You are invited to create new articles, add new sections to this article, raise questions or comments on the discussion page or project/portal Forum page, or send feedback by email to email@example.com
The second major goal of the Summit should be to generate awareness of the factors that make the present decade highly conducive for an initiative to eradicate youth unemployment.
Agriculture represents the largest untapped employment opportunity
Hundreds of millions of new jobs can be created by commercialization of agriculture and expansion of agri-businesses in developing countries. At a time when employment in agriculture has declined to just 7% of the workforce in developed nations compared to 61% in developing countries, many will question the wisdom of trying to create more jobs in this sector. But a clearer understanding of the stages of development that most economically-advanced countries have passed through in the process of industrializing and modernizing will justify an agriculture-led strategy.
In his study to determine why the Industrial Revolution took off in England before it occurred in other European countries, Nobel laureate Arthur Lewis observed that industrialization in England was the result of a prior revolution in British agriculture. Rising levels of farm productivity and farm income generated surplus food and rural purchasing power. This freed up a large portion of the rural workforce to leave employment in agriculture. Increasing rural wealth also created greater demand for manufactured goods.
The same process occurred during the mid 20th Century in the more advanced developing nations of Asia such as Taiwan and South Korea. Dramatic increases in agricultural productivity led to rising incomes and investment in manufacturing. In regions of India where the Green Revolution has been most successful, agricultural development has been followed by rapid industrial development as well.
Many developing countries have not yet completed the agricultural revolution that forms the basis for rapid industrialization. Even in countries such as India, which has quadrupled food grain production since 1965, development of untapped agricultural potential can be a powerful engine for employment generation. A study entitled Prosperity 2000 by the International Commission on Peace and Food estimated that India could generate 100 million additional jobs within 10 years by a full exploitation of its agricultural potential. The key to employment generation through agriculture is the multiplier effect that higher farm production and income have on this and other sectors of the economy. The Commission found that the 100 million jobs can be created by a combination of increased on-farm employment, employment in down-stream agro-industrial and business activities, and employment in other sectors of the economy created by the increased purchasing power of farmers. The relatively low nutritional levels in countries such as India are another key element of the strategy. The higher rural purchasing power generated by raising farm production, employment and incomes creates its own market for much of the additional crops and processed goods produced.
The agricultural potential in developing countries has several major components. First, there is the potential for raising agricultural productivity. Even after India’s highly successful Green Revolution has popularized hybrid wheat, rice and maize production, yields of most major crops are still far below world averages, let alone the yields achieved in countries with the highest productivity. Table 1 compares the average yield on a range of major crops in the USA and India. Yields on some crops comparable to those in the USA have already been achieved by private farmers under Indian conditions, but remain isolated achievements. Improving cultivation practices to raise crop yields in India’s labor intensive farm economy will result in a nearly proportionate increase in labor input for planting, harvesting, processing and transport of crops. It will also increase demand for labor for processing, handling and distribution.
Table 1: Crop Yields in USA and India (kg per hectare) 
Higher employment can also be created in agriculture by a shift from traditional food crops such as wheat and rice to commercial crops such as sugar, cotton, vegetables, and flowers, which require higher labor input and generate far higher incomes per unit of land cultivated, and by promotion of downstream processing industries, agri-service and food distribution businesses linked to these commercial crops. Cotton, for example, creates employment in spinning mills, textile factories, and garment production units.
A study of Pune District in Maharashtra, India by the Agricultural Finance Corporation strongly supports the Commission’s findings. The study concluded that an additional 750,000 jobs could be created in this single district by an agriculture-led strategy. If extrapolated over India’s nearly 400 districts, the total employment potential would far exceed ICPF’s estimate of 100 million jobs. Since 1990, many of the ICPF strategies have been successfully implemented in Pune. The area under horticulture crops in the district has been expanded from 125,000 to 1.5 million acres, which is 20% of the increase projected in ICPF’s report for the whole of India.
