Good jobs in the UK and US are under threat, facing a ‘global auction’ against emerging economies that Western countries are likely to lose – according to a fascinating recent book by Brown, Lauder & Ashton that I previously described in two separate posts. Philip Brown kindly agreed to do an interview for the Inequalities Blog, and in the discussion I challenged him on the book’s argument and policy recommendations.
Q: Given that productivity depends on the institutional context as much as the individual worker, is the picture really as bleak as the one you argue in the book?
A: A lot of this is fairly new, in that we don’t really know what the medium-term response of Western transnational companies (TNCs) will be, let alone the long-term. Nobody knows what will happen – including the companies themselves. They’re experimenting with different kinds of arrangements, e.g. follow-the-sun innovation systems, and how far they can push that remains an open question.
But what we got from our interviews with TNCs is that (i) they’ve been surprised at how quickly China, India and some of the other emerging economies have been moving up the value chain of technology and know-how, and (ii) this has created the opportunity for Western companies to rethink their global HR strategies. Because one thing’s for sure, the role of HR has fundamentally changed to become disembedded from the national context.
Yet the biggest question of all is not of that nature – it’s the extent that the Chinese and Indians themselves develop transnational companies. Up till now the debate has been around labour supply in Asia for Western companies, but that’s going to change. If you look at the latest five-year plan from the Chinese government, what you see is a determination to invest heavily in key sectors of the economy and to compete for platform technologies and knowledge, not just for jobs.
Q: How far do you think the HR managers you spoke to were overplaying the latest trends?
A: It’s often very difficult to judge. You can pick up the ‘cheerleader interviews’, where they say ‘we’ve got a great company and we’ve got a great future if we all work together’. But we were surprised how willing senior people were to be critical of some of the things they were doing. Were they over-egging it? Well I’m sure at times they were, but we tried to triangulate as best we can between company head office and interviews in at least two other countries; and also triangulating between the different companies that we spoke to. So we don’t think the picture is exaggerated.
Q: I felt the book recommended two sets of policies, each of which had different problems. Some policies fitted mainstream political debate (e.g. active industrial policy) but I wasn’t sure how much they’d achieve. Other policies would achieve a lot (e.g. a global minimum wage), but I couldn’t see any realistic path to implementing them. How much difference are the realistic policies going to make, and how realistic are the policies that would make a difference?
It’s a good question! It depends what you mean by a realistic policy agenda – if you take the current agenda then we are in serious trouble. Surprisingly, the World Bank and ILO have an appetite at the moment for new ideas that link skills and industrial strategies. But the current UK Government has moved away from any kind of state intervention in industrial aspects of the economy, and the US is even further away from this. This is disastrous, as other economies like China and Singapore understand that this planning is crucial. Therefore in both the British and American context, to say we need some industrial strategy of some kind is actually quite radical. It sounds totally ridiculous, but that’s how it is.
In terms of their impacts, if you’re linking industrial demand to skills supply, you’re going to be better-placed than if you leave that to the market – so this would be positive. But I doubt whether it would have a major impact, because ultimately the labour market cannot resolve the problems of social justice and a fairer society. The job market and the economy have to be used as ways of generating wealth, which then requires us to think how we’re going to distribute that wealth.
The problem is that we’re saying that the middle-classes are under threat and current strategies aren’t going to work – so Government are not likely to respond unless they have to. Things are going to have to get quite a lot worse before some of this agenda gets taken seriously.
Next week I’ll blog the 2nd part of the interview, where we discussed the trade-off of Western vs. global inequality, and the future path of inequality in emerging economies. Enormous thanks to Philip Brown for giving up his time to respond to my questions.