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The globalization gap: how tech disrupted the labor market

Globalization has caused a sudden and wide rift in the world labor market. But who will pick up the pieces? Experts discuss at The Economist's Human Potential conference.
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Written by Andrew Nusca, Former editor on

NEW YORK CITY -- Globalization is among the most important trends to shape the development path of humanity, and never before in history have so many people have had access to so many other people, fueled by connecting technology and a business imperative to grow, experts said on Wednesday.

But the trend has manifested more rapidly than the technology that has enabled it, leaving businesses, governments and individuals in its wake, experts said at The Economist's Human Potential conference. The drastic turnaround has left employees and companies scratching their heads as they suddenly face the reality that there are far more like them than they could have imagined.

"We are seeing the coming together of a single global labor market," said Economist editor Matthew Bishop, "and that is a process that has been accelerating over the last 30 years."

What's more, this connectivity has enabled an entirely new palette of professions never before seen.

"What we're seeing here is a global phenomenon [that] depends on where you live and how educated you are and how well you're able to join what we call the 'global talent pool,' " said London Business School professor Lynda Gratton.

In a panel discussion moderated by NPR "Planet Money" co-host Adam Davidson, Gratton and Bishop debated the extent of how disruptive to the global labor market this phenomenon is, as well as what to do about it.

While immigration controls remain a barrier, globalization has allowed a freelancer in the Philippines to bid on work in the United States -- with a corresponding wage that adheres to what is rapidly becoming the global price of labor, Bishop said.

LABOR AS A COMMODITY

The problem? A rise in inequality could occur, helping the successful become even moreso, and vice-versa.

"The sheer pace of technological innovation and the emergence of China and India means that the normal adjustment process can't happen," Bishop said, adding that there's no way for a laid-off worker to adjust to market demands that quickly.

As labor enters the global marketplace, it becomes a commodity. But one's fate is not sealed, Gratton said. It's difficult to predict the market, but it's not impossible -- so be smarter about forecasting in which sector the next labor base will grow from, such as social media marketing.

"At the level of the individual…you've really got to be smart about what the emerging skills are going to be," she said. "Create value -- something difficult for people to imitate."

RESISTING FATE

Imitation, a corporate synonym for outsourcing, is a natural market force that can be hurdled. Gratton, author of The Shift: The Future of Work is Already Here, suggested mastering your vocation.

"The days of middle management -- knowing a little bit about lots of things -- are over," Gratton said.

Flexibility is also key -- Gratton called it "sequencing" skills -- especially as workers live longer and see more economic shifts in their lifetimes. Surrounding yourself with a "regenerative community" -- real-life social networks that make you happy -- and reorienting your attitude toward money also helps, she said.

"You work for money to buy stuff to make you happy," she said. "We need to rethink our relationship to 'meaningful work.' "

EDUCATION AS ENABLER

But who's really out of luck in the world? Those with a fixed set of skills who refuse to retrain for a changing economy, the panelists agreed.

The way to fight it: education.

In Michigan, former governor Jennifer Granholm retrained auto workers to make batteries for electric cars, planting the seeds for a new labor cluster, Bishop said.

"There are lots of people out there who we tend to write off [who can be educated to remain relevant]," he said. "Everywhere you go around the world, you talk to business leaders and they say that the education system is failing to prepare people to work."

Take India, for example: the nation plans to train 250 million people in the next 10 years in skills for the top 10 most rapidly growing sectors, he said.

"India will emerge as maybe a model for how you get demand-led, supply-side training," Bishop said. "There is a lot of nostalgia about manufacturing. Infrastructure. These are not big job creators the way they were 50 years ago. But people can learn new skills."

THE GRADUATE QUESTION

But it starts with better aligning the educational and career tracks, panelists said.

"If we really want to make a difference, there needs to be seriousness about reforming the education system," Bishop said. "Not just K to 12, but higher education as well."

Gratton said there aren't any easy solutions to the problem, despite "the greatest minds in the world thinking about this problem." But it starts with the youngest members of the population.

"The challenge with youth unemployment is that young people who don't have jobs in the first five years of their adult life has a profound effect on them that goes way past those first five years," she said. "I find that extremely worrying."

The trend is visible in places as diverse as Spain, South Africa and some Asian nations, she said.

"The convergence of technology and globalization has created a set of circumstances and a trajectory of change that to be honest has caught all of us by surprise," Gratton said. "I don't think any government any company any CEO has [prepared for it]. We're seeing a changing of the world."

To get ahead, companies may have to fill the holes left by government in supporting education to better serve them. "For a part of our society, I think that we have profound challenges ahead," she said.

Citing unemployed university graduates in Cairo, Egypt, Bishop put the stakes in more stark terms.

"I think one of the reasons the Arab Spring happened this year is because so many graduates came out of university and said, 'There are no jobs.' If action isn't taken very aggressively to actually give hope to younger people who are out of work that they are going to be able to build careers for themselves," the U.S. could see something like the Arab Spring, he said.

This post was originally published on Smartplanet.com

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