World View : A Revolution at Work : Nearly one-third of the world's labor force is jobless or underemployed. But technology promises change.

By ROBIN WRIGHT

March 7, 1995 12 AM PT

TIMES STAFF WRITER

WASHINGTON —

Workers of the world, beware.

With the worst unemployment crisis since the Great Depression at hand, almost one in every three workers--or 820 million out of 2.8 billion--is either without a job or underemployed, according to the International Labor Organization.

That chilling statistic underscores how, of all the world’s changes at the end of the millennium, the upheaval in jobs may have the deepest impact on the average person.

“The world’s job market is undergoing an historic transformation at an unprecedented pace. And it’s not over,’ said Peter Peek, a Geneva-based economist for the U.N. labor organization and co-author of the ILO study “World Employment 1995.”

“We’re only somewhere in the middle of the process,” he said.

Ironically, despite the high number of jobless, many changes in employment patterns are positive, creating conditions for broader employment in the future. Technology is transforming the types of jobs available. Globalization is diversifying their location. Women’s liberation is revising who does what. And empowerment of the poor and minorities is opening up opportunities once limited to privileged classes.

The technology of faxes and jumbo jets has created jobs in Switzerland for Africans. And vice versa. Geneva supermarkets that once stocked small and pricey winter vegetables artificially cultivated in local greenhouses now fly in fresh produce grown naturally in the African sun--and sell it for the same price or less.

The breakdown of global trade barriers allows the trendy Italian clothing manufacturerBenetton, doing its planning and marketing from its Venice headquarters, to produce its products with weavers and sewers in places from Poland to the Persian Gulf.

The trouble--and the discrepancy in prospects--lie in the transition period.

“The pace of change is overwhelming whole sectors of economic activity. Those displaced from their jobs are often not equipped to work in the new activities that emerge. When new jobs are created, they are often less well-paid, less secure and of lower quality than those that disappear,” according to a report of the U.N. Development Program.

The crisis has reached such alarming proportions that this week the United Nations is holding a World Summit for Social Development in Copenhagen on unemployment and the related issues of poverty and social disintegration.

In the short term, many authorities claim, there’s not much relief in sight on jobs.

“Prospects for job growth remain, with few exceptions, gloomy throughout the world,” according to the ILO world employment study, which was issued this month.

“Under current scenarios, growth will not be sufficient to cure Europe’s endemic employment ills, reverse the decline in real U.S. incomes, halt the spread of poverty and underemployment in developing countries or prevent the marginalization of an entire continent--Africa,” the study asserts.

Unemployment in Africa now officially ranges from 15% to 20%, with underemployment usually cited at well over half the labor force. And despite resumed growth in their economies, wealthy industrialized nations have seen their unemployment rates triple from about 3% in the 1970s to as much as 10% in the early 1990s, the U.N. Development Program reports.

“Entire generations are growing up who believe that it is unrealistic to hope for productive, remunerative and reasonably secure jobs,” it warns. And the dangers may spill over, the ILO adds: “Societies that fail to offer that prospect are bound to be socially unstable and economically insecure.”

In 1993, Russia’s minimum wage plummeted to a quarter of the level required for basic subsistence. By 1994, Russian unemployment was estimated to be at least five times higher than the official rate. Both are key factors in widespread and growing public discontent.

North vs. South

Between wealthy countries of the Northern Hemisphere and developing nations of the south, labor trends differ, the ILO study points out. In the north, jobs are disappearing in the fields of electronics, textiles, leather processing and others where labor costs are a significant part of the total. Labor-intensive production is no longer profitable in these areas.

Over the past 30 years, manufacturing jobs have declined from 37% to 24% of the northern job pool, according to the ILO study.

“The current process of de-industrialization is far more rapid than the pace of de-agriculturization in the late 1800s and early 1900s,” ILO analyst Peek said.

At the same time, however, service sector jobs, from hamburger flippers to computer analysts, have soared from 41% to 68% of the labor force.

Among the areas of greatest growth through the year 2005 will be service jobs in child care, travel, teaching, gardening and the law, according to a U.S. Bureau of Labor Statistics survey. The biggest advance will be in home-health jobs, whose number may double.

“Globalization is bringing about a new division of labor whereby the north must specialize in products and services requiring expensive use of higher technology or skilled workers in which it has a comparative edge over the south. It can’t compete with China in producing shirts anymore,” Peek said.

In the south, countries are witnessing a rapid rise in unskilled manufacturing jobs, often moving from the north.

U.S. and European companies now produce computers in India’s equivalent of Silicon Valley in Bangalore. A generation ago, 90% of shirts sold in Holland were locally made. Today, the same Dutch companies produce 90% of their shirts in Morocco, Turkey, Bangladesh and India.

Service jobs will also increase in the south, though they will be different from those in the north. Vast numbers will be self-created jobs as workers become “labor refugees” unable to integrate into the formal work sector. They’ll join the so-called informal sector, working in unstructured and unregulated jobs ranging from outdoor vendors to street-corner chefs.

Throughout the south, the informal sector now accounts for between 40% and 60% of urban labor, the World Bank reports.

Agriculture in the Southern Hemisphere will remain a major employer, unlike in the north. In the United States, only 1% of the labor force can produce enough food for the entire population and export a surplus as well.

In contrast, 45% of the world’s labor force is involved in agriculture, according to the World Bank. By the year 2010, the total is expected to be 40%--still high due in part to population growth and the slower spread of technology in poor countries.

Global Trends

Worldwide, six factors reflect the upheaval in the job market in both north and south.

