. This process of labor substitution and disintermediation has been underway for some time in service sectors–think of ATMs, online banking, enterprise resource planning, customer relationship management, mobile payment systems, and much more. This revolution is spreading to the production of goods, where robots and 3D printing are displacing labor. It is important to understand the economics of these technologies. The vast majority of the cost comes at the start, in the design of hardware (like sensors) and, more important, in creating the software that produces the capability to carry out various tasks. Once this is achieved, the marginal cost of the hardware is relatively low (and declines as scale rises), and the marginal cost of replicating the software is essentially zero. With a huge potential global market to amortize the upfront fixed costs of design and testing, the incentives to invest are compelling. In other words, unlike the preceding wave of digital technology, which motivated firms to gain access to and deploy underutilized pools of valuable labor around the world, the driving force in this round is cost reduction via the replacement of labor. This transformation has important side effects. For physical goods, there are costs associated with logistics and lead times, owing to inventories and poor forecasts of the market. With digital capital-intensive technology, however, production will inevitably move toward the final market, wherever it is. This re-localization constitutes a major shift in the structure of global supply networks. An extreme form of this may be coming in the form of 3D printing, a technology that makes it possible to produce an astonishingly wide and growing range of products by printing them one layer at a time. Examples include buildings, athletic shoes, designer lamps, aircraft wings, and much more. As the costs of this technology decline, it is easy to imagine that production will become extremely local and customized. Moreover, production may occur in response to actual demand, not anticipated or forecast demand. In some sense, this represents the ultimate compression of supply chains, as firms produce to final demand with minimal delay. Meanwhile, the impact of robotics (another technology with digital foundations), is not confined to production. Though self-driving cars and drones are the most attention-getting examples, the impact on logistics is no less transformative. Computers and robotic cranes that schedule and move containers around and load ships now control the Port of Singapore, one of the most efficient in the world. Developing countries in the early stages of growth need to understand these trends. Labor, no matter how inexpensive, will become a less important asset for growth and employment expansion, with labor-intensive, process-oriented manufacturing becoming a less effective way for early-stage developing countries to enter the global economy. Re-localization will be seen everywhere, including lower-income countries. Production will not vanish; it will just be less labor intensive. All countries will eventually need to rebuild their growth models around digital technologies and the human capital that supports their deployment and expansion. The retail sector, too, is being transformed. Online retail and supporting logistics is expanding in a wide range of advanced and developing economies. In China, where the expansion is occurring extremely quickly, estimates suggest that only part of the expansion is at the expense of traditional retail. In fact, online retail appears to be accelerating the expansion of the overall consumer market. Knowledgeable participants expect the new retail model to be an integrated form of online and physical retail, each modified by the presence of the other. Think again of the 3D printing model, a potential form of demand-driven mass-customization, and its combination with online mobile payments systems and social media. The integration of sourcing with logistics and retail will become the third leg of the stool. The world we are entering is one in which the most powerful global flows will be ideas and digital capital, not goods, services, and traditional capital. Adapting to this will require shifts in mindsets, policies, investments (especially in human capital), and quite possibly models of employment and distribution. No one knows fully how all of this will play out. But attempting to understand where the technological forces and trends are leading us is a good place to start. This article originally appeared on project-syndicate.org.
Workers Around the World Back Employee Free Choice
http://blog.aflcio.org/2009/05/08/workers-around-the-world-back-employee-free-choice/
by James Parks, May 8, 2009
Workers around the world understand the freedom to freely join a union is a human right and one of the key marks of a free society. That’s why the global union movement is solidly behind the Employee Free Choice Act.
The most recent examples of that strong support come from Thailand and Indonesia. In a letter to United Steelworkers (USW) President Leo Gerard, Saman Pronprachathum, general secretary of the Petroleum & Chemical Worker’s Federation of Thailand, says “a strong economy depends on workers [being] given the opportunity to join a trade union and to bargain collectively so that fair wages and social benefits are lifted for all in a society.”
In a separate letter to Gerard, Irzan Zulpakar and Etin Rodiana, president and general secretary, respectively, of the Indonesian paper workers union, say:
Our trade union stands firmly behind the American trade unions in your efforts to get the United States Congress to pass this legislation into law, with the support of President Barack Obama….[W]e consider it an essential element in a free society that workers be allowed to join a trade union in an unobstructed way.
The outcome of the fight for the Employee Free Choice Act will have an impact beyond our borders. In December 2007, participants in the historic global summit on organizing told members of Congress the anti-worker atmosphere created in the United States by unscrupulous employers and advanced by the Bush administration systematically denies workers their rights, especially the freedom to form unions and bargain collectively.
A report released at the summit showed the United States has the lowest rate of union membership among developed nations and that anti-union tactics are being exported to other countries.
This export of anti-worker sentiment by U.S. employers has spurred the global union movement to support passage of the Employee Free Choice Act. On the Global Unions website, Anita Normark, general secretary of the Geneva-based Building and Woodworkers International, says:
We know from experience that, without explicit provisions, the dominant American anti-union corporate culture will prevail. It is the job of governments to protect human rights. And, the United States government is not doing its job.
One Nation Under Materialism
http://www.jbs.org/index.php/news-feed-archive/4842
Written by Donald Hank
Thursday, 07 May 2009 01:51
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Whenever I meet someone who identifies himself as a “liberal” or left-winger, I immediately ask them, “What caused the banks to crash?” The answer: “lack of regulation.” When I ask them to elaborate, they say, parroting Tim Geithner, that the problem is “very complex,” implying “you aren’t smart enough to understand.”
But the ultimate implication is that free market principles killed the banks.
But the free market has an alibi. It left the country years ago. Some say it started to decline with the creation of the Fed and income tax in 1913. Others trace the decline to the 30s and FDR’s Keynesian policies.
At any rate, the Western economy has long been an unsavory mixture of government and business, which some call corporatism and others call fascism. Indeed, it is essentially the economic system introduced by Mussolini, with the difference that Mussolini did not use it to harm banks or businesses.
Big business certainly fits this description of a public-private partnership. In the financial service industry, toxic government policies force banks to make bad loans but tacitly guarantee these loans under the aegis of Fanny and Freddy. Gone are the days of mortgages guaranteed by sound financial practices such as credit checks and 20 percent down payments. Common sense and self preservation have been left out of the equation.
Manufacturers like the auto industry have always been manipulated by big government using the levers of labor unions (and, more recently, green policies), to the extent that labor prices average in the $70s per hour per (unskilled) worker. Obviously, the industry is no longer viable, but never fear, the government will prop it up at all costs – to you.
Green policies force manufacturers to hold to unrealistic clean air and water standards that drive prices even higher. Cap and trade will be a new tax more onerous than any government interference heretofore, making CO2 emitters pay fines for emissions that easily pass muster, for example, in China.
And when we buy from the heavily polluting, labor-exploiting Chinese, at prices that make our over-regulated industries incapable of competition, government cynically calls this “free trade.”
Imagine sending an American boxer into the ring with pillows tied to his hands and with hands and feet bound, to fight an unfettered foreign opponent armed with brass knuckles, and calling this a fair fight!
Most would say that labor unions represent the intrusive government side since without government support, in a truly free economy, the law of supply and demand would not tolerate such overpriced labor even for a day. Likewise, most would say that executives represent the "private" side of industry. Yet, in a truly free economy, these high-ranking leeches would also not be tolerated for a day.
The problem is that if big government intervenes on behalf of labor to grant them exorbitant salaries, then, out of "fairness," it is obliged, in any democratic system, to allow management to gouge likewise. We get two evils for the price of one.
Now conservatives have traditionally defended management's right to excessive remuneration, perceiving themselves as defenders of the “private sector” and the CEOs as their protรฉgรฉs, while the left sees itself as the defender of labor.
But both sides are wrong, in two ways – neither side fully understands that big business has long been a State-private partnership, heavy on State, with the free market being shackled. And neither side understands that the malaise is largely cultural, not political, nor economic.
In a healthy culture of honorable people with common sense (like the Japanese, for example), no labor union would be capable of negotiating terms that would make their business unprofitable to the point of destroying their jobs. Yet union after union has done just that in America, with workers blithely accepting the demise of their jobs, dutifully blaming management and now, in the Obama Age the free market itself, ignoring that free market capitalism has been extinct for years.
No decent CEO would demand an exorbitant salary knowing that in so doing he or she was destroying the business that sustains himself, his family and his workers. They would see the danger to themselves if nothing else. But seeing themselves as defenders of the illusory “free market,” they guiltlessly accept the exorbitant unearned fruits of others' labor and watch passively as their unprofitable industries fail – as though they had no say in the matter.
Nor, in a hypothetical sound and honorable culture based on common sense, would the media neglect to warn the public of the imminent loss of thousands of jobs as a result of reckless labor negotiations. But the media, staffed by far too many eager left-leaning polemicists, would not think of double crossing their comrades in the labor unions.
