Sustainable Employment needs a re-think on how we value services

Consider that the world population
reached 1 Billion not so long ago
in 1804 and is currently over 7 Billion and is expected to rise and stabilize
at 10 billion by 2050. Sustainable employment for all these people needs a
re-think of how we value services.

The problem is acute in Asia with  about 60% of the world's population and  China and India accounting for 26% of the world population.

From a goods and manufacturing type
of thinking there are just too many people in China and India who are willing
to work for less i.e. provide services for less wages which erodes earlier high
paying jobs of the developed world. Not that anyone wants to work for less, it’s
just that there is a huge surplus of desperate labor with no recourse to social

Globalization and the Internet has
made manufacturing and digitized services easy to transfer out of the expensive
countries to those that are cheaper. Jobs that are not outsourceble require a
physical presence of the service provider. Hence the barber, nurse and
plumber's job is hard to outsource. Consider:

  • That every strip mall in the US has new nail spas and
    hair salons since the recession. There were 5 such businesses on a main
    street in one small but relatively affluent US town  at one recent
    count. Not making booming profits these businesses were eking out a living
    for the owners. A low-cost haircut in the US costs about $15 while the
    cost for a haircut in India is about a dollar.
  • A plumber costs $90 an hour in the US and cost of parts
    pale in comparison. In contrast, an Indian plumber talks about material
    costs first and offers labor at about $ 2 /hour.

Because of these huge differences in
labor costs you will find that Americans do tend to do their own minor plumbing
repairs and there is a market for personal hair dressing
equipment going by the gifts on display for the holiday season.

Things get more complicated when you
talk of firms that are trying to maximize shareholder return and try to reduce
cost by sourcing from the cheapest viable location.

 "Free trade"
thinking was designed for a world that had not reckoned with globalization
and the Internet. If labor movement was free and with no immigration
controls even barbers and plumbers would not be "outsourcing proof."

Perhaps it is time to re-think how
services and work is valued and the role Government should play for sustaining
employment. Contact StratoServe.


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