Additional employment generation in agriculture can also be a highly effective strategy in many other developing countries with relatively low crop productivity and agro-industrial development. If widely applied, an agriculture-led growth strategy could generate hundreds of millions of additional jobs in developing countries on the farm and in agri-businesses and in other sectors of the economy that benefit from higher rural purchasing power.
Demographic trends will create acute shortage of workers in developed nations
Although concern over rising levels of unemployment loomed large in the minds of Western economists through much of the 1990s, demographic trends indicate that in future developed nations will face a shortage of labor, rather than a shortage of job opportunities. Worldwide the rate of population growth is ebbing. Although by the year 2050, there likely will be 9 billion people on the planet, demographers predict the population will level off at this point, perhaps even decline. In the last few years, worldwide population growth rates and fertility have dropped faster than anyone projected.
For all intents and purposes, the developed world has stopped growing. In North America, Europe and Japan birthrates have been steadily declining for the past decade; in some countries, birthrates are too low to even sustain current population size. Family size in Mexico has dropped from seven children to just 2.5, below the U.S. average of 2.71. In Italy and Spain, women now average 1.17 babies. In 1997, Italy became the first nation in history to have more people over the age of 60 than under age 20. The Italian population is actually shrinking. Greece, Spain, France and Germany will soon face the same situation. Today, the fertility rate exceeds the replacement rate in only three of the 23 richest countries in the world.
A UN study released in March 2000 estimates that the 15 nation European Community would have to accept 150 million new immigrants over the next 25 years in order to maintain present levels of working and tax-paying population. Though immigration on such a massive scale is unlikely, this trend will soon eradicate unemployment within developed nations and generate increasing opportunities for employment growth among developing nations.
Despite surging immigration, the labor force in the United States, Europe and Canada is not growing quickly enough to meet demand for workers, a trend line that will continue well into the new millennium. As US baby boomers retire or reduce their work hours, there will not be enough younger workers to replace them. By 2013, labor-force growth in the United States will be zero. These demographic trends are already resulting in labor shortages in a number of developed countries.
The current concern in Japan regarding rising levels of unemployment is one of the ironies of the global employment context resulting from a very temporary, short term restructuring of the Japanese political and economic system that is now underway. In the mid-term, government projections indicate that Japan will face acute labor shortages. As a consequence of an aging population and declining birth rate, the United Nations estimates that Japan would need to admit 600,000 immigrants annually for the next 50 years in order to maintain the size of its working population at the 1995 level. In the absence of increased immigration, the size of the workforce would decline from the current level of 127 million to 105 million by 2050, placing an inordinate burden on a shrinking workforce to support an increasing population of retirees. The aging of the Japanese population will create increasing opportunities for younger nations to create jobs to fill this shortage of workers.
Preparatory to the Summit, research should be undertaken to quantify the impact of demographic changes on the complexion of the global workforce over the next half century. This will help highlight the underlying social forces that will generate new opportunities in the coming decades.
Shortage of skilled workers, not shortage of jobs
In the early 1990s, there was a widespread belief in most industrial nations that the increased deployment of technology would lead to a prolonged and, perhaps, permanent era of jobless growth, an increasing shortage of employment opportunities, and even what was metaphorically termed by one author “the end of work”. In retrospect, it is clear that the rise in unemployment rates at that time was the temporary result of a combination of transient factors. The end of the Cold War, which led to a 35% reduction in global military spending, brought on an economic recession as large, defense-related industries struggled to refocus their businesses on civilian markets. This was coupled with a large increase in the number of women entering the workforce, higher rates of immigration from developing countries, and downsizing of major corporations.
There is now ample evidence to conclude that what first appeared to be a long-term or even permanent trend among industrialized countries was actually a short-term adjustment which is already well on its way to reversing itself. In fact, present indication suggest that the long-term prognosis is for an increasing shortage of workers in the industrialized world.