Further, education and academe would cultivate common sense and honor in workers, journalists, business managers, politicians and future educators, all of whom would join forces to keep America sound. But no such thing has happened in the United States for many, many years.
Japan comes closest to an honor-based, less egocentric culture, with workers at Toyota, for example, all showing up for work in their new Toyotas and management politely declining excessive raises. Accordingly, unemployment there has been running at half (a little over 4 percent) the Western rate (over 8 percent in the United States and EU both).
A half-century of relentless globalist-leftist activism in education, journalism, labor, management, media, education, religion and government has brainwashed Americans into accepting as inevitable – and moral – that more and more jobs go to the Third World and illegal immigrants, knowing that it is a death blow to the economy of their own nation and people, who grimly march unaware of their own destruction, fueled by political slogans disconnected from reality or science. Millions of Americans have succumbed to the spiritual and psychological onslaught.
If there is a unifying idea in the West, it is materialism, with both left and right shot through with its common threads — Engels’ notion on the left and materialist consumerism on the right.
The unifying philosophy of our forefathers has been almost completely surrendered to this self-destructive ideology.
Donald Hank is a former language teacher, currently operating a technical translation agency in Wrightsville, PA. A former language teacher, he holds an undergraduate degree in French and German from Millersville State University (PA), a Master’s degree in Russian language and literature from Kutztown State College (also in PA), has studied Chinese for 3 years in Taiwan at the Mandarin Training Center, and is self-taught in other languages, having logged a total of 8 years abroad in total immersion situations. He is also the founder of Lancaster-York Non-Custodial Parents, a volunteer organization that provides Christian counseling for non-custodial parents.
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Will Workers Be Left Behind in a Green Transition?
http://www.thenation.com/doc/20090518/uehlein/single?rel=nofollow
By Joe Uehlein
May 5, 2009
As Congress prepares legislation to slow global warming, what kind of jobs will it create?
Unfortunately, "transition assistance" in the past has often meant little more than a funeral for workers and communities threatened by the side effects of globalization, environmental protection and other public policies. Without a clear program to protect workers from the effects of climate protection, the struggle against global warming can all too easily come to be perceived as a struggle against American workers. Workers have often felt threatened by measures to protect the environment. Today such fears are likely to be augmented, especially in a time of soaring unemployment, by the large changes necessary to protect the planet from global warming.
Environmentalists have often addressed this challenge by pointing out that a transition to clean energy would create far more jobs than it would eliminate. While that may be true, it entirely misses the point. The fact that some people get new jobs provides little solace for the people and communities who have lost theirs.
As Carl Wood of the Utility Workers Union of America put it at this year's Good Jobs, Green Jobs national conference, "Workers are used to being ground up and spat out by any change in society. In the United States there is no safety net for the victims." He cited mechanics in a southeastern Ohio coal-fired power plant represented by his union whose jobs would be eliminated by the phasing out of coal as a very real example of how climate protection could threaten specific workers even if it produced more jobs in general.
Coal miners and their communities are particularly at risk. In a September 2008 op-ed, United Mine Workers of America president Cecil Roberts cited a study showing that the Climate Stewardship Act of 2003 would have reduced coal production by 78 percent by 2025, which would have "just about wiped out the coal industry in southern West Virginia and elsewhere in Appalachia." He added that the more recent Lieberman-McCain bill would have cut Appalachian coal production by 30 percent or more.
The current campaign to reduce the use of coal could easily become a poster child for the threat posed to workers by climate protection. But for that very reason it also provides an opportunity for climate protection advocates to paint a picture of themselves as the advocates and protectors of miners, railroad workers, utility workers and others whose jobs and communities may be threatened by climate protection measures.
Replacing "to be supplied"
Perhaps surprisingly, some of the best ideas for protecting workers and communities hit by the side effects of public policy decisions were embodied in legislation championed a few years ago by Republican Senator John McCain to protect tobacco workers from the effort to reduce tobacco consumption.
McCain's 1997 Universal Tobacco Settlement Act passed out of committee nineteen-to-one but was defeated on the Senate floor. Workers and farmers would have received transition assistance from the fund if "the implementation of the national tobacco settlement contributed importantly to such workers' separation" from their jobs. Looking ahead to the next generation, the bill also provided education benefits to members of a "tobacco farm family."
A similar program should be developed for workers who lose their jobs because of climate protection policies.
Rick Wagoner got a cool $23 million for running GM into the ground. Coal miners, railroad workers, coal-fired generator workers and others displaced by climate protection policies don't expect anything like that. But they should be able to count on a program like the one McCain championed for tobacco workers. And those for whom the program doesn't work should at least be guaranteed decent pensions with healthcare.
Perhaps even more important, the McCain bill provided not just for individuals but for hard-hit communities. It included a $28 billion industry-funded Tobacco Community Revitalization Trust Fund to provide economic development grants over a twenty-five year period to create jobs and business opportunities for former tobacco workers.
The same thing could be done now to jump-start the transition from coal and other carbon-intensive industries. The stimulus package includes an estimated $80 billion for programs that could create green jobs. A portion of these funds can be used to make eastern Kentucky, West Virginia and the rest of the Appalachian coalfield a model of job-positive transition from coal to renewable energy and conservation. Green jobs can be targeted at the communities that will be affected by coal production to create local jobs that will provide an alternative source of employment. The statewide network Kentuckians For The Commonwealth has spelled out some of the clean energy solutions; read the details here.
A green TVA for the green New Deal
But climate protection legislation should go further. During the Great Depression a regional economic development program, the Tennessee Valley Authority, transformed one of America's poorest regions by means of massive energy development. Seventy-five years later, the TVA has lost much of its original vision and become a target of environmental protests. But the principle of regional economic development through investment in a new energy source can be applied to the Appalachian coalfields today.
A small-scale version of such a post-coal economic development program is poised to begin in the Southwest. The closing of a highly polluting generating station has provided the owner, Southern California Edison, with an estimated $30 million annually in pollution allowances, which can be sold under the US Acid Rain Program. The Just Transition Coalition, composed primarily of Hopi, Navajo and environmentalist allies, developed a plan to use the funds for a transition to renewable energy.
The Just Transition plan would direct 30 percent of the pollution credits to local villages to invest in solar, wind and ecotourism; 10 percent to job retraining; 40 percent to alternative energy development and production; and 20 percent to tribal government programs previously supported by coal royalties.
Southern California Edison is regulated by the California Public Utilities Commission, which has taken the groundbreaking step of ordering that proceeds from pollution allowance sales be put into a special account. It then requested proposals from the Just Transition Coalition for how the funds should be spent.
The Hunter Region in Australia is also being proposed as a model for a transition from coal to renewable energy. The Greenpeace-funded study, "A Just Transition to a Renewable Energy Economy in the Hunter Region, Australia," details two scenarios for a renewable energy future.
Greenpeace and other environmental organizations have made "just transition" a central part of their program for transforming the region. According to a Greenpeace publication on Hunter:
A just transition from coal to renewables requires that the federal government support and protect coal industry workers as coal-fired power stations are phased out. Government support should include providing investment in new industries and infrastructure, guaranteeing jobs and retraining workers so that they can find employment in new green industries. With the right government action, an energy revolution can provide a way forward for coal communities.
An imaginative program for a transition from coal to green energy might win surprisingly wide support. In September three-quarters of Kentuckians said they would support a five-year moratorium on coal-fired power plants, and 43 percent backed expanding investment in clean renewable energy.
It is a basic principle of fairness that the burden of policies that are necessary for society--like protecting the earth's climate--shouldn't be borne by a small minority who happen to be victimized by their side effects. Unless workers and communities are protected against the unintended effects of climate protection, there is likely to be a backlash that threatens the whole effort to save the planet.
Thailand to Register 400,000 Foreign Workers
http://www.irrawaddy.org/article.php?art_id=15423
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By LAWI WENG Wednesday, April 1, 2009
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The Thai Labor Ministry will register 400,000 foreign migrant workers to compete in the labor market, mostly in low-paying jobs shunned by Thai nationals.
Jackie Pollock, a founding member of the Chiang Mai-based Migrant Assistance Program, said “It is good for the Thai government to recognize the need of migrants. But they also need to stop the current crackdown and deportation of illegal migrants.”
The Thai Labor Ministry will register 400,000 new foreign workers, granting them permission to work legally in the kingdom, according to a ministry announcement on Tuesday.
Employment department director general Pichai Ekpithakdamrong was quoted by The Nation newspaper, saying: "We have decided to push for the registration of more alien workers because we have found that Thais are not interested in working in the fishery, construction and cold-storage sectors,"
According to the Thai Labor Solidarity Committee (TLSC), based in Mahachai in Samut Sakhon Province, most migrants work in the so-called "three Ds," in the "dirty, dangerous or degrading” sectors of the job market.
The group said there is a need for about 150,000 workers in Samut Sakhon Province, a center for the fishery industry.
“Thai workers don’t want to do the ‘three Ds’ because the work is unhealthy. But it is a good opportunity for Burmese migrants,” said a TLSC member.
Thailand is believed to have nearly 4 million migrant workers. About 500,000 are legally registered.
Most foreign workers live in highly concentrated areas like Mae Sot on the Thailand-Burma border, a center of the Thai garment industry, and Samut Sakhon, a hub for the labor-intensive seafood processing industry, located southwest of Bangkok.
According to the Labor Rights Protection Network, based in Mahachai, there are 200,000 Burmese migrants in Mahachai; an estimated 70,000 workers are legally registered while others are working illegally in hope of qualify for worker permits.
Recently, the global economic crisis in Thailand has forced many Burmese migrants to return to Burma because they can’t find work. The labor ministry estimated 2 million Thai workers are currently unemployed.
The Thai government earlier this year announced it would not offer illegal migrants a chance to register for legal status this year and have increased crackdowns and deportation. About 400 illegal migrants were arrested in Bangkok this week.
Copyright © 2008 Irrawaddy Publishing Group | www.irrawaddy.org
Japan’s Jobless Rate Jumps to Three-Year High of 4.4%
http://www.bloomberg.com/apps/news?pid=20601068&sid=acW.yLh.Xl5U&refer=home
(Update1)
By Toru Fujioka
March 31 (Bloomberg) -- Japan’s recession deepened as the unemployment rate surged to a three-year high, wages fell and job openings plunged at the fastest pace in three decades.
The jobless rate rose to 4.4 percent last month from 4.1 percent in January, the statistics bureau said today in Tokyo. The ratio of jobs available to each applicant tumbled to 0.59 from 0.67, the biggest drop since 1974, the Labor Ministry said.
Companies from Toyota Motor Corp. to NEC Corp. are firing thousands of workers, increasing pressure on the government to give more assistance to the nation’s jobless, most of whom don’t receive benefits. Prime Minister Taro Aso said the government plans to unveil a stimulus package in mid-April that will include aid for households.
“We don’t think this is the ceiling for the unemployment rate,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo, who expects it to reach a record 5.7 percent this year. “Manufacturers are going to keep cutting costs by suppressing employment.”
Wages slid 2.7 percent as a record slump in exports forced manufacturers to slash production and overtime. Household spending fell 3.5 percent, a 12th monthly decline, indicating domestic demand is unlikely to make up for the collapse in exports. Purchases by consumers account for more than half of the economy.
The yen fell to 98.27 per dollar at 5:57 p.m. in Tokyo from 97.36 before the reports, and is heading for its biggest quarterly loss in seven years. The Nikkei 225 Stock Average fell 1.5 percent.
Sentiment Tumbles
Sentiment among the nation’s largest manufacturers probably tumbled to its lowest level in more than 30 years, the Bank of Japan’s Tankan survey is expected to show tomorrow. Exports fell an unprecedented 49.4 percent in February from a year earlier. Factory output slid 9.4 percent from January, when it declined a record 10.2 percent, a report showed yesterday.
Suzuki Motor Corp., Japan’s fourth-largest automaker, said yesterday it will shut some domestic factories for up to seven days next month to get rid of inventories.
Overtime compensation dropped an unprecedented 18.5 percent last month as manufacturers cut extra working hours by a record 47.7 percent, today’s Labor Ministry report showed.
Aso, speaking to reporters before heading to the Group of 20 summit in London, said compiling his newest stimulus package is his highest priority and the government needs to take measures to prevent the economy from “falling apart.” Since he took office in September, Aso has announced stimulus measures in two plans totaling 10 trillion yen ($102 billion).
Debt Burden
The government’s ability to spend may be limited as the nation’s debt burden is set to rise to 197.3 percent of gross domestic product next year, the Organization for Economic Cooperation and Development said in a report today. The ratio is the highest among OECD-member countries and almost double that of the U.S., where the ratio is projected to rise to 100 percent, OECD data show.
Some 77 percent of jobless people aren’t getting unemployment benefits, the highest figure among Group of Seven nations except Italy, whose data weren’t available, the International Labour Organization said in a report last week.
“The policy response has been pretty slow in creating a safety net for unemployment, which is putting downward pressure on the whole economy,” said Noriaki Matsuoka, an economist at Daiwa Asset Management Co. in Tokyo.
The jobless rate will reach a postwar high of 5.5 percent in the first quarter of next year, according to the median estimate of 14 economists surveyed by Bloomberg News.
Oki Electric Industry Co., a maker of communications equipment, said it will cut administrative workers after weakening demand forced it to widen its loss forecast this month.
Harder to Find
New jobs are also becoming harder to find as companies try to contain costs. A total of 1,845 graduates had their job offers rescinded as of March 23, up 17 percent from February, the Labor Ministry said.
Toyota, the world’s largest automaker, this month said it will almost halve recruitment of graduates in Japan to the lowest in 14 years after forecasting its first loss in almost six decades. NEC, Japan’s largest personal computer maker, said it plans to cut new hires by almost 90 percent to 100 people.
NEC said in January that it will eliminate 20,000 jobs worldwide and Toyota plans to trim its workforce by at least 3,000.
“Japan’s labor market will keep deteriorating,” said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo. “The question is how much consumer spending will become a drag on the economy as wages and employment conditions worsen.”
To contact the reporters on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net
Last Updated: March 31, 2009 05:14 EDT
Japan's management approaches offer lessons for U.S. corporations
http://seattletimes.nwsource.com/html/opinion/2008936833_opinb29jacoby.html
While Japan has been used as a cautionary tale in the U.S. economic downturn, guest columnists Sanford M. Jacoby and Sally Kohn argue that management approaches common in Japan offer lessons for U.S. companies as they recover.
By Sanford M. Jacoby and Sally Kohn
RECENTLY, auditors for General Motors raised substantial doubt about whether the automaker will survive. But while Japanese automaker Toyota is also taking a hit as global auto sales slump, analysts expect Toyota to ultimately prevail. It's not just the Prius. Another type of hybrid built into Japan's economic model blends corporate interest with the common good. Japan's cooperative capitalism is the key to Toyota's future — and ideally America's, too.
Promoting his stimulus package, President Obama said, "If you delay acting on an economy of this severity, [it potentially] becomes much more difficult for us to get out of. We saw this happen in Japan in the 1990s, where they suffered what was called the 'lost decade.' "
Yet while Japan has been used as a cautionary tale, in many ways even at the peak of its recession Japan remained better off than the United States today. Japan did not see its middle class disappear into swelling rates of poverty and unemployment. And Japan was not plagued by growing class resentment. Its inequality remained modest and its large corporations did not have bloated CEO salaries, including at those firms receiving government aid.
Why? Despite some changes in recent years, most large Japanese corporations still practice a form of capitalism in which different groups with a stake in the enterprise — owners, employees, managers, suppliers, creditors — work together to create value. Cooperation is possible because the various stakeholders have made long-term commitments to the firm. The result is a more holistic corporation, balancing short-term opportunities with long-term needs.
A large company in Japan is less likely to lay off thousands of employees simply to help its share price or to gut pension benefits to pay out higher dividends. In other words, Japanese corporations contribute to the common good rather than compete with it.
American corporations (including banks), under pressure from speculative investors, prioritize driving up short-term stock prices and dividends. Executives are "aligned" with shareholder interests through stock-based compensation. But this creates an incentive for executives to boost their own compensation by taking excessive risks and by manipulating share prices. Ultimately this harms the long-term health of companies and thus the long-term health of America's economy.
Toyota, for instance, refused to line investors' pockets and instead reinvested profits in capital improvements and in research and development, which led to the hybrid. By contrast, through the late 1990s, GM funneled billions of its profits to shareholders — as dividends and share buybacks — a fact often overlooked in discussions of what went wrong in Detroit.
In stakeholder capitalism, employees participate in corporate decision-making. While unions in both Japan and the United States have declined in recent years, the level of unionization in the United States today is about half that in Japan. And in nonunion Japanese corporations, human capital still is valued more deeply. Senior human-resource executives are far more influential than in comparable American companies, where it is chief financial officers who rule the roost.
And when corporations function as teams, fairness becomes an instinctive priority. In the United States in 2006, the average CEO earned more than 364 times the average U.S. worker — a huge increase from, say, 1980, when the differential was just 40 times more. Japan, on the other hand, has one of the lowest CEO pay gaps in the world, with chief executives earning on average 10 times more than the average worker.
Measurements of economic inequality find that wealth, too, is less unequally distributed in Japan. The United States ranks among the worst nations in terms of wealth inequality, at the end of the scale with South Africa and Iran.
Of course, Japan is not an economic paradise. About a third of the population works in "atypical" jobs that carry no promise of employment security. These workers, mainly women and young people, don't receive the same benefits the Japanese business model provides others. Just as women and African-American and Latino men face disproportionate discrimination in the U.S. labor market, Japan's inequities, while lower overall, still exist.
