The future of employment
Today's announcement that the chief executive of Kraft Foods, which owns Cadbury, Irene Rosenfeld will receive a total package of almost £14 million (a rise of 13.5% on last year), once again focuses the question on how much any person should be paid.
I don't intend to address the appropriateness of Rosenfeld's salary package. However, in receiving what is for the vast majority of people, a total package that would be like winning the lottery, it raises the point about whether companies have appointed people capable of taking strategic decisions about the future.
Crucially, what does the future hold, and what should the companies do to anticipate development and change in markets? Indeed, what should senior managers such as the extremely well paid Rosenfeld be considering in order to deal with any potential changes?
A recently published paper by the McKinsey Global Institute may assist them. In this paper, Help Wanted: The future of work in advanced economies, there is examination of how future employment patterns will alter and, significantly, what the influences will be.
In the introduction to this report the authors recognise that even though growing unemployment is a regular feature of advanced economies, there is a belief that companies cannot obtain workers with the requisite skills.
The report acknowledges that even though the global recession caused by the financial crisis has been a primary cause for increased unemployment, its end will not automatically result in the return of jobs lost.
Instead, it is argued, there are a number of influences that will cause the labour market to alter. Accordingly five such influences are examined:
2. Skills mismatch
3. Geographic mismatch
4. Untapped talent
5. Increasing disparity of income
The first of these is obvious. We have experienced significant alterations in technology over the last three decades. As we know, there are fewer workers in factory production. Those that do remain are significantly more efficient than their counterpart would have been in the 1970s.
We also know that may jobs have been lost in what Mckinsey call 'transactions'. These are tasks carried out by people who act as a go-between you and another organisation. The best example is that when you went on holiday you booked at a travel agent. Now you do it online yourself. More convenient and less jobs required. At best you get more people working in call centres.
According to McKinsey, the largest growth in jobs has been those that require skills to carry out difficult tasks and need enhanced skills. These are what Mckinsey calls interactions. However, they suggest that businesses will seek to increase the efficiency of such workers. Indeed, as we have seen in the medical profession there may be a tendency to have some tasks carried out by semi-skilled workers. They see this as an opportunity for employment growth.
The second influence McKinsey identify is skills mismatch which between those who have superior capabilities such as problem-solving (as found in many professions). Such people will, usually be relatively secure. At the other end are those whose capabilities are minimal. They are also cheap to employ. If it is relatively difficult to shifty the facility in which they work they may have reasonable security.
But, as McKinsey identify, it is in between that will come under increasing pressure. It is incumbent on every government to keep the focus on increasing the education and capabilities of every person.
The third influence is that fact that one that we are well aware of in the UK. We know that there are far more jobs in the South East than the North (where unemployment is rising). McKinsey recommend using policies to increase the likelihood to companies shifting to the areas where employment is desperately needed.
Is this a justification for the return of regional policy? Moreover, will the coalition's attempt to create greater disparity between rates for public sector jobs assist?
Influence number four concerns the fact that employment is still a relatively male preserve; especially those that are beyond youth. There are some countries where the 'participation rate' is declining (such as Germany). If skill gaps do emerge then it will require workers to be willing to travel where the jobs are.
The increasing rate of youth employment across Europe is of great concern. In Spain it is almost 50%. Are we going to end up with a transient population who, like previous generations will be required to travel? Not great if you are the parent of children who live in a different country.
The last challenge is to deal with disparity of income within countries and throughout the world. Until the recent financial crisis there were some countries in which those on low income experienced significant increase and, as a consequence, living standards were enhanced.
The trouble is the countries were Spain, Portugal, Ireland and Greece. I probably don't need to say more.
So, when we look to our business and political leaders, what do we expect? Certainly a degree of security is good. The trouble is, here in the UK we are struggling with a huge public sector debt. The coalition's belief that austerity is the only way is causing a good deal of uncertainty and pain.
If we emerge from the current problems better prepared to face the future in terms of creating employment and opportunity for sustainable development then that will be good,
Whether we will have people with the right skills is, of course, a government matter.
As we know, business leaders such as Irene Rosenfeld pride themselves on being able to make good decisions.
But as we also know, they are willing to shift their businesses from one country to another with relative ease. The trouble is workers find it a great deal harder to make the move.
Maybe we have to educate future generations to be far more footloose and adaptable than they have been in the past. Ireland spent a great deal on educating its children and youth in the 1980s so that they would be well prepared to move elsewhere for employment.
It is probable that we in the UK will need to do the same. The real challenge is where will the money come from to do this?