Tuesday, April 20, 2010

Jobs, Jobs, Where are the Jobs? (Part 1)

Global unemployment to trigger further social unrest, UN agency forecasts
International Labour Organisation (ILO) notes that social unrest has already been reported in at least 25 countries
Julia Kollewe, guardian.co.uk,
Friday 1 October 2010
The International Labour Organisation (ILO) has warned of growing social unrest because it fears global employment will not now recover until 2015.
This is two years later than its earlier estimate that the labour market would rebound to pre-crisis levels by 2013. About 22 million new jobs are needed – 14 million in rich countries and 8 million in developing nations.
The United Nations work agency today warned of a long "labour market recession" and noted that social unrest related to the crisis had already been reported in at least 25 countries, including some recovering emerging economies.
Crisis-hit Spain faced its first general strike in eight years this week as unions protested against the government's austerity measures and labour reforms. The strike on Wednesday coincided with protests in Greece, Portugal, Ireland, Slovenia and Lithuania, as well as demonstrations in Brussels by tens of thousands of workers from across Europe as part of a European day of action against public spending cuts.
"Fairness must be the compass guiding us out of the crisis," said ILO director general Juan Somavia. "People can understand and accept difficult choices, if they perceive that all share in the burden of pain. Governments should not have to choose between the demands of financial markets and the needs of their citizens. Financial and social stability must come together. Otherwise, not only the global economy but also social cohesion will be at risk."
Withdrawing fiscal stimulus too early
Raymond Torres, lead author of the ILO's annual World of Work report, published today, warned governments against withdrawing fiscal stimulus measures while the economic recovery was still weak.
Torres said there were two main reasons for the bleaker outlook facing many countries: "The first is that fiscal stimulus measures that were critical in averting a deeper crisis and helped jump-start the economy are now being withdrawn in countries where recovery, if any, is still too weak," he said. "The second, and more fundamental factor is that the root causes of the crisis have not been properly tackled."
The ILO said the global economy had started growing again, with encouraging signs of employment recovery, especially in some emerging economies in Asia and Latin America. But it added: "Despite these significant gains ... new clouds have emerged on the employment horizon and the prospects have worsened significantly in many countries."
Since the crisis started in 2007, some 30-35 million jobs have been lost worldwide. The ILO forecasts that global unemployment will hit 213 million this year, a rate of 6.5%. For the United States, the number of jobs still needed to regain pre-crisis levels is 6.9 million.
Many countries that experienced employment growth at the end of 2009 are now seeing the jobs recovery weaken. Even among people with jobs, satisfaction at work has deteriorated significantly.
"The longer the labour market recession, the greater the difficulties for jobseekers to obtain new employment," the ILO report said. "In the 35 countries for which data exists, nearly 40% of jobseekers have been without work for more than one year and therefore run significant risks of demoralisation, loss of self-esteem and mental health problems. Importantly, young people are disproportionately hit by unemployment."
The ILO recommends three policies for a jobs-led recovery:
• Active labour market policies including work-sharing that target vulnerable groups such as young people, and training.
• A closer link between wages and productivity gains in surplus countries to boost demand and job creation.
• Financial sector reform to ensure savings are channelled to productive investment and the creation of more stable jobs.
The Offshore Outsourcing of American Jobs: A Greater Threat Than Terrorism
By Dr. Paul Craig Roberts
URL of this article: www.globalresearch.ca/index.php?context=va&aid=18725
Global Research, April 19, 2010
Creators Syndicate - 2005-04-18
Is offshore outsourcing good or harmful for America? To convince Americans of outsourcing's benefits, corporate outsourcers sponsor misleading one-sided "studies."
Only a small handful of people have looked objectively at the issue. These few and the large number of Americans whose careers have been destroyed by outsourcing have a different view of outsourcing's impact. But so far there has been no debate, just a shouting down of skeptics as "protectionists."
Now comes an important new book, Outsourcing America, published by the American Management Association. The authors, two brothers, Ron and Anil Hira, are experts on the subject. One is a professor at the Rochester Institute of Technology, and the other is professor at Simon Fraser University.
The authors note that despite the enormity of the stakes for all Americans, a state of denial exists among policymakers and outsourcing's corporate champions about the adverse effects on the US. The Hira brothers succeed in their task of interjecting harsh reality where delusion has ruled.
In what might be an underestimate, a University of California study concludes that 14 million white-collar jobs are vulnerable to being outsourced offshore. These are not only call-center operators, customer service and back-office jobs, but also information technology, accounting, architecture, advanced engineering design, news reporting, stock analysis, and medical and legal services. The authors note that these are the jobs of the American Dream, the jobs of upward mobility that generate the bulk of the tax revenues that fund our education, health, infrastructure, and social security systems.
The loss of these jobs "is fool's gold for companies." Corporate America's short-term mentality, stemming from bonuses tied to quarterly results, is causing US companies to lose not only their best employees-their human capital-but also the consumers who buy their products. Employees displaced by foreigners and left unemployed or in lower paid work have a reduced presence in the consumer market. They provide fewer retirement savings for new investment.
