Technology Without Borders

One of the key drivers behind diminishing global job growth is accelerating global productivity growth. [1]  Global labor productivity growth turned negative in 2009, declining by 1.4 per cent versus growth of 3.3 per cent in 2007. In 2010, global productivity growth recovered to 3.1 per cent. (Key Findings, Global Employment Trends, 2011, International labor Organization).  This pace of productivity growth is putting enormous downward pressure on global job growth and that pressure can be expected to increase.

The first reason is that the integration of the world’s economic activities into a single world economy transformed the landscape of business opportunities available to business owners and transformed the landscape of competition.  Business leaders can now compete for a much expanded number of potentially high profit investment opportunities.  However, they also face a much expanded number of competitors and must compete in a global arena in which rules of engagement are not well developed and enforcement institutions are relatively weak.

In this world, all business owners must aggressively invest in machines and equipment that displace workers not only to profit from emerging business opportunities but to simply survive.

Second, the creation of global communications and transportation systems now facilitates the rapid distribution of new technologies across the world.  So, global corporations can take the most advanced production processes to almost any place in the world that looks promising as a place to do business.

The third reason global productivity growth will increase and intensify downward pressure on global job growth is that computer systems that can mimic human decision making activity are now a reality, as this quote notes.

“Computers are getting better at mimicking human reasoning — as viewers of “Jeopardy!” found out when they saw Watson beat its human opponents — and they are claiming work once done by people in high-paying professions. The number of computer chip designers, for example, has largely stagnated because powerful software programs replace the work once done by legions of logic designers and draftsmen…Software is also making its way into tasks that were the exclusive province of human decision makers, like loan and mortgage officers and tax accountants.” (John Markoff, Armies of Expensive Lawyers, Replaced by Cheaper Software, New York Times, March 4, 2011.)

These new systems are augmenting the traditional replacement of human physical activity with machines with the replacement of human evaluation and decision-making activities with machines.  This development puts public and private service sector jobs — which have been vital to keeping employment rates up around the world as jobs in agriculture, mining, and manufacturing disappeared — right in the sights of managers of businesses, non-profit organizations, and government agencies seeking to cut costs.

[1] Productivity is a relative indicator of how efficiently an economy, an industry, or a company uses labor.  It is measured in terms of the cost of labor that goes into producing goods or services of a specified monetary value.