With unemployment rates at a 30-year low in the USA, many jobs remain unfilled, particularly those requiring specific skills. The unemployment rate for engineers is 1.6 percent, for computer programmers 1.4 percent, and for computer scientists 1.2 percent. Recruiting workers is difficult, but retaining them is becoming an even greater challenge in Europe and the United States.
A 1999 study conducted for the National Tooling & Machining Association (NTMA) in the USA, a group of 2500 manufacturing companies, found that the No. 1 problem faced by American manufacturing companies was the growing shortage of skilled workers to fill jobs in industry. Although skilled toolmakers and machinists commonly earn upwards of $40,000 to 50,000 a year, many of these companies are being forced to make huge investments in automated equipment or to subcontract work to overseas firms due to the scarcity of job applicants. High skill jobs are not the only ones facing labor shortages in the USA. The Associated Builders and Contractors estimates that it would take 240,000 workers to ease the current skilled-labor shortage in the construction industry.
Although labor and, especially, skilled labor shortages are more prominent in the most developed nations, it would be a mistake to assume that they do not exist in developing countries as well. The explosive growth of population in these countries has no doubt resulted in an imbalance between population and job growth, but here too there are signs that the gap is narrowing and labor shortages have emerged in specific regions of many countries. This is even the case is some relatively low income developing countries such as India in states such as Punjab and Maharashtra where commercial agriculture has advanced rapidly. Farmers and businesses in these and other areas report an acute shortage of both farm and factory workers.
Surveys should be conducted preparatory to the Summit to document the skill shortages in different countries and sectors of the economy, so that specific strategies can be formulated to fill these gaps.
Information Technology Sector
The best documented and most celebrated example of the emerging skill shortage has been in fields related to information technology. McKinsey & Company, one the world’s largest management consulting firms, estimates that global demand for information technology will exceed $1.9 trillion by 2008, including $1 trillion for I.T. services, $700 billion for software products, and $142 billion for I.T.-enabled services. For the past two decades, worldwide growth of the computer industry has outstripped even the very rapid increase in the availability of trained workers. Annual studies in the USA routinely assess the shortfall of information technology professionals at upwards of 200,000. Between escalating salaries and lost business opportunities, the labor shortage in Silicon Valley alone is costing technology companies an estimated $4 billion a year. Similar shortages of high tech workers exist in most industrialized nations.
In one of the largest, most comprehensive studies yet undertaken, the Information Technology Association of America (ITAA) examined demand over the boarder category of information technology workers and found that the IT workforce and the current IT skill shortage are both far larger than previously estimated. ITAA estimates that the US currently employs 10 million information technology workers and will create 1.6 million new positions in this category during year 2000 alone. Of these 1.6 million new jobs, approximately 800,000 or 50% will remain unfilled due to the growing shortage of skilled workers. The greatest need for IT workers is in the largest segment of the economy--smaller non-IT firms. Greatest demand is for people with both technical and non-technical skills. By one estimate the I.T. skill shortage in Europe is about 20% lower than in the USA.
The achievement of India’s software industry serves as one index of this growing domestic shortage in developed nations. India’s software industry, which exports software services primarily to the USA, Western Europe and Japan, has increased from a mere $10 million in 1984 to $8 billion in 1999. A study by McKinsey forecasts that India's software industry could generate $87 billion in revenues and employ 2.2 million people before the end of this decade.
For many years, Western nations responded to the increasing shortage of high technology workers by increasing levels of immigration and raising quotas for the temporary employment of skilled foreign workers. Over the past five years, the USA increased the quota of new H-1 visas allotted annually from 65,000 to 115,000. After doubling the allotment, the entire quota for year 2000 was filled within the first half of the year. Businesses are requesting that the annual quota be increased to 200,000 and a Congressional Committee has recommended abolishing the quota entirely for the next three years. Many of these temporary workers eventually obtain green cards for permanent residence in the USA. One result of this trend is an astonishingly large number of immigrants providing professional services. By one estimate, 38% of US doctors and 12% of all US scientists are of Indian origin.
High domestic costs and public sensitivity in developed nations regarding the increased immigration has generated another trend that can dramatically expand employment generation in developing countries. Increasingly, companies in developed countries are looking to outsource service sector jobs to workers in developing countries. The prospects in this field are not only at the high end of the technology spectrum where a limited number of highly educated software engineers can earn salaries nearly equivalent to levels pertaining the West. Exciting opportunities are opening up across a broad spectrum of Information Technology-enabled services, cross-border businesses that utilize information technology to provide services to customers around the world.
This field is not entirely new. For years, several leading US banks and insurance companies have been outsourcing and out-locating human resources, customer service, telemarketing, back office and administrative operations to firms in the Caribbean and Ireland. The explosive growth of the Internet has drastically reduced the time, cost and effort required to do so, thereby opening up this field to many more companies and to countries around the world.
The category of I.T. enabled services includes a range of rapidly emerging opportunities:
- Call Centers -- State-of-the-art telecommunications technology makes it possible to provide 24 hour telephone contact for telemarketing and customer support from facilities located anywhere in the world. US-based Convergys provides billing and customer care services to other companies through 30 call centers employing 30,000 people. GE Capital, a division of the giant American conglomerate General Electric, operates a facility near New Delhi where Indian graduates place telephone calls to GE’s credit card customers in the USA.
- Medical Transcription – Pressure to reduce the cost of medical care in the USA have created an overseas market for transcription services. Digital recordings of physicians’ patient case notes are sent over the Internet to companies in India and the Philippines, where the recordings are processed into text form and sent back electronically to update medical records. During 1999-2000 alone, approximately 70 new companies were established in India to provide this service.
- Back Office Operations & Accounting Services – All types of data entry, analysis and processing are now being outsourced to developing countries by airlines, book and magazine publishers, universities and other institutions. British Airways and Singapore Airways are the first of several airlines planning to process ticket information and frequent flyer records at facilities in India. America On-Line now has 600 Filipino customer-service employees who answer 10,000-12,000 e-mail technical and billing enquiries a day, most of them from AOL’s U.S. customers.
- Insurance Claims Processing -- Large insurance companies, which receive millions of claims that need to be processed according to clearly defined rules, are also outsourcing this work to college graduates and medical professions in countries with lower labor costs.
- Technical Support – The large US engineering firm, Bechtel, operates an engineering design center in Bangalore which employs 500 people to support the firm’s customers worldwide over telecom and data networks.
- Legal Research -- Legal firms in the West have started to outsource legal research to organizations that have a large English-speaking, lower-priced workforce of trained lawyers. This business includes creation of databases of existing legal records, indexes on cases, tracking new documents and incorporation into the database.
- Content Development/Animation – Computer animation is expected to be a $35 billion global industry by 2001. The development of computerized animation systems has dramatically reduced the cost of creating animated video material for full-length motion pictures, medical and other types of training, educational documentaries and CDs, games, and advertisements. The high labor content involved in using the software provides ample opportunities for developing countries.
- Payroll & Human Resources – Payroll processing and other human resource functions are also being out-located. The large oil company, Caltex, operates from Manila a shared human resource center for its offices in five regional countries.
The outsourcing and out-location of service sector jobs is still in its infancy, so it is difficult to project the full magnitude of the potential. However, it can be reasoned that for every new job created in the software industry, 50 or 100 jobs can be created by application of information technology in other fields. If this is the case, this single trend could generate fresh employment opportunities for as many as 100 million people worldwide during the coming decade.
Fast growing occupational categories
At each stage of social development, different fields of activity generate the impetus for further growth. The most successful employment strategies will be those that accelerate growth of fields which are already expanding rapidly. For instance, although the entire service sector category is growing rapidly in developed nations, certain service activities are leading the charge. Emphasis on removing obstacles and stimulating faster expansion in these fields will be most effective in stimulating employment growth.
Table 2 shows the growth rates for the fastest growing service industries in the USA over the past quarter century. Table 3 gives the projected growth rates of specific occupations in the USA from 1994 to 2005.