* Technology: This has rendered an array of jobs obsolete, streamlined others and created a new generation of techies. It has also produced alarmist predictions. In his book “The End of Work,” Jeremy Rifkin warns that wealthy nations will have almost no need of workers--in both blue- and white-collar jobs--in the next century.

The auto industry, once labor intensive, now makes widespread use of robotics and computers, sharply reducing the need for workers. Computer programs can also now diagnose some human maladies, while robots are under development in California to perform hip replacements.

Other observers disagree on the technological trends. “There’s no reason to believe that this is the end of work. New technology and automation, accompanied by the right government policies, will in the end create more jobs than they will destroy,” Peek said.

The information revolution has already created a host of jobs in cyberspace, from games in “virtual reality” to compilers and programmers of information on the superhighway. The volume of data available is so great that companies are now hiring people just to explore the highway to see what services can be bought and products sold, what databases can be used--and what can be gained from foreign markets.

“Making use of all this information is a job in itself,” Peek noted.

Peru is experimenting with technology to help revive and restore its forests. Video programs will provide training, while computers will coordinate where and when to plant what trees. Lower overall program costs are expected to make possible more reforestation and more jobs.

* Globalization: The new mobility of capital and goods is rapidly breaking down barriers, creating unusual twists in both jobs and markets.

South Korean companies have set up electronic and textile factories in Central American “export processing zones,” creating jobs in countries such as Honduras and the Dominican Republic. Products are exported to Europe and the United States, but not back to Asia.

Globalization, however, does not necessarily mean jobs are moving south. Instead, they are being redistributed, economists claim. And both north and south may benefit.

New markets in the south--for major machinery, technology and designer goods--generate jobs and exports from the north. And the low cost of labor-intensive imports from the south holds down prices and inflation in the north, the ILO report says.

The line between north and south has already begun to blur. Chile has a booming new business in kiwi fruit, cultivated from seeds purchased in New Zealand, for export to the United States. The trade has created jobs in agriculture as well as a few kiwi millionaires in a country where the fruit was, until recently, virtually unknown--and still isn’t eaten.

* Gender equality: The gender revolution has transformed the job market, particularly in North America, Europe, Japan and Australia. Although still a long way from equal pay and positions, women in the north have risen to between 45% and 50% of the labor force over the past 20 years, the ILO reports.

By the turn of century, they’ll constitute the majority in the United States and Canada.

The south is now following suit. Women in developing countries are generally making significant headway, albeit for lesser jobs than in the north.

In Thailand, as throughout Asia, women who traditionally worked on the family farm a generation ago typically have daughters working in garment, toy, electronic or appliance production. Technology has helped. Mechanization in Indonesia has reduced the need for women to mill rice by hand.

“The whole nature of production has changed. It’s no longer primarily heavy industry. Manual dexterity and the ability to learn rapidly are critical,” said David Deferranti, a World Bank labor specialist.

“Manufacturing often used to favor men. Now it increasingly favors women.”

* Government restructuring and economic reforms: Millions of workers, from secretaries to engineers, have lost jobs as governments in both north and south have downsized functions and payrolls. Since 1989, the trend has been particularly devastating for workers in Eastern Europe, Latin America and Africa.

Privatization of bloated state-owned companies has also led to large layoffs. Argentina’s transport systems and utilities are being sold off, releasing hundreds of thousands of workers. The railway alone reduced its work force from 100,000 to 10,000. Former civil servants often now rely on menial jobs such as waiting on tables, selling leather goods and driving cabs.

In the private sector, jobs once considered permanent--from furniture design to appliance repair--are increasingly being shopped out to subcontractors.

“There’s an extraordinary trend for companies to contract out work, which changes the entire structure of employment. The corps of white-collar jobs is actually shrinking,” said Jane Armitage, a World Bank specialist on labor.

“This trend can be very troubling, as people’s relationship with work worldwide has been at the root of deeply held societal arrangements and beliefs. If societies used to the traditional ideas of a job and security suddenly find them eroded, then there’s a profound impact on everything from role models to consumer spending patterns.”

* Urbanization and migration: The continuing migration within countries from rural areas to cities, the largest in human history, is expected to add millions of people to the urban job market over the next generation. Many will be unskilled, and their absorption will often be slow. But they will also create demand for jobs in trade, transport, banking, community services and education.

At the same time, economists expect that cross-border migration may actually slow as job opportunities become more mobile.

“The trend will be the other way. People will be able to stay at home because opportunities will be brought to them,’ said Michael Walton, staff director of the World Bank’s upcoming “World Development Report 1995.”

“The bulk of jobs will be created in countries where people now live. Instead of people moving, production will move.”

Educated Indians have long flocked to Europe for jobs. Now, Zurich-based Swissair, one of the world’s top airlines, does its accounting in Bombay.

Workers in Europe’s poorer states--such as Portugal, Northern Ireland and Scotland--have often migrated to the continent’s richer countries for jobs. Now, companies in Germany, Switzerland and France are increasingly contracting or transferring labor-intensive jobs in small industries to their poorer neighbors.

* Part-time work and the informal sector: As unemployment reaches staggering levels, both men and women are increasingly turning to part-time jobs. Between 10% and 20% of all employees in the United States, Germany, Canada, France and Japan work part time. In Holland, a third of all workers are part-timers, almost twice as many as in 1979.

An even bigger trend is people creating their own jobs. Informal jobs are likely to remain common for the next couple of decades, particularly in the south, the source of 95% