The downsizing of corporations in America today has been brought about by two dominant factors: advancements in technology and globalization of markets. Technology has forced the American worker to adapt to their surroundings or lose their jobs. This is especially true for the uneducated, workers with minimal skills, and for the rest of the workforce who are not computer literate. That is not to say, however, that educated or trained workers are not subject to downsizing. It has happened to myself, members of my family and to my friends. It can affect anyone; the only way that an individual can overcome the effects of downsizing, is to adapt. This can be accomplished through education, cross training, and plain old flexibility. It is a fact that technological change and deregulation of industries produce the bulk of job loss (and creation) in today’s economy. Globalization, on the other hand, has forced the United States to become competitive. Global competition is one of the prime reasons for reducing labor costs and global markets are setting the stage for how a country has to behave economically, if it wants to thrive in the current world economy.
American’s are lucky. We have been through periods of downsizing for some time now and have been learning how to cope with the effects as individuals and as a nation. Other countries, on the other hand, are just beginning to realize the serious consequences of downsizing due to technological advancements and globalization.
One contrasting example is that of the job markets of countries such as England and France. While the U.K. is enticing companies to locate divisions there, France is not. The deregulation of markets in the U.K. has provided a business-friendly climate, luring foreign companies that are fed up with the continent’s onerous business regulations. Countries such as France and Germany have the European Union to ensure workers rights, generous benefits and high wages. All this, in addition to the government’s stance towards labor markets, has contributed to chronic unemployment and lagging competitiveness. Britain’s government has embraced flexible labor markets and has adopted only the social chapter of the European Union’s rulebook, thereby creating low unemployment and a thriving economy.
Countries like Germany and France have been getting the best of both worlds for quite some time now with short work weeks, excellent salary and some of the best benefits and highest living standards worldwide. But now the good times may be gone forever. There is no way possible for the workers to enjoy such a livelyhood and compete with technology and globalization. Freer global trade pushes countries to adapt the U.S. / U.K. approach of working longer for less ensuring a productive and competitive edge. This is the only way that these countries can revive their markets based on their export-driven economies. The employee must be willing to sacrifice some salary, time and benefits in order to secure a more permanent position. This requires change.
I don’t want to say that these changes won’t be painful to many people. It’s absolutely true that you have less job security, greater inequality of incomes and a meritocracy that tracks very closely with people’s education levels. The so-called skill premium has significantly increased. But the upside is significant and other countries will have to adapt in order to keep pace with Americans and the U.K. The relationship between the company and the employee today is much less paternalistic and less autocratic. There’s less security, yes, but there’s also more worker autonomy and more opportunity to help define your own job. Looking at models they found in Japan and elsewhere, more and more American firms have worked to develop a high-performance workplace, where workers are encouraged to develop broader skills and where the supervisor becomes more coach and facilitator and less the boss. The reason for this is the way companies and employees interact with each other and the way both have become more flexible and more adaptable.
In conclusion, Europe won’t solve its problems with double-digit inflation, and Japan won’t be able to pull itself out of recession unless they can adapt as the Americans have done to become a more flexible, open market economy. It doesn’t mean our nation will never experience a downturn, but Americans have found the formula to enjoy a long period of growth. Many countries would love to have our 3.8 percent unemployment rate with minimal inflation. If countries such as France, Germany and Japan do not adapt as the Americans and the U.K. have done, they will certainly pay a hefty price.
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