Nevertheless, lessons from Japan could strengthen the U.S. economy for generations to come. We can cut the gap between CEO and worker pay by giving shareholders a say in executive compensation, an idea that ideally will be ratified now that the SEC is under new management.
But we need to go further. For example, we need to revamp corporate charter laws to mandate stakeholder governance and corporate accountability, to adopt laws like the Employee Free Choice Act to strengthen employee representation and to tax unearned income at the same rates applied to wages and salaries.
Toyota, like Japan, is not a perfect example. The days of Japan as No. 1 are over. But it's worth noting that the first plank in the Toyota Way is: "Base your management decisions on a long-term philosophy, even at the expense of short-term goals." That's a good place to start as we rethink the American corporation.
Sanford M. Jacoby is professor of management and public policy in the UCLA Anderson School. He is author of "The Embedded Corporation: Corporate Governance & Employment Relations in Japan and the United States." Sally Kohn is senior campaign strategist for the Center for Community Change and a blogger for the Huffington Post.
Copyright © 2009 The Seattle Times Company
Workers’ group calls for employee focus in global crisis management
http://www.itfglobal.org/news-online/index.cfm/newsdetail/3153
27 March 2009
Workers’ representatives are demanding that the social and employment dimension of the world economic crisis be highlighted at the G20 summit next week.
At a meeting of the International Labour Organization (ILO) Economic and Social Policy Committee on 17-18 March in Geneva, Switzerland, Ebrahim Patel, vice-chair of the workers’ group, called for a focus on a number of areas in attempts to deal with the global financial crisis. These, he said, should include fiscal and wage measures to stimulate demand, social protection, observance of core labour standards and social dialogue and tripartism.
In a speech to the committee, Patel also outlined the group’s support for the concept of a “global jobs pact”, developed with the full involvement of trade unions and employer organisations. The pact should contain several key aspects, for example: public investment-based and employment-orientated stimulus packages; active labour market policies to help workers find decent work opportunities; extended and enhanced social protection provisions and stronger workers’ rights and the application of relevant international labour standards. The group wanted to see the establishment of a global jobs fund managed by the ILO to address the imbalance between developing and developed countries’ economic capacities.
Member states of the G20 should, he said, invite the ILO to the summit as a participant along with other multilateral bodies.
The G20 leaders meet in London, UK, next Thursday 2 April. The ITF is backing a demonstration on Saturday 28 March, Put people first, urging the G20 leaders to build policies to create a global economy based on the fair distribution of wealth, decent jobs for all and a low carbon future.
The global union federations, including the ITF, have put together a special publication on the economic crisis, which will be available next week.
More information about the demonstration: www.putpeoplefirst.org.uk
Toyota City, Japan Is Beginning To Look A Lot Like Detroit
http://helpthemiddleclass.com/2009/03/23/toyota-city-japan-is-beginning-to-look-a-lot-like-detroit/
The ultimate company town thought it was immune from economic downturns. But that was before the global recession hit and the automaker started slashing jobs.
Reporting from Toyota City, Japan — When times were good and the auto business hummed along like a finely tuned engine here in the Detroit of Japan, this tightknit company town was considered a workers’ utopia.
City officials were the envy of the nation, nursed by a paternal multinational firm that paid generous wages and showered the community with perks such as a top-notch sports stadium, concert hall and art museum — all carrying the Toyota brand name.
That was before the worldwide economic pileup that brought widespread personal wreckage to the hometown of the world’s mightiest automaker.
Unlike in Detroit, where years of steady decline preceded the current financial crisis, Toyota City’s fortunes went from cruise speed to brick wall. Regarded a model of economic prosperity, it endured an unthinkable drop from first in the country to worst in less than nine months.
In this community three hours southwest of Tokyo, it’s a phenomenon known as Toyota Shock.
“Toyota City is hurting,” said Norio Seki, general director of the city’s industrial labor division. “We’re in trouble.”
Last summer, Toyota was just months away from overtaking General Motors as the world’s biggest car company. Jobs were plentiful here in Toyota City, where 80% of workers are employed in the auto industry.
Then Japan slumped into recession. Exports in the world’s second-largest economy plummeted at a record pace, and domestic demand dropped alarmingly.
Mammoth blue-chip firms such as Toyota and Sony weren’t exempt from the financial carnage. Even before announcing last month that it was facing its first annual net loss in 59 years, Toyota had begun an unprecedented production slowdown that called for reduced shifts and 10-day closures at its 12 domestic plants.
It also fired 9,000 contract workers — more than 10% of its 85,000 employees — and warned that more firings could follow, even among once-protected full-time workers.
As a result, Toyota City saw its number of available jobs fall more than 50% between October and December compared with the same period of 2007, officials say.
January brought more bad news: The number of job seekers soared 130% from the same month in 2008, from 1,489 to 2,627. That brought Toyota City unwanted attention as Japan’s most out-of-work town.
“There used to be so many jobs we couldn’t fill them all, but that all dried up overnight,” said Masami Kawajiri, director of a federal job center in Toyota City. “Now our only choice is to do our best for job seekers, one by one. To think about them all at once would be too overwhelming.”
City hall has fared no better: Officials predict a 96.3% drop in the corporate taxes they’ll collect this year, a loss that jeopardizes city services. The Aichi prefecture government, which relies on Toyota for one-fourth of its corporate tax revenue, is projecting a $1-billion shortfall in 2009.
For its part, the automaker can only watch the decline of its home city as its scrambles to climb out of its own financial hole.
From an operating profit of $37 billion last year, Toyota expects a $5-billion loss for the fiscal year ending March 31. The company is also seeking government loans to hold off private investors demanding as much as 50% in interest on the company’s debt.
“We know Toyota City has been hit on the chin, and we feel a responsibility to the community,” said Paul Nolasco, a Toyota spokesman in Tokyo. “But here’s an indication of how cloudy our situation is: We haven’t even come up with a global production and sales plan for this year.
“We usually release that in December, but here it is March and we haven’t done it yet. That’s the biggest indication that we’re still looking for direction.”
Hurting just as much are hundreds of smaller companies here that supply the Toyota colossus with the parts to construct its cars, including mufflers, door parts, windshield wipers and headlights.
In a city where one-third of the 1,400 employers are auto-related, many of the firms say Toyota’s production cuts will cause bankruptcies unless they too can qualify for government loans.
“We have no way to make the situation better — we just have to wait and see what happens with Toyota,” said a manager in a car window parts company who asked not to be named. “People are afraid to talk because they are afraid of Toyota, but we’re all very nervous.”
Toyota City’s downturn baffles residents. After all, this was the home of Japan’s largest company. Financial woes might be a reality in other parts of Japan, but not here.
“This thing took us by surprise,” said one former Toyota employee who declined to give her name. “Who would have ever guessed that recession would come home to roost here? This is a car town and the world needs cars, right?”
Toyota City is a somewhat isolated community on the last stop of a subway line based in the nearby bigger city of Nagoya. Most people here support the hometown company and drive Toyotas.
Not far south of downtown sits the automaker’s massive complex of factories and research and development centers. It carries an air of big-brother mystery, even among locals.
The main gate is guarded, and a visitor who tried to take pictures from the public street was quickly shooed away.
The city has the typical signs of stress: plummeting property sales, empty storefronts and restaurants. But there is another commodity that the town has lost to the recession: foreigners. The representatives from Toyota suppliers and customers from the U.S. and Europe who used to pack downtown’s hotels are gone. Some say occupancy rates have dropped 90%.
For 13 years, Kevin Yuhara has run his tiny restaurant-pub in the heart of downtown, catering to foreigners who did business with Toyota. The U.S. college sports memorabilia, collection of Toyota caps and Polaroids covering the walls capture the atmosphere of drinking and laughter of the mostly American clientele.
Now the place sits empty, except for the occasional Japanese customer.
“For more than a decade, we had some good times here,” said Yuhara, standing next to a flying-pig toy hanging from the ceiling. “But now the party’s over, the town’s major company is hurting, and the foreigners have all gone home.”
At city hall, faces are grim as officials look for answers.
Seki, the industrial labor division head, said Toyota City and Detroit have for years been “sister cities” and share several cultural exchange programs.
Though he has never called his counterpart in Detroit for advice, Seki says there are many questions he’d like to ask. The economic malaise has prompted officials to reconsider the city’s future as a one-company town, he said.
“I’d like to know how they handle unemployment at this scale,” he said of Detroit. “I’d like to know what other industries they are looking into. How can you use the technology used in the auto industry for other kinds of enterprises?”
Seki says the two cities are different in key ways. Unlike most American workers and employers, Toyota City and its citizens have savings they hope will see them through the hardest times.
Toyota City has remade itself before, locals say. During the Depression, the city was a silk production center named Koromo. The stock market crash destroyed the industry, so an ambitious loom maker named Kiichiro Toyoda turned to automobiles instead.
Nobody here expects that another such drastic personality change is in Toyota City’s future. “In the long run, we don’t think the auto industry will fail,” Seki said. “Humans drive cars. It’s what they do.” (FOR ADDITIONAL INFORMATION AND RELATED ARTICLES PLEASE CLICK THE LINK BELOW FOR THE LOS ANGELES TIMES)
Please share your thoughts below.
Article by John Glionna for the Los Angeles Times
In Toyota City, Japan, the good times rolled . . . away - Los Angeles Times.
Posted by Man In The Middle on Mar 23rd, 2009 and filed under Big Business/Wall Street, Careers, Credit & Debt, Economy, Human Interest, Latest Job News, Latest News, Money, News, World. You can follow any responses to this entry through the RSS 2.0. You can leave a response by filling following comment form or trackback to this entry from your site
Shift to labour-intensive industry -INDIA
http://www.centralchronicle.com/viewnews.asp?articleID=2782
Category » Editorial Posted On Friday, March 20, 2009
There are widespread reports about job loss in various countries, including India thanks to the global meltdown. According to the Union Labour Ministry, around 5 lakh workers have lost their jobs between October and December last year. The figure is based on a study that covered 2,581 units. The affected workers belonged to 20 sectors in 11 States and UTs, including textiles, metals, gems and jewellery, automobile, transportation and mining. For a labour-intensive country like India these reports are indeed intriguing as unemployment and underemployment has been increasing among a large segment of the working population.
The biggest knock has, however, been suffered by the export-driven gems and jewellery units a fall-out of the slump in demand from foreign markets, most of whom are reeling under the impact of the downturn. In fact, the impact of retrenchment has already become evident in Gujarat , which has a large number of diamond units, where even suicides have been reported. But its not just Gujarat, some other States have also been affected by closure due to dwindling orders.
The automobile sector has also suffered badly coinciding with poor demand in the last few months of 2008. However, there are expectations that the economy would improve in the second half of the year and the job loss in this sector may be checked to some extent.
Meanwhile, based on the dwindling export orders, industry inputs have predicted a crore job losses, an estimate that is obviously a cause for worry, specially for the government with elections nearing. The figure, arrived at by the Federation of Indian Export Organizations (FIEO) survey, reflects that textiles, garments and handicraft sectors have been found to be the worst-affected. And it is generally believed that these sectors would find the going tough during the current year.
It may be recalled that a disturbing trend of Indias economic performance has been a deceleration in employment growth of 1.92 per cent per annum from 1993-94 to 2006-07 from 2.61 per cent per annum between 1983 and 1993 although growth in terms of GDP was rapid. Clearly, there has been a decline in employment per unit of GDP growth or employment elasticity of 0.28 from 1993-94 to 2006-07.
Applying this elasticity to the likely GDP growth of below 7 per cent in 2008-09 and around 5 per cent in 2009-10 to project the generation of employment provides an average of 7.5-8 million work opportunities this year and 6 million in the next financial year. This is much short of the 10-million opportunities generated during each of the last five years. In other words, there will be around 6 million fewer jobs during 2008-10.
However, the job loss has affected other parts of the world more--a staggering 50 million figure by 2009-end, according to the International Labour Organization. The slowdown has already claimed 3.6 million American jobs. High unemployment rates, specially among young workers, have led to protests in countries as varied as Latvia , Chile , Greece , Bulgaria , and Iceland and contributed to strikes in Britain and France . In emerging economies such as in Eastern Europe , there are fears that growing joblessness might encourage a move away from the free market and pro-western policies while in developed countries unemployment could bolster efforts to protect local industries at the expense of global trade.
Interestingly, in 2008, the 61st round survey of the National Sample Survey Organization, carried out in 2004-05, covering a sample of six lakh people in both rural and urban areas, found that the workforce participation rate (the number of persons working as a percentage of the total population) had increased by 2.85 per cent a year between 2000 and 2005. This is well beyond the current population rate. However, things started changing since early 2008 after the global recession set in.
India has been generating more jobs than any other developing country such as Brazil , Russia and China , as per a study conducted by the Organization for Economic Cooperation & Development (OECD). India generated 11.3 million new jobs annually between 2000 and 2005, which is over 60 per cent more than 7 million jobs created in China every year. The performance looks even more impressive when contrasted with Brazil as the S American giant clocked 2.7 million new jobs annually over the five-year period while Russia added some 700,000 new jobs every year.
It has been estimated that there are 130 million surplus workers in rural India and around 170 million in rural China and the figures are likely to grow as agriculture becomes unremunerative and the farmers debt continues to increase. Incidentally, it may be mentioned that as per a government report around 48.6 per cent farmers in India are presently in debt though the actual figures may be much more.
With increased mechanization, the informal sector has obviously been the greatest contributor to employment generation with nearly 72 per cent of workers in cities and 82 per cent in villages engaged in this sector. But various factors, including competitiveness, economies of scale and lack of financial resources may close down many of these units in the coming years unless the government decides to help them.
Importantly, entrepreneurship development has to be a vital tool for employment generation. There are around 33 million entrepreneurs in India today with 45 per cent belonging to the backward community. According to FICCI estimates, with an enterprise to employment ratio of 1:3, creation of five million new entrepreneurs would result in generating 15 million additional jobs for individuals. Thus, it is necessary to promote entrepreneurship in a big way, specially among the weaker sections in the rural areas through easy access to capital, technology and market distribution channels. Meanwhile, the National Rural Employment Guarantee Scheme (NREGS), which has been extended to all the 615 districts, has been allocated Rs 30,100 crores in the interim Budget. This should provide four crore jobs per annum.
Some economists and planners have voiced the need to reverse the planning strategy and concentrate on the rural sector with industries, which would generate adequate employment and at the same time utilize local skills and technology. Remember, Mahatma Gandhi had advocated strengthening the rural sector to upgrade life and livelihood of the vast majority, which languish there. In recent times, our former President, Dr. A. P. J. Abdul Kalam, had echoed the same by suggesting the need for PURA (providing urban facilities in rural areas) to boost up the development process.
Clearly, if the demand of the right to work is accorded Constitutional guarantee, which may not happen now, one could see a perceptible change in the strategy towards generating employment. Obviously, this would call for giving more incentives to the sectors that are labour-intensive and also have high employment potential. Agro-industries and rural industries come to our mind immediately, but there are many areas in the manufacturing sector which could too generate sufficient employment and become competitive.
Thus, there is a need to change the outlook of our politicians and planners, who concentrate on GDP growth through labour-reducing techniques without caring for the population, which languishes in poverty and squalor. Indias growth strategy in the coming years would need a drastic reorientation aimed towards labour-intensive sectors, where entrepreneurship development could perform the dual task of employment generation and self-employment. The countrys rural sector offers enormous possibilities and a national dialogue is necessary.
Dhurjati Mukherjee, INFA
Economic crisis to hit women harder than men, ILO report says
http://working.canada.com/resources/story.html?id=9fae403a-43d1-4ffb-b59e-4603c3cbf4c2
Economic crisis to hit women harder than men, ILO report says
In its annual report Global Employment Trends for Women, the Geneva-based employment equity organization said up to 22 million women could join the ranks of the unemployed in 2009.
Becky Rynor, Financial Post
E-mail
Font: * * * * The continuing global economic crisis will likely see more women than men lose their jobs in the year ahead, the International Labour Organization warns.
In its annual report Global Employment Trends for Women, the Geneva-based employment equity organization said up to 22 million women could join the ranks of the unemployed in 2009.
"Gender inequality in the world of work has long been with us, but it is likely that it will be exacerbated by the crisis," said Juan Somavia, director-general of the UN agency whose mandate is to promote "decent work" internationally.
"In times of economic upheaval, women often experience the negative consequences more rapidly and are slower to enjoy the benefits of recovery. And already before the crisis, the majority of working women were in the informal economy with lower earnings and less social protection."
The report indicates that of the three billion people employed around the world in 2008, 1.2 billion were women.
In 2009, it predicts the global unemployment rate for women could reach 7.4 per cent, compared to seven per cent for men.
"Women's lower employment rates, weaker control over property and resources, concentration in informal and vulnerable forms of employment with lower earnings, and less social protection, all place women in a weaker position than men to weather crises", said ILO spokeswoman Jane Hodges.
The report predicts the gender impact of the economic crisis is expected to be worse for women in most parts of the world, but particularly in Latin America and the Caribbean.
The countries where unemployment rates may have less of an impact on women include East Asia, developed economies and the non-European Union which had narrower gender gaps in job opportunities prior to the current economic crisis.