Nothink economists assume that new, better jobs are on the way for displaced Americans, but no economists can identify these jobs. The authors point out that "the track record for the re-employment of displaced US workers is abysmal: "The Department of Labor reports that more than one in three workers who are displaced remains unemployed, and many of those who are lucky enough to find jobs take major pay cuts. Many former manufacturing workers who were displaced a decade ago because of manufacturing that went offshore took training courses and found jobs in the information technology sector. They are now facing the unenviable situation of having their second career disappear overseas."
American economists are so inattentive to outsourcing's perils that they fail to realize that the same incentive that leads to the outsourcing of one tradable good or service holds for all tradable goods and services. In the 21st century the US economy has only been able to create jobs in nontradable domestic services-the hallmark of a third world labor force.
Prior to the advent of offshore outsourcing, US employees were shielded against low wage foreign labor. Americans worked with more capital and better technology, and their higher productivity protected their higher wages.
Outsourcing forces Americans to "compete head-to-head with foreign workers" by "undermining US workers' primary competitive advantage over foreign workers: their physical presence in the US" and "by providing those overseas workers with the same technologies."
The result is a lose-lose situation for American employees, American businesses, and the American government. Outsourcing has brought about record unemployment in engineering fields and a major drop in university enrollments in technical and scientific disciplines. Even many of the remaining jobs are being filled by lower paid foreigners brought in on H-1b and L-1 visas. American employees are discharged after being forced to train their foreign replacements.
US corporations justify their offshore operations as essential to gain a foothold in emerging Asian markets. The Hira brothers believe this is self-delusion. "There is no evidence that they will be able to outcompete local Chinese and Indian companies, who are very rapidly assimilating the technology and know-how from the local US plants. In fact, studies show that Indian IT companies have been consistently outcompeting their US counterparts, even in US markets. Thus, it is time for CEOs to start thinking about whether they are fine with their own jobs being outsourced as well."
The authors note that the national security implications of outsourcing "have been largely ignored."
Outsourcing is rapidly eroding America's superpower status. Beginning in 2002 the US began running trade deficits in advanced technology products with Asia, Mexico and Ireland. As these countries are not leaders in advanced technology, the deficits obviously stem from US offshore manufacturing. In effect, the US is giving away its technology, which is rapidly being captured, while US firms reduce themselves to a brand name with a sales force.
In an appendix, the authors provide a devastating expose of the three "studies" that have been used to silence doubts about offshore outsourcing-the Global Insight study (March 2004) for the Information Technology Association of America, the Catherine Mann study (December 2003) for the Institute for International Economics, and the McKinsey Global Institute study (August 2003).
The ITAA is a lobbying group for outsourcing. The ITAA spun the results of the study by releasing only the executive summary to reporters who agreed not to seek outside opinion prior to writing their stories.
Mann's study is "an unreasonably optimistic forecast based on faulty logic and a poor understanding of technology and strategy."
The McKinsey report "should be viewed as a self-interested lobbying document that presents an unrealistically optimistic estimate of the impact of offshore outsourcing and an undeveloped and politically unviable solution to the problems they identify."
Outsourcing America is a powerful work. Only fools will continue clinging to the premise that outsourcing is good for America.
Where Have All the Jobs Gone?
By Alison Doyle
16 Apr 2010
America has lost millions of private-sector jobs. Where have all the jobs gone? Overseas, in many cases. In addition to cutting jobs due to the recession and to increase profitability, companies are looking overseas to save money in labor costs.
According to Forrester Research, over the next fifteen years over three million US service industry jobs and up to $136 billion in wages will move overseas to countries including India, Russia, China and the Philippines. Forrester also notes that 88% of the firms said they got better value for their money overseas and 71% said overseas workers did better quality work.
A Deloitte Research survey reports that the world's 100 largest financial-services companies expect to transfer about $356 billion of their operations and two million jobs offshore over the next five years. "Offshoring is gaining momentum at a rapid pace," says Christopher Gentle, a director at Deloitte Research.
On a similar note, Gartner Inc. predicts that one of 10 jobs in the computer services and software industry could move abroad by the end of 2004. It's not just technology jobs that are leaving the United States. Jobs in just about every sector are going abroad including mortgage processors, claims adjusters, financial analysts, telemarketers and a variety of other job titles.
Overseas Offices
A computer industry acquaintance told me how his company had a office up and running in India in less than thirty days and how the salaries they were paying overseas workers were averaging $20,000 a year compared to a $100,000 for a United States employee.
Some of the companies moving jobs overseas include General Electric, Boeing, IBM, Microsoft, Citigroup, Hewlett Packard and ATT. Sprint is considering outsourcing hundreds of jobs and sending them offshore. It's not only the private sector. Government agencies in 40 states and Washington, DC are using foreign workers staffing help desks to handle customer service for food stamp inquiries.
Protecting American Jobs
What can be done to protect American jobs? One suggestion is to remove tax incentives to American firms that are shifting jobs. Former presidential candidate, John Kerry, said in an AFL-CIO interview that "...companies move offshore simply to avoid paying American taxes, yet they still get all of the same benefits, including government contracts. We should penalize these companies and deny them government contracts."
A NetworkWorldFusion article, quotes consultant Jack Heacock, who wonders whether the U.S. should impose tariffs on overseas call centers, "to better balance the playing field and the U.S. economy and information privacy."
In addition, labor unions and technical worker alliances are lobbying Congress. While states, including New Jersey, North Carolina and South Carolina, are considering legislation to prevent tax-payer funded jobs from being shifted overseas.