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Global Labour Markets: Bytes vs. Brains

June 17, 2018

BrainsFace it, just about any type of work can be outsourced to distant countries, or what’s called offshoring. The exceptions at this point would include such occupations as firefighters, paramedics, nurses, police officers, construction workers, and teachers. However, with respect to the last occupation, one day we may see kids in classrooms where large TV screens depict teachers in India, the Philippines, or Taiwan. A teacher’s “aide” (a monitor earning near minimum wage) would be sitting at the back of the classroom to ensure discipline.

Farfetched? Maybe.

Everyone likes to pick on China for being the world’s manufacturing hub and for stealing jobs from the Industrialized West. However, Chinese companies over the past decade have increasingly outsourcing their manufacturing operations to much lower wage countries, such as Vietnam and Cambodia. Even South Korea has outsourced some of its work to the pathetically poor North Korea.

Some call this a race to the bottom, in terms of locating production to the cheapest wage locations (with non-existent worker health and safety laws) on the planet. Don’t confuse the lower-end manufacturing or assembly aspects of an iPad, Samsung wireless device, Nike running shoe, or Yamaha piano with where the intellectual property resides. Taiwan and Singapore, for example, understand this and are focusing on the value-added, intellectual property end of products and services.

This is the BRAINS part of the strategy for a nation to build its human capital and generate wealth for its citizens. The BYTES part can be done anywhere around the globe. The challenge for governments is to decide where they want to play.

If you want the brains route, it comes with the unwavering commitment to invest intelligently in the human capital of citizens. Note that this doesn’t mean dumping a lot of money into education and training. Money is an important element, but smart investing is even more important.

A vital part of human capital development that regularly gets overlooked is that of management development. If you want a dynamic economy that’s a hotbed of innovation, then you must have effective management practices across all sectors of the economy.

This encompasses management at the strategic decision-making and policy-making levels and at the firm operational level, where products and services are produced and disseminated. Moreover, it means connecting the research and development elements with how new inventions get commercialized in the marketplace. It doesn’t just happen by chance. Management is a key ingredient in a firm’s–and more broadly a nation’s–competitive efforts.

Finally, productivity–the word that causes eyes to glaze over–is intertwined with human capital development and the effective adoption and use of technology. Productivity’s now the cool word for smart governments.

Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.
— John Maynard Keynes

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