Employment in the Age of Globalization

January 15, 2013

Things have changed! Not just a little, not just for a short time, and not just because of the worldwide economic crisis (although that certainly exacerbates trends which are now well established on their own.

The key word for employment, since about 1980, is “flexibility.” This was the notion that neoliberal economists and politicians effectively sold, in order to help capitalism escape the squeeze on profits. Productivity needed to be taken to a new level. So, for example, Wells Fargo, across the 80’s, converted thousands of retail bank employees from “customer service” to incentive paid sales people, and the tellers from full time to part time, taking advantage of an abundance of women (many married and mothers) who were happy to take the part time employment, adding some income and leaving time for family and kids.

Some of the new and re-trained workers did well and were pleased with their lot. Some did not. Particularly negatively affected were tellers who needed full time employment wages and health benefits. If the hours were carefully keps to under 20 per week, Wells Fargo was not obligated to provide health benefits, or to match 401K contributions. Middle aged customer service personnel often did poorly–they resented and disagreed with the change, arguing that customers needed their attention and help, and would not respond well to constant sales pitches. But, management persisted, adding ATM machines and persuading customers that they didn’t really need to come into the branch–unless a sales officer was inviting them in to sell them another product. Many of the middle aged who could not effectively sell were phased out. We imagine they became early participants in the evolving process described below.

All of this worked well for Wells Fargo and its shareholders. The company was a forerunner in designing and implementing such measures and the results went to the bottom line–profits were excellent.  And, it’s true that if you have a customer with say six “products”, she is much less likely to leave the bank than one with one or two only, not to mention the added profit from each product and the economies of scale in having only one customer to deal with, vs. six.

Along about this same time, Wells Fargo and many others were taking down their pension plans, replacing them with 401K’s and persuading employees (not so much persuasion was needed, because no choice was offered) that they would be better off managing their own retirement funds–which has seen mixed results across industry since.

Underlying all of this was a philosophy which was beginning to pervade business on all levels–the elimination of security for the workers along with far greater flexibility affording business to move more rapidly to adapt . Here are a few of the key elements of the neoliberal direction of business in regard to labor, beginning around the 80’s:

  • Corporate freedom to hire and fire as needed to deal with ups and downs in the economy
  • Reduced obligation to take care of employees laid off (assisted by legislation)
  • Reduced power of labor unions (orchestrated by government)
  • Freedom to move operations wherever effective labor is cheaper–e.g., to India or wherever
  • Ability to take full advantage of high unemployment periods–hire interns for no pay, hire part time workers, hire contract workers, replace older workers with younger workers
And, what are the conditions facing the employee or would-be employee in the new world of employment?
First, conditions vary widely from country to country, and vary also by race, by gender, by religion, by culture, by language, by looks, education, skills, and a number of other factors.
Second, it is only fair to acknowledge that there are some who have benefitted from the change. These include some of the migrant workers from the Chinese countryside who have moved to the cities, as did my parents in the 1930’s in North Carolina. Included also are women in developing countries, who found they could now gain an income in the new factory of the multinational, thus giving them better living standards and a voice in the important financial matter of the household. There are others.
But, on a broad basis, there has been great loss to labor over these changes.
  • A massive erosion of the level of security employees feel in their jobs
  • No negotiating power–labor unions are mostly powerless 
  • Minimal termination payments to displaced employees
  • No pensions, thus reliance on savings and 401K’s
Along with all this, inequality has worsened dramatically in many advanced or advancing countries. See this chart.  

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