Wednesday, December 01, 2004

Technology advancement and the demand for labour

A recent paper by Alan Manning of the London School of Economics suggests that the assumed link between technology progress and employment of the lower skilled might not be correct. In fact the paper suggests that the demand for the least skilled jobs may be growing.

One reason cited for why this is happening is that there is an increasing relationship between the proximity of the low skilled and high skilled - namely we are expecting a higher level of 'service'. This can be seen in many sectors. Retail banking, led from the US, has for the last few years been increasing the number of customer facing roles (which are generally low skilled and low paid) and in some instances increasing the number of branches.

We can look at articles such as the recent news about First in Glasgow having to go to other countries to get bus drivers as showing the state of what Manning, with Maarten Goos, called 'McJobs' in his article 'McJobs and MacJobs: The growing Polarisation of Jobs in the UK' (in The Labour Market Under New Labour, Dickens, Gregg & Wadsworth 2003)

This research, and practitioners experience is showing a rapid heating of the employment market for low skilled. Due to the proximity need it is likely that in the next few years this will put increasing pressure on immigration in developed economies, a topic which is politically sensitive.

In the meantime, companies need to be addressing these issues with some urgency - the labour pool for these jobs is small, and the demand is likely to rise rapidly.