Lists of fast growing sectors and occupations should be compiled for every country, so that educational and training courses can be refocused on those with the largest potential, not only within the country but in other countries that can be serviced from overseas.
Table 2: Fast growing sectors of the US economy
Table 3: Fastest growing occupations in US
The shift from work to jobs is beginning to reverse
Although poverty has plagued large sections of humanity throughout history, the problem of unemployment is a relatively recent phenomenon. Prior to the industrial revolution and development of the factory system, relatively few people held ‘jobs’. For the vast majority, work meant livelihood rather than employment. That livelihood consisted of the multiple tasks individuals performed, whether for themselves or for others, that supported a subsistence-level existence for their families.
The introduction of the factory system transformed our concept of work from livelihood to employment or job. The institutionalization of work as jobs meant that most people became fully dependent on one external source of employment for their entire livelihood. It forged a division between the role of men as paid career employees and women as unpaid housewives. The extension of this same model to all types of white collar work raised enormously the cost of expanding the workforce, since each additional worker required a place and facilities to work outside the home. In recent years the high economic and social costs of this model have created strong pressure on business to reduce the number of institutional jobs.
This has partly been achieved by automation of work. But more significantly, the advent of advanced communication technology is leading to a reverse trend from institutionalized jobs back to personal livelihood. Technology and changing organizational cultures are enabling more people to work wherever they choose to live. In the USA, a rapidly growing number of people are engaged in telecommuting, employment in the home linked to the institutional workplace over telephone and internet networks.
A study by AT&T estimates that 19.6 million Americans carry on paid work from their home at least one day per month, compared with 3.4 million in 1990. A report by FIND/SVP estimates that three-quarters of these US telecommuters utilize a computer. The average telecommuter is over 40 years of age, earns $51,000 a year and works about 19 hours a week from the house. Seventy-six percent of them are married and 46% have children. Other studies indicate that this trend is accelerating rapidly and could effect a large portion of the US population. The Gartner Group predicts that there will be 37 million US telecommuters by 2003. Telecommuting is also growing in many areas of Europe, Canada and the Pacific Rim.
Within the next decade, it is likely that more than half the US workforce will be “virtual,” telecommuting from home or regional office co-ops shared by several companies. Virtual partnerships between independent contractors also will flourish, as sophisticated telecommunications capabilities enable people to link-up with anyone, anywhere. As this trend accelerates, jobs will follow individuals, not the other way around. Since telecommuting can be done from virtually any place in the world over the internet, this trend will open up vast opportunities for creation of additional service sector jobs in developing countries.
Far-sighted thinkers such as Harlan Cleveland have been stating for decades that job or employment-based societies will eventually give place to societies in which individuals are politically, socially and economically free to choose personal livelihoods suited to their own capacities and interests. Formal jobs as we know them will give way to more flexible work structures. In other words, the evolution of society from individual livelihood to organized employment is coming back a full turn of the wheel, or rather of the spiral; for it is not coming back to where it started but rather to a far higher evolutionary position in which individuals will have maximum security and maximum freedom. An inevitable stage in the transition to this utopian-sounding achievement is a period in which society generates far more jobs than there are people to fill them. When that occurs, the status and function of job will give way to a more flexible and humane organization of work. Trends now emerging on the global horizon suggest that the time for this accomplishment may be very much sooner than anyone presently believes possible.
- ↑ These are 1990 figures
- ↑ G. Rangaswami, Prosperity 2000, Volume 1 & 2, Bharat Vidya Bhavan, 1992. Copies of the summary (Vol. 1) are available to download at www.icpd.org.
- ↑ A complete program for enhancing crop yields and income has been developed by California Agricultural Consulting Services, Davis, CA, USA.
- ↑ Crop yields prepared by California Agricultural Consulting Services, USA.
- ↑ Information Technology Association of America sponsored study “Bridging the Gap: Information Technology Skills for a New Millennium”, released in April 2000, www.itaa.org.