© The Vancouver Sun 2009
China, India and the Doubling of the Global Labor Force: who pays the price of globalization?
http://japanfocus.org/-Richard-Freeman/1849
By Richard Freeman
[In this concise article, Harvard Economist Richard Freeman shows us that a spectre is haunting the industrialized societies, and above all the workers of these countries. Though little recognized in Japan and elsewhere, there has been an effective doubling of the global labour force (that is workers producing for international markets) over the past decade and a half, through the entry of Chinese, Indian, Russian and other workers into the global economy. The effective supply of capital, on the other hand, has virtually remained unchanged. With such a massive increase in the supply of labour, its relative share of the returns from production inevitably decline. One important dimension of this decline is the ability of increasingly footloose capital to find cheaper labour to employ. Morgan Stanley's Chief Economist Stephen Roach has long referred to a "global labour arbitrage" wherein high-wage jobs in the developed world are eliminated in favor of low-wage jobs in the developing world. He has argued that this is not limited to manufacturing, but also extends to such service industries as banking. But capital does not have to move to keep pressure on wages and salaries. Even work that is not at present outsourced may experience this pressure if the cost of labour becomes excessive relative to global benchmarks (including premiums for developed world levels of political stability and infrastructure).
Small wonder, then, that the labour share of compensation in Japan, the US and the EU countries is almost flat (indeed, incomes are declining for much of the workforce), while corporate profits are robust. What is more than a little strange is the general lack of recognition of this labour supply shock and its sobering implications. The public debate on globalization is largely dominated by pressure to open markets in order to attract more capital or at least keep what one has, while progressive taxes, regulations, unions and the other means of collective provision and action are either ignored or dismissed as "socialistic" impediments to growth. But Freeman rightly argues that capital can take care of itself and that it is time for domestic and international politics and policy to shore up the woefully eroded position of workers, a proposition that applies no less in the periphery than in the core. Japan Focus]
The global economic community, and economic policymakers in governments and global institutions alike, has yet to fully understand the most fundamental economic development in this era of globalization — the doubling of the global labor force.
I estimate that the entry of China, India and the former Soviet bloc into the global economy cut the global capital/labor ratio by just 55% to 60% what it otherwise would have been.
The doubling I am referring to is the increased number of persons in the global economy that results from China, India and the ex-Soviet Union embracing market capitalism.
1. Chinese workers assemble computers in Fuzhou, Fujian
In 1980, the global workforce consisted of workers in the advanced countries, parts of Africa and most of Latin America. Approximately 960 million persons worked in these economies.
Population growth — largely in poorer countries — increased the number employed in these economies to about 1.46 billion workers by 2000.
New players enter the scene
But in the 1980s and 1990s, workers from China, India and the former Soviet bloc entered the global labor pool. Of course, these workers had existed before then. The difference, though, was that their economies suddenly joined the global system of production and consumption.
2. Indian programmers
In 2000, those countries contributed 1.47 billion workers to the global labor pool — effectively doubling the size of the world's now connected workforce.
Competing globally
These new entrants to the global economy brought little capital with them. Either because they were poor or because the capital they had was of little economic value.A decline in the global capital/labor ratio shifts the balance of power in markets away from wages paid to workers and toward capital, as more workers compete for working with that capital.
Using figures from the Penn World Tables, I estimate that the entry of China, India and the former Soviet bloc into the global economy cut the global capital/labor ratio by just 55% to 60% what it otherwise would have been.
The capital/labor ratio is a critical determinant of the wages paid to workers and of the rewards to capital. The more capital each worker has, the higher will be their productivity and pay. A decline in the global capital/labor ratio shifts the balance of power in markets toward capital, as more workers compete for working with that capital.
Even considering the high savings rate in the new entrants — the World Bank estimates that China has a savings rate of 40% of GDP — it will take 30 or so years for the world to re-attain the capital/labor ratio among the countries that had previously made up the global economy.
Pressure to compete
Having twice as many workers and nearly the same amount of capital places great pressure on labor markets throughout the world. This pressure will affect workers in the developing countries who had traditionally participated in the global economy, as well as workers in advanced countries.
Countries that had hoped to grow through exports of low-wage goods must look for new sectors in which to advance — if they are to make it in the global economy.
The effect on advanced countries
Mexico, Columbia or South Africa cannot compete with China in manufacturing, as long as Chinese wages are one-quarter or so of theirs — especially since Chinese labor is roughly as productive as theirs.
The entry of China, India and the former Soviet bloc to the global capitalist economy is a turning point in economic history.
The ending of the apparel quotas in January 2005 has brought this point home to many countries, which are now rethinking their growth strategy.
But the advent of 1.47 billion new workers also pressures labor in advanced countries. The traditional trade story has been that most workers in advanced countries benefit from trade with developing countries because advanced country workers are skilled, while developing country workers are unskilled.
But this analysis has become increasingly obsolete due to the massive investments that the large populous developing countries are making in human capital. China and India are producing millions of college graduates capable of doing the same work as the college graduates of the United States, Japan or Europe — at much lower pay.
A shifting monopoly
By 2010, China will graduate more PhDs in science and engineering than the United States. The huge number of highly educated workers in India and China threatens to undo the traditional pattern of trade between advanced and less developed countries.
Historically, advanced countries have innovated high-tech products that require high-wage educated workers and extensive R&D, while developing countries specialize in old manufacturing products. The reason for this was that the advanced countries had a near monopoly on scientists and engineers and other highly educated workers.
Job migration
As China, India and other developing countries have increased their number of university graduates, this monopoly on high-tech innovative capacity has diminished. Today, most major multinationals have R&D centers in China or India, so that the locus of technological advance may shift.The world needs to abandon the Washington Consensus model of globalization that was designed, not all that successfully, for an utterly different global economy.
Certainly, the rate of technological catch-up will grow, reducing the lead of advanced countries over the lower wage developing countries.
Business experts report that if the work is digital — which covers perhaps 10% of employment in the United States — it can and eventually will be off-shored to low-wage highly educated workers in developing countries.
If and when Russia gets its economic act together, labor market pressures on educated and skilled workers will grow.
Transitioning to global market capitalism
The entry of China, India and the former Soviet bloc to the global capitalist economy is a turning point in economic history. For the first time, the vast majority of humans will operate under market capitalism, with access to the most modern technology.
3. Kunshan development zone: the epicenter of Taiwan high tech investment in the Shanghai-Suzhou corridor
The workers in these new entrants to the global capitalist system should make great gains, reducing rates of poverty, as indeed has occurred in China and India over the past 10-15 years.
A difficult change
But there will be a long and difficult transition for workers throughout the world to this change — a more formidable transition than that associated with the recovery of Europe and Japan after World War II.Countries that hoped to grow through exports of low-wage goods must look for new sectors if they are to make it in the global economy.
In advanced countries, real wages and/or employment are likely to grow more slowly than in years past. In developing countries that have traditionally been part of the global economy, manufacturing jobs are at risk.
They are likely to see a shift in labor to the informal sector with rising poverty, as indeed has occurred in many countries. China and India themselves are likely to face problems. Inequality in China and the former Soviet bloc has risen at rates unprecedented in economic history. Inequality has historically been high in India.
Large numbers of rural workers in China and India could lose from globalization, creating dangers of social unrest, particularly in non-democratic China.
Responsibility of policymakers
What does all this mean for economic policymakers and officials like Paul Wolfowitz at the World Bank and his counterparts at the International Monetary Fund?
So far, the World Bank and the IMF have tended to blame economic problems on insufficient labor flexibility, or fiscally irresponsible governments with excessive expenditures on social safety nets, as well as on government interventions in markets.
The role of the IMF and World Bank
The IMF, in particular, has sought to protect capital, particularly foreign capital, as its actions in Argentina make clear. But with a doubled workforce, capital should be quite capable of taking care of itself.The huge number of highly educated workers in India and China threatens to undo the traditional pattern of trade between advanced and less developed countries.
Instead of seeking to protect capital, the World Bank and the IMF need to help countries develop policies to minimize the costs of adjustment to workers during what is likely to be a long transition.
The global community needs to make sure that the gains of globalization are spread widely, to avoid backlashes and instability. And the world needs to increase savings as rapidly as possible to build up the global capital stock.
For its part, the United States has to shift from being the world's greatest debtor to becoming a giant creditor to the global economy.
A new consensus
In short, the world needs to abandon the Washington Consensus model of globalization that was designed, not all that successfully, for an utterly different global economy.
The world needs a new model of globalization and new policies that put upfront the well-being of workers around the world. They will be on the short end of the stick for a long time to come.
Richard Freeman is a Harvard University economist and co-chair of the Harvard Trade Union Program. This article appeared in The Globalist on June 3, 2005. Posted at Japan Focus August 26, 2005.
Hitachi, Sony freeze wages, to implement work-sharing
http://www.domain-b.com/economy/worldeconomy/20090320_hitachi.html
20 March 2009
Responding to the Japanese government's attempt to help companies retain employees during the current economic turmoil, Hitachi and Sony will freeze wages and introduce work sharing.
