Not all that is solid
The traditional cloth-cap economy has melted into one which is fluid, global, insecure and indifferent to people and communities. A useful story if you want to manufacture uncertainty, says Kevin Doogan, just not true
We are often told of a "new economy" and a transformation of work driven by globalisation, technological innovation and corporate restructuring. It is a world in which the cloth-cap imagery of production industries with traditional employment and permanent jobs, which were largely unionised, is replaced by a new flexible labour market in which lifetime employment has disappeared. It is a world in which corporate relocation, downsizing, outsourcing and offshoring have relegated Britain to a service economy of shopping centres, "McJobs", part-time employment, temp agencies and casual work. Capital, we are told, is now footloose, companies have no long-term commitment to localities and the bonds of reciprocity between firms and employees have been frayed and rendered tenuous. Job insecurity is rife and employment short-term and precarious, contingent upon the vagaries of increasingly unpredictable market forces.
This narrative is not confined to Britain. The New York Times reported in 1996 that "the notion of life-time employment has come to seem as dated as soda jerks and tail fins". In fact research produced by the OECD in 1997 showed significant anxiety about the fear of job losses and redundancies among all the advanced industrial economies. Yet, as the Americans might say, "here's the thing". In the 1980s when mass unemployment returned to levels not experienced since the great depression of the 1930s, there was no expressed concern with precarious employment. Mass unemployment, redundancies and poverty dominated public concerns, but not job insecurity.
It was only as labour market conditions began to improve that talk of job insecurity and precarious employment gained international currency. So how is it that so many of us have bought into the precarious picture of the economy? Part of the problem is the flimsy evidence upon which the portrait relies.
Take the case of temporary employment in the United States. A range of commentators from the management guru Tom Peters to Will Hutton have told and retold the story that Manpower Inc., the temporary employment agency, is the largest employer in the US. This first made the news in a six-page article in Time in 1993 on "The Temping of America" and a year later in Fortune's cover story on "The Contingency Workforce". Truth be told, the story is bogus. Temporary employment agencies count everyone, even those who have been on their payroll for one day. So instead of the 600,000 claim that justifies the "largest employer" tag, on an average day the number of staff employed ranges between 80,000 and 120,000. Moreover, despite the claims of left-wing commentators about the threat posed by agency working, the proportion of the US workforce employed in temporary employment agencies is minute, in fact just 1 per cent of the labour force.
More broadly the statistical evidence shows that long-service employment has declined in some 5 per cent of the workforce in Europe and in the United States in sectors that constitute 20 per cent of the workforce. Job stability has not however diminished in Europe and North America and long-term employment, defined as those who stay with their employers for ten or more years, has risen. Across the board the long-term workforce has grown in the public and private sectors and in high turnover and low turnover industries. Furthermore new forms of employment such as part-time employment have increased labour market attachment rather than the disaffiliation that many had predicted. Labour market flexibility in the form of part-time work has, for example, greatly contributed to the growth of long-term employment of women. These trends are observed over some 20 years and furthermore occur during a period of employment expansion which tends to depress average job tenures, as the growing number of new starters lowers average number of years in employment. The fact that job stability has not declined and long-term employment increased during this period shows that employers increasingly prioritise labour retention.
But what about the claim that work has been transformed by globalisation and technological change?
One of the main ways in which globalisation is said to threaten jobs is that transnational corporations now operate in international markets. Firms are no longer bound to localities or communities and can decamp with the flexibility of a travelling circus, giving rise to a new form of capital that is "spatially indifferent". The United Nations Committee on Trade and Development describes "the universe of TNCs" made up of 77,000 parent companies with over 770,000 foreign affiliates. In 2005 these foreign affiliates generated an estimated $4.5 trillion in value added, employed some 62 million workers and exported goods and services valued at more than $4 trillion. Multinationals unquestionably dominate world trade and control the supply of key resources and primary commodities in the world. However the international reach of their operations should not lead to the conclusion that they have a high mobility capacity or are indifferent to their domestic economies. The annual surveys of MNCs conducted by UNCTAD reveal that the top 100 non-financial corporations have a transnationality index of approximately 50 per cent. This means that their sales, employment and value added in the home economy are as important as their combined operations in overseas markets. More remarkably data gathered by the Bureau of Economic Analysis in the United States explore American multinationals operations in both overseas markets and in the domestic economy. It is striking that investment and employment in the domestic economy have kept pace with expansion overseas, and shows that three decades of corporate globalisation have left little impression on the balance between the domestic and foreign activities of US multinational corporations. On this evidence TNCs have enduring attachments to their home markets.
Analysis of global foreign direct investment patterns also reveals two interesting and counter-intuitive trends. In the first instance FDI expands during boom periods and contracts during recessions. To blame job losses on capital migration is highly questionable. Secondly the lion's share of overseas investment goes to the rich rather than poor countries. Between 1980 and 2006 the developed economies' share of global FDI inward stock has grown from 56 per cent to 70 per cent, consolidating their position as the prime target for overseas investment. In other words capital moves abroad to access rich markets rather than exploit cheap labour. This shows that fears of exporting jobs are not related to the actuality of capital relocation but to the threat of jobs going overseas. Research in America, where fears of overseas job loss have a much higher profile than in Europe, shows that companies use the threat of corporate relocation in order to maintain the compliance of trade unions during contract negotiations.
Job insecurity can be seen as manufactured uncertainty based on heightened fears of corporate relocation perpetuated by employers, but also, bizarrely, echoed in the campaigns of trade unions. Thus in the United States, after the telecoms crash claimed three million American jobs at the start of this decade, the AFL-CIO launched a campaign against Exporting America, in which job losses were linked to competition from cheap labour economies. At a time when all attention should be focused on the mismanagement of corporations, the avarice of CEOs and the extraordinary damage to public finance in bailing out the bankers, the campaign against foreign competition from cheap labour economies represents an extraordinary own goal on the part of unions.