September 23, 2011

Global Jobbing

Blast from the past. The Economist talks about the great economic problem of our time. No, not global warming but global jobbing.

To understand why these changes are so exciting for some people and so scary for others, a good place to start is the oConomy section on the website of oDesk, one of several booming online marketplaces for freelance workers. In July some 250,000 firms paid some 1.3m registered contractors who ply their trade there for over 1.8m hours of work, nearly twice as many as a year earlier.

ODesk, founded in Silicon Valley in 2003, is a "game-changer", says Gary Swart, its chief executive. His marketplace takes outsourcing, widely adopted by big business over the past decade, to the level of the individual worker. According to Mr Swart, this "labour as a service" suits both employers, who can have workers on tap whenever they need them, and employees, who can earn money without the hassle of working for a big company, or even of leaving home.

It is still small, but oDesk shows how globalisation and innovation in information technology, the two big trends that have been under way for some time, are moving the world nearer to a single market for labour. Much of the work on oDesk comes from firms in rich economies and goes to people in developing countries, above all the Philippines and India. Getting a job done through oDesk can bring the cost down to as little as 10% of the usual rate. So the movement of work abroad in search of lower labour costs is no longer confined to manufacturing but now also includes white-collar jobs, from computer programming to copywriting and back-office legal tasks. That is likely to have a big impact on pay rates everywhere.

It puts the whole thing into context of the current 2nd dip in USA and Europe. My first contribution to this debate was to predict the above in a paper & implementation of a jobs market in 1997. Because this used a sort of variation on Ricardian Contracts, and turned the global jobbing market into a financial system, it qualifies as FC.

(My second contribution was equally exciting, built in 2009-2010, and I guess someone will overtake it in 14 years as well. If you are in the angel business, you can find out about it sooner...)

Oh, and in case you didn't quite understand the oTalk above ... here's some hard econ data:

Michael Spence, another Nobel prize-winning economist, in a recent article in Foreign Affairs agrees that technology is hitting jobs in America and other rich countries, but argues that globalisation is the more potent factor. Some 98% of the 27m net new jobs created in America between 1990 and 2008 were in the non-tradable sector of the economy, which remains relatively untouched by globalisation, and especially in government and health care -- the first of which, at least, seems unlikely to generate many new jobs in the foreseeable future. At the same time, says Mr Spence, the mix of jobs available to Americans in the tradable sector (including manufacturing) that serves global markets is shifting rapidly, with a growing share of the positions suitable only for skilled and educated people.

(Readers will recognise Prof. Spence as the man who wrote the paper that inspired the silver bullets hypothesis.)

Posted by iang at September 23, 2011 03:52 PM | TrackBack
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