Hitachi said it had formed an agreement with its labour union to freeze its regular workers' salaries form April for a period of six months. Hitachi will also implement the Japanese work-sharing style concept under which employees will take one day of unpaid leave during weekdays said company officials.
Hitachi is expected to record a hefty net loss in fiscal 2008 ending March 31, taking this into view the labour union made considerable compromises at the annual spring wage negotiations, inorder to retain workforce in these trying times where companies are on a massive lay offs mood.
Similarly, Sony Corp also has agreed to freeze the monthly wages of its workers starting from April to sustain and improve its revenue, the financial reported daily Nikkei reported .
In a further move, Sony expects to cuts bonuses and salaries of executives. The labour staff's bonuses will be reduced from 6 months to 4 months and for managers the annual salary compensation will be reduced by 10 to 20 per cent and reduction in bonuses to the tune of 35 to 40 per cent bonus, said the paper.
Sony, too is expected to post its first loss in 14 years as the global recession coupled with a strong yen force it to revise its forecasts downwards for fiscal 2008 ending. (See: Sony braces up for recession; cuts jobs, closes factories)
The government too along with employers as well as labour union is forming a tri-party agreement to protect jobs. (See: Japan mulls work-sharing agreements to protect jobs)
High-risk cancer screening urged for overnight workers
http://www.cbc.ca/health/story/2009/03/17/cancer-night-shifts.html
Last Updated: Tuesday, March 17, 2009 | 10:40 AM ET Comments13Recommend18CBC News
Denmark's move to compensate women who developed breast cancer after working night shifts shows a need for new vigilance when it comes to people working overnight, Canadian cancer and labour advocates say.
The Danish government made the decision following a ruling in 2007 by the World Health Organization's cancer wing that declared overnight shift work "probably carcinogenic to humans."
The ruling stems from a review of scientific research including several population studies
"The Canadian Breast Cancer Network would really call for high-risk screening groups to include women who are working shift work, working at night, and the high-risk screening involves having an MRI," said the group's president, Diana Ermel of Fredericton. "It's not just a mammogram."
About 20 per cent of Canadians work shifts, many of them overnight, including 10,000 postal workers who sort mail into the morning.
Their union highlighted studies linking cancer to shift work over a decade ago, and used them to support their case for more time off.
"We will really look at these new studies coming out and really find ways to maybe negotiate with the employer," said Denis Lemelin of the Canadian Union of Postal Workers in Ottawa.
In Canada, it would be up to provincial health ministries and workers' compensation boards to decide if the links between cancer and overnight shift work are strong enough to warrant further investigation.
Global Labor’s Forgotten Plan to Fight the Great Depression
http://laborstrategies.blogs.com/global_labor_strategies/
In the early 1930s, as global unemployment tripled in two years and the world plunged into the Great Depression, the world’s labor movements developed a program for fighting the global crisis through international public works. It’s a little-known historical might-have-been that could have helped halt the Great Depression, the rise of Adolph Hitler, and the Second World War. And, as the efforts of world leaders to address today’s “Great Recession” threaten to break down in nationalist rivalry and petty political bickering, it bears lessons – and perhaps an alternative vision – for today.
Workers and organized labor have historically advocated government public works as a solution to unemployment. Not only would they provide jobs and income for those directly employed, but they would raise overall purchasing power, thereby creating demand for the products of other workers and creating a virtuous circle of economic growth. In the context of swelling unemployment in the early Depression, discussion of national public works programs developed in many countries.
The proposal for international public works originated with General German Trade Union Alliance (ADGB), which included most of Germany’s trade unions and represented the great majority of its workers. The plan won the support first of the German union alliance, then of unions around the world, and finally of the League of Nations’ International Labor Organization.
The plan was worked out by the head of the Alliance’s statistical department, W.S. Woytinsky. Woytinsky was a Russian รฉmigrรฉ who had been president of the St. Petersburg Council of the Unemployed during the 1905 revolution and had organized mass action to force the city to provide public works employment. Observing Germany’s combination of spiraling deflation and spiraling unemployment in the early 1930s, he came up with the idea of using credit expansion to finance massive public works.
Taking a cue from recent League of Nations policy proposals, Woytinsky proposed an international agreement that would allow the lowering the gold reserve requirements for national currencies. That would let central banks create new money that could finance international public works and thereby create the purchasing power needed to reflate the economy.
In a June, 1931, article, Woytinsky proposed an “Action Program for Reviving the Economy.” It called for the labor movement to “assume the role of conveyor of the idea of an activist world economic policy.” It was up to the labor movement to “force the state and all public institutions to implement measures to revive the economy.”
Labor’s policy “must be a global economic policy. All nations are suffering because the world economy is sick, and therefore they must all concentrate their forces upon joint action to overcome the worldwide crisis.” The international agreement would provide an alternative to the rise of economic nationalism, supporting “tariff reductions and European economic unification” as well as “internationalization of wage policy and social policy.” The program would also support workers’ fight for higher wages, shorter hours, social rights, and regulation of business.
The funds freed up by international money-creation policies would be applied to job creation through “public works on a grand scale” for a “grand plan for European reconstruction” with “the employment of one million unemployed.” The creation of jobs would “spark a revival of the consumer goods industry, thereby sucking a further, considerable number of unemployed back into employment."
A primary objection to such a plan was that it would lead to runaway inflation like that which had been so devastating to Germany in 1922-23. But Woytinsky argued that the conditions were entirely different. “We have a huge amount of unutilized capacity in our productive apparatus. Consequently, increases in production can, without difficulty, follow along in the wake of planned increases in purchasing power.”
Why international public works?
As the International Labour Organization’s International Labor Review explained in its introduction to Woytinsky’s January, 1932 article “International Measures to Create Employment: A Remedy for the Depression,” there were two problems with big public works programs to fight unemployment. First, it was hard to find enough money. Second, “in a worldwide depression like the present one, if one country goes very much ahead of other countries in its public works program” there is “danger of price inflation.” Both, the Review noted, “can be overcome by international cooperation.”
Woytinsky elaborated the danger. The creation of credit on a large scale “represents a daring experiment for any one country, and failure would shake and weaken the economic system of the country, and more especially its finances.” An international agreement is “the only method of avoiding this danger and clearing the way for individual countries to undertake schemes of this kind.”
How would such a plan work in practice? An international office would “collect the newly-created capital from every country” to create a fund for creating new purchasing power and new employment on an internationally agreed plan. “From the fund thus constituted, different countries would be granted loans in proportion to their needs for the creation of employment.” Two or two-and-a-half billion dollars would employ four to five million workers and provide the economic stimulus the world required.
Such programs should be selected for their social usefulness, not to their profitability for one or another company. Such works “must produce something of lasting value, but they do not need to be productive in the sense in which private enterprise employs the term and show a direct profit to meet the interest and redemption charges on the capital employed.” Each part doesn’t need to show a profit on capital. What is necessary is that “the plan as a whole” will reduce the resources wasted by the Depression and “improve the conditions of life throughout the world.”
In Europe, the funds would be used for “the construction of an international network of motor roads, of canals to link up the most important waterways of the Continent, and the international supply of electric power.” In individual countries they would be used for such purposes as land improvement, roads, and housing.
In 1933, sixty nations sent high-level representatives to the London Monetary and Economic Conference to forge a solution to the Great Depression. The ILO had voted to present its plan “to set on foot immediately large-scale public works” and “to coordinate these measures on an international basis” there. But instead of developing an international strategy to solve the Depression, the Conference broke down in nationalist bickering. The worldwide spread of mass unemployment, Hitler’s rise to power, and World War II followed apace.
Lessons for today’s “Great Recession”?
After the meeting of finance ministers from the world’s major economic powers in mid-March, 2009 the participants issued a statement saying, “We have taken decisive coordinated and comprehensive action to boost demand and jobs” and “we are prepared to take whatever action is necessary until growth is restored.” It sounds as though the lessons of the Great Depression have been learned and a plan like that advocated by the unions in the early 1930s for job creation and economic stimulus has been adopted. But, as one news account put it, the ministers “stopped short of announcing any details.” In fact, world leaders are facing the same paralysis in the face of the “Great Recession” that they did in the face of the Great Depression eighty years ago.
What would it mean for the world’s labor movement, and the broader community of allies often known as the “Global Justice Movement,” to develop an “activist world economic policy” to confront today’s “Great Recession”? Conditions are of course different, but in many ways the core of such a program can be the same.
That core can be public works to create jobs to meet public needs. In today’s world, threatened as it is by global warming, the number one public need is to rebuild the world’s economy in a way that protects the Earth’s climate. So a global jobs program today means primarily a program for global green jobs.
Such a program needs to be global for the same reasons that it did in the 1930s. First, the problems are global, and therefore require a global solution. Second, if any country expands credit too much by itself, it is likely to face rebound effects from the international economy. (Think about the way the Chinese, who hold much of the U.S. debt, recently forced Barack Obama to give assurances that the U.S. would not inflate its currency.) Such measures by one country alone also lead to loss of trade.
