Transcript The Global Auction

Learning Isn’t Earning: How the Global Auction for Jobs is
Breaking the Promise of Education
Phillip Brown - Cardiff University
& Hugh Lauder - University of Bath
Seminar: The World Bank, Washington, 23/9/2010
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Technological Evolution  Knowledge
Economy;
The Age of Human Capital - Education, Jobs
and Rewards;
Comparative Advantage:
◦ Developed Economies = Quality (Brain)
◦ Developing Economies = Price (Body)
‘In the past, material forces were dominant in
national growth, prestige, and power; now
products of the mind take precedence. Nations
can transfer most of their material production
thousands of miles away, centring their attention
on research and development and product design
at home. The result is a new and productive
partnership between “head” nations, which
design products, and “body” nations, which
manufacture them’
R.Rosecrance,
The Rise of the Virtual State, 1999.
High Skilled ‘Magnet’ Economy
• Higher Skills
• Raising Quality Standards
• Innovation and R&D
• Foreign Talent
Efficiency & Justice  ‘Learning = Earning’
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Thomas Friedman’s ‘The World is Flat’?
The World is Uneven, Fragmented & Uncertain
Question Promise of Education, Jobs &
Rewards (Knowledge Economy)
Global Auction = Dual Auction:
• Forward/Progressive (High Skills, High Wages)
• Reverse/Dutch (High Skills, Low Wages)
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Challenges/Opportunities?
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Examine Views of Transnational Companies;
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Examine Views of Senior Policy-Makers,
including China & India.
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Seven Countries - Britain, China, Germany,
India, Singapore, South Korea, and the
United States;
Core Sectors – Automotive, Financial
Services and ITC/Telecoms;
Company Interviews:
125 company interviews = 105 outside of
UK;
Policy Interviews:
65 policy interviews = 43 outside UK.
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Enrolments in Tertiary Education doubled
within a decade from 72 to 136 million
(1996-2007);
China overtaken US with over 20 million in
HE (2006). Now 27 million enrolled in HE;
Over 60 percent of engineering doctorates
were awarded to foreign students in both
American and Britain.
‘We have an “inside out”, not outside in model
which is very clever. It gives us more
flexibility over what to do where’
Senior Indian Manager, EU Electronics, Mumbai
‘What is really different here is research, we
generate ideas for the frontline to use…These
are the areas that we find that talent is
delivering to an even higher standard than
expected. We’re not doing those menial call
centre type jobs. It’s global work and that’s
where we think we’ve been able to add a lot
more value than what was initially expected
and that will continue.’
Senior Indian manager, US Bank, Mumbai
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Knowledge Work  Working Knowledge
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Simplify  Codify  Standardise 
Digitalise
‘Standardisation in terms of IT has become
huge…not only standards for a single customer but
across countries…technology is the ultimate
equaliser…it will drive globalisation, drive change…I
hope that people don’t get reduced to the state of
drones…but I think increasingly employment will
shrink.’
Chief Information Office, Financial Services.
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Developers (creators)
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Demonstrators (executioners)
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Drones (digital routine)
 Segmentation
of High Skilled
Labour;
 Performance Not Simply Skills;
‘It’s more important to get great talent,
since the differential value created by the
most talented knowledge workers is
enormous.’ McKinsey Consultants.
Global Skill Webs
 Competitive advantage through people  ‘leverage’ global
supply of skills, knowledge, talent., etc.;
• Value is created through webs of skills/capability that cut
across traditional relationships between employees, suppliers,
companies, universities, etc. within the global economy.
• Internationalisation/De-nationalisation of HR Strategies;
• TNCs will use different strategies but common ‘pressure
points’  Knowledge arbitrage.
What is the empirical basis of your analysis?
There are two bases for this analysis. The first is
qualitative research that has enabled us to identify
the generative mechanisms for the global auction and
the creation of an emerging division of labour for
knowledge workers. Generative mechanisms do not
always produce expected data patterns but rather
‘tendencies’ because other factors, for example
national differences in education and the labour
market (theoretically understood) may intervene to
alter the data patterns.
Why and how is the Global Auction for jobs
affecting the value of education?
The GAJ is affecting the value of education,
understood in economic terms, by intensifying the
positional competition for fewer ‘good’ knowledge
jobs. However, there is an opportunity trap, (Brown,
2006) if young people do not commit to education
they have little or no chance of gaining ‘good jobs’.
But for many their credential will not yield the
returns that might have once been expected.
Is this a problem only for rich countries? Among
rich countries, is it especially a problem for the US
and the UK? What are other rich countries doing
about the problem?
It is a problem for rich countries. Whether the GAJ
will have more effect in the USA and the UK will
depend on business strategies relating to cost
cutting and outsourcing. However, our data
suggest that all MNCs have to engage in this form
of the competition to a greater or lesser extent
because of the drive to cut costs –especially in a
recession.
Why should developing countries worry about
GAJ? Or does GAJ present an opportunity for
them?
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There are some developing countries that have clearly gained
from the GAJ –India and China for example but there are
pockets of gain elsewhere. There are at least three conditions
that need to be satisfied for a developing country to gain
from the GAJ: (i) they have the relevant language skills (ii)
they have other skills in demand (iii) their costs are lower
than competing countries.
As countries like China seek to upskill and raise wages so
there may be temporary room for workers in other developing
countries.
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They have to be hooked into the global economy.
This involves, at the least, infrastructure capability
with respect to the internet, an education system that
can produce workers to a level where they can be
internationally competitive –at the right price, and the
social capital networks to find and establish the
business. When we look at the recently
developed/developing economies, India, China, South
Korea, then they all had strong intellectual and
business connections with the USA and to a lesser
extent the UK.
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This is the hardest question, especially at a time of
economic crisis. Given the lessons from the recently
developed/developing countries, then the idea that
education is enough or that investment in human
capital is enough will not do it. It’s about establishing
intellectual and business communities that have a
global reach as well as having state investment in the
infrastructure. This can be done in several ways.
Singapore provides one model but others may include
the investment in research students at overseas
universities. This investment needs to be undertaken
through cohorts so that they have a sense of a group
and national allegiance. If this is allied to internships
in MNCs, then social capital connections, as well as
best practice may eventuate.
We have noted the position of Hanushek and
Wossman (2008). And while the common sense idea
that quality is important and helpful, the framework
within which it is cast is problematic. There are
glimpses of insight about the significance of those
with engineering degrees being more significant in
terms of economic growth but how an economy is
structured is important to sustained economic
growth: we need to look at industrial and
occupational structures and note that openness to
markets needs to be seen in terms of stages of
development.
The Global Auction: The Broken
Promises of Education, Jobs
and Incomes
Oxford University Press:New
York. August, 2010. P.Brown,
H.Lauder and D.Ashton.