| Mehmet Murat BEKDÝK | |
| Editor-in-Chief |
|
Globalization and employment |
Now the most important issue in business is not whether the production or the service is important but how much value is created. In the past, the production used to create the highest value. High tech industries like pharmaceutics, aviation and space industries still do. Writing a computer program actually creates more value than producing a computer disk.
What is important for developed countries is to support innovation fast enough to create new jobs that can compensate the population growth and to create a labor force flexible enough to move to new industries when required. Beside all, many of the jobs millions of people actually doing didn’t exist a generation ago and such jobs couldn’t even be imagined at that time. Many of the manufacturers of network equipment like routers or servers, web designers and e-trade specialists couldn’t know in 90’s that they would do these jobs.
The enemy number one in each economy all over the world is the unemployment which negatively affects social stability. Unemployed people do not contribute to the production nor to the income tax system and their ability to spend dramatically decrease. Unemployment pays has a negative impact on the economy and where the employment rate is high, poverty and routs are more probable. Almost by definition, developing countries experience unemployment and related serious problems. Thinking that most of these countries have a high birth rate, it is a requirement to create new jobs fast enough to absorb growing labor force. Arab world alone need to create 80 millions of new jobs until 2020 just to keep their unemployment rate at today’s level.
In some developing countries, it is planned to increase employment by opening new industries for investment: for example, mining in Vietnam, agriculture, agricultural trade in Philippines and outsourced services in South Eastern Asia and Eastern Europe. Some other countries try to decrease the loads, created by the laws and regulations that restrict investments. The Egyptian government announced that they will fight against the unemployment which is actually as high as 20% in Egypt by offering low cost business loans, making new lands suitable for agriculture and constructing some hundreds of desert towns; they aim to create that way 4,5 millions of new jobs until 2011.
Many developing countries don’t have enough money, expertise or infrastructure to create financial resources for new jobs. In this case, which method should they apply? Direct foreign investment (DFI). A recent research made by the World Bank shows that DFIs has many positive “scatter effects” such as job creation, technology transfers, development of technical and management skills, increase of productivity and forward and back dependencies for companies. Almost all developing countries have recently made some liberalization reforms with the hope to attract DFIs. Furthermore, policies –such as creating industrial groups- meant to support local private sector to fight against poverty should be open to foreign companies too.
Richard Freeman from Harvard asserts that the doubling of the global work force with the integration of China, India and ex-soviet union countries to market capitalism is a turning point in the history of economy. Freeman states that in 2000, these countries added 1.47 billions of workers in global labor pool. These new participants did not bring a substantial capital with them and as a result, pulled down the global capital/job ratio. This creates a high pressure on the workforce both in developing and developed countries.
Globalization means the migration of the jobs to workers or migration of the workers to jobs. But this situation creates difficulties for the governments. Governments are able to understand potential benefits of the mobility of the work force but they have security concerns and see the immigrants as an economical threat. In developed countries, local workers generally despise ordinary jobs but unqualified immigrants attracted by these jobs can’t obtain the right of immigration, what causes a widespread “illegal” employment.
In the other side of the medallion, there is a global competition for the highly educated, talented people armed with the skills of the information society.
According to Freeman, the World Bank and International Monetary Fund, which used to “protect the capital” now feel the necessity to change their attitude and help governments to develop policies meant to lower the cost of an adaptation period for workers to a minimum, during a transition period which may last quite long. Freeman warns that the gains of the new global economy should be shared by a larger extent to avoid rebound and instability situations. It is also certain that without new approaches to the globalization, workers all over the world will be harmed.
It seems that the coming ten years will bring us more things to be afraid of than we expect to see. When looking forward, we are located in a crossroad in some issues: should we surrender to our fears and concerns, should we become a fatalist society, should we live on a large scale forgetting our concerns or go on to accept for the time being small sacrifices from individual freedoms on the name of “security”?