There are ways to provide international credit expansion today that didn’t exist in the 1930s. The primary one is a kind of international money, known as “Special Drawing Rights” (SDRs) or “paper gold” that allows countries to create new currency reserves through the International Monetary Fund. Countries can hold SDRs in their treasuries and release other currencies they are holding there – creating new money in very much the same way as Woytinsky’s proposals for lowering gold reserve requirements.
The U.S, Britain, and many other countries are currently calling for an expansion of SDRs to help poorer countries get through the current economic crisis. George Soros has called for the issuing of trillions of dollars of SDRs to counteract the downturn. And Joseph Stiglitz has proposed that SDRs be used to create an international fund for supporting projects for “public purposes” in poorer countries. Expansion of SDRs, or some other form of internationally agreed global credit expansion, can be the basis for a new era of global green public works, what has recently been dubbed a Global Green New Deal.
World leaders didn’t face up to their responsibility for countering the Great Depression, and it looks like the same is true of today’s leaders in the face of the Great Recession. The idea of international public works financed through global agreement to credit expansion could provide a global program around which labor and popular organizations around the world could unify to “force the state and all public institutions to implement measures to revive the economy.”
Japan: Labor Think Tank Says Shorter Work Hours Can Create 4.53 Million Jobs
http://mrzine.monthlyreview.org/japan150309.html
by Akahata
The Labor Movement Research Institute (Rodo Soken) of Japan says that the strict application of labor laws and regulations and the shortening of work hours would create 4.53 million jobs.
Rodo Soken, which has close working relations with the National Confederation of Trade Unions (Zenroren), earlier estimated that 2.7 million jobs would be created by simply eliminating unpaid overtime and encouraging workers to use all their paid holidays.
If Japan established a 38-hour workweek, as in Europe, additional 1.8 million jobs would be created, which would be feasible if just 4.11 percent of 403 trillion yen, which corporations had amassed in their internal reserves (as of the end of 2007), were used.
Rodo Soken also calls for the prevention of mass layoffs by forcing corporations to use their internal reserves. It says that corporations should offer full-time positions to all temporary workers after three years of service.
The labor think tank also calls on the national and local governments to compel companies to comply with the existing laws and regulations, to provide full-time positions to the public-sector contingent workers, and to enact a law on public contracts that will ensure living wages.
Rodo Soken stresses that a fundamental revision of the Temporary Staffing Services Law (ๅดๅ่
ๆดพ้ฃๆณ) and a raise in the minimum wage are essential to securing stable employment. It is also necessary to improve the unemployment insurance system and the public safety net and to establish a public project for the relief of the unemployed.
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This article was published by Akahata on 7 March 2009. See, also, the full text of Rodo Soken's proposal: "่งฃ้่ฆๅถใจๅคฑๆฅญไฟ้、้็จๅตๅบใฎใใใฎ ็ทๆฅๆ่จ" (Emergency Proposal for Regulation of Layoffs, Unemployment Insurance, and Job Creation), 5 March 2009.
Worldwide downturn 'to hit women'
http://news.bbc.co.uk/2/hi/business/7927503.stm
The economic crisis could increase the number of unemployed women by up to 22 million this year, the International Labour Organization (ILO) says.
In a report assessing employment trends for women, the ILO warns that they will not escape the downturn.
But the UK's Chartered Institute of Personnel and Development (CIPD) said women were not suffering more than men.
The global crisis began in the US and Europe's financial sectors in jobs traditionally dominated by men.
But unemployment is now spreading well beyond these sectors, the ILO says.
"The sectors that were initially impacted the hardest, which were finance, insurance and real estate, construction and manufacturing were often dominated by male workers," said Jeff Johnson, author of the report.
"But as this crisis has played out, it's hit other sectors of the economy - service-orientated sectors, wholesale retail trade - which in many industrialised economies are dominated by females."
Jobs disappear
As consumer confidence wanes, more traditionally female jobs such as waitresses and shop assistants, are all disappearing too.
The ILO is especially worried about women in the developing world, working in agriculture, or as domestic servants, on a piecemeal basis.
It's a truism that more women will lose jobs in this recession than in previous recessions - there are simply lots more women in the workforce
John Philpott
CIPD
They have no social protection and are especially vulnerable during an economic downturn.
The ILO is predicting a global rise in unemployment this year of up to 51 million people - 22 million, it believes, will be women.
The organisation is calling on governments to ensure that new jobs created by economic stimulus packages guarantee fair salaries, and social protection measures.
However, official UK figures showed that women were "definitely not" suffering more than men from job cuts and rising unemployment, according to the CIPD.
The argument had been pushed by vested interest groups, said the group's chief economist.
"It's a truism that more women will lose jobs in this recession than in previous recessions - there are simply lots more women in the workforce," he said.
During a recession, offering flexible working opportunities becomes less of a priority for businesses, which will make it harder for these women to stay in employment
Karen Gill
Director, Everywoman
"Yet while one can't yet entirely rule out the possibility that women will lose out relative to men in the jobs stakes as the recession unfolds, this is categorically not true of the jobs downturn to date."
He acknowledged that women who lost their jobs might need tailored help to enable them to cope with unemployment and returning to work - including income pressure on lone parents and childcare issues.
But more men had so far lost their jobs during the recession, Mr Philpott said.
Falling flexibility
A recession created a climate which could disadvantage women, said Karen Gill, a director at Everywoman, which offers support and advice for women in business.
"Unfortunately, women tend to have a lower skill-set than men, at least in the UK, and in a recession, while many people have to 'trade down' in their career and take jobs that are below their skills-base, the competition is even more fierce," Ms Gill said.
She added that many women - especially those who were lone parents - needed flexible working options, "and often have to undertake part-time and lower paid work".
"During a recession, offering flexible working opportunities becomes less of a priority for businesses, which will make it harder for these women to stay in employment," Ms Gill said.
"In addition to this, part time positions are also often the first to go. "
Asia to 'lose 7.2 million jobs'
http://news.bbc.co.uk/2/hi/business/7896878.stm
About 7.2 million people in Asian countries are likely to lose their jobs in 2009 amid the global downturn, a UN report has suggested.
The International Labour Organization (ILO) said that in the worst case scenario the number of newly-unemployed might total 22.3 million.
The UN agency warned that a significant rise in the number of unemployed workers could lead to social unrest.
It urged governments to prioritise the creation of jobs.
However, the report added: "There is very little chance that a sufficient number of new jobs will be created in the region this year to keep up with expected labor force growth."
The ILO scenario forecast a likely rise in the number of jobless people in Asia to 97 million, with the figure jumping to 113 million in the most pessimistic scenario.
Some Asian countries have experienced an economic boom in recent years, but a third of Asia's population still live on about $1 a day.
Government policies
Expanding already agreed public spending projects is a quick, effective way to create and safeguard jobs
Sachiko Yamamato, ILO regional director
The report estimates that about 51 million new jobs will be needed in 2009 and 2010 to absorb the growing labour force.
The organisation also forecast a drop in remittances in 2009.
"For labor-sending countries, this will exacerbate the challenge of mitigating job losses and generating new employment domestically," it said.
The ILO warned Asian countries against protectionist policies, such as refusing to issue work permits to foreign workers.
"Having a more coordinated effort to pull fiscal policies together, to talk about the sequencing and the timing of those fiscal policies would be a big help," said Stephen Pursey, Director for Policy Integration at the ILO.
Sachiko Yamamato, regional director of ILO, said: "Support must come quickly. Expanding already agreed public spending projects is a quick, effective way to create and safeguard jobs."
51 million jobs could disappear worldwide
http://www.granma.cu/ingles/2009/febrero/mier25/desempleo.html
The International Labour Organization (ILO) said that approximately 51 million jobs around the world could disappear by the end of the year. This means that 230 million people globally could be unemployed by 2010.
Unemployment brings with it an infinite number of social problems, principally a deterioration of the quality of life and the subsequent consequences. For example, when income is lowered many families face losing their homes.
Facing the rise of this uncontrollable disaster, the ILO proposes the creation of rescue plans for low-income families, many of whom will be obliged to live on less than one dollar a day.
Unemployment and necessity in homes forces many children to leave school to work and support their families, deteriorating, in certain ways, their future prostpects.
The phenomena experienced today, which has caused millions to fall into deep despair, is not only affecting poor or “third world” countries. According to the World Bank (WB), more people are falling into poverty in developing countries. In other words, the employment crisis is global and those who are feeling the worst of it are those who have always felt like the “masters of the world.”
In this respect, IMF director Dominique Strauss-Kahn, pointed out that the principal economies are in a deep depression and maintained that the worst is still to come.
One fact to keep in mind is that as the crisis becomes worse, many countries will start to close their doors to immigrants who, as usually occurs, are seeking to escape from the poverty in their own countries to work in others. (Taken from Rebeliรณn)
Translated by Granma International
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