Globalisation fears often overblown
Saturday, 23 June 2007
Adam Jones writes from Paris
THE Paris-based think-tank for 30 wealthy nations insisted that globalisation was "compatible with high employment rates, provided the right domestic policies are in place". Countries should pursue policies to manage the insecurities of life in the new century's labour market, it urged.
Angel Gurría, OECD secretary-general, said last Tuesday employers were using the threat of offshoring -- the practice of moving work to countries where labour is cheaper -- as "a bargaining chip" in pay talks. He also said the gap between the richest and poorest workers had grown.
The OECD said it needed to reassess the impact of freer trade on workers because a "wedge" had appeared between the rosy analysis put forward by economists and "the much more sceptical view of the general public". That scepticism was particularly strong in the US and France.
In its report, the think-tank said wages in the OECD nations had on the whole been increasing in real terms, in spite of offshoring. It said the number of unemployed people in the OECD zone was set to fall from 33.6m in 2006 to 32m in 2007 - a slight slowing in the pace of job creation.
But it conceded that globalisation could "permanently increase" job insecurity for workers by making their employers more vulnerable to external shocks such as exchange rate fluctuations.
It said salaries had been shrinking as a proportion of national income in the US, Japan and Europe, perhaps reflecting the weakened bargaining position of workers in pay negotiations.
In 16 out of 19 OECD member countries for which data were available, the earnings of the best-paid 10 per cent grew faster than those of the lowest-paid 10 per cent between 1994 and 2005. The three countries in which the wages of high-fliers did not outpace those of the lowest-paid were Ireland, Spain and Japan.
However, the OECD concluded that trade appeared to have made only a modest contribution to increases in inequality, suggesting technological changes might have had more of an impact.
Mr Gurría added that people's fears of losing jobs to workers in foreign countries were often overblown.
The OECD recommended that governments make it as easy as possible for their citizens to start businesses and shift to industries that are not in decline. It also suggested unemployment benefits should not discourage globalisation's victims from finding a new job.
Above all, it called for politicians and journalists to foster a well-informed discussion of the benefits and costs of globalisation. "The story has to be told better," Mr Gurría concluded.
........................................
FT Syndication Service
THE Paris-based think-tank for 30 wealthy nations insisted that globalisation was "compatible with high employment rates, provided the right domestic policies are in place". Countries should pursue policies to manage the insecurities of life in the new century's labour market, it urged.
Angel Gurría, OECD secretary-general, said last Tuesday employers were using the threat of offshoring -- the practice of moving work to countries where labour is cheaper -- as "a bargaining chip" in pay talks. He also said the gap between the richest and poorest workers had grown.
The OECD said it needed to reassess the impact of freer trade on workers because a "wedge" had appeared between the rosy analysis put forward by economists and "the much more sceptical view of the general public". That scepticism was particularly strong in the US and France.
In its report, the think-tank said wages in the OECD nations had on the whole been increasing in real terms, in spite of offshoring. It said the number of unemployed people in the OECD zone was set to fall from 33.6m in 2006 to 32m in 2007 - a slight slowing in the pace of job creation.
But it conceded that globalisation could "permanently increase" job insecurity for workers by making their employers more vulnerable to external shocks such as exchange rate fluctuations.
It said salaries had been shrinking as a proportion of national income in the US, Japan and Europe, perhaps reflecting the weakened bargaining position of workers in pay negotiations.
In 16 out of 19 OECD member countries for which data were available, the earnings of the best-paid 10 per cent grew faster than those of the lowest-paid 10 per cent between 1994 and 2005. The three countries in which the wages of high-fliers did not outpace those of the lowest-paid were Ireland, Spain and Japan.
However, the OECD concluded that trade appeared to have made only a modest contribution to increases in inequality, suggesting technological changes might have had more of an impact.
Mr Gurría added that people's fears of losing jobs to workers in foreign countries were often overblown.
The OECD recommended that governments make it as easy as possible for their citizens to start businesses and shift to industries that are not in decline. It also suggested unemployment benefits should not discourage globalisation's victims from finding a new job.
Above all, it called for politicians and journalists to foster a well-informed discussion of the benefits and costs of globalisation. "The story has to be told better," Mr Gurría concluded.
........................................
FT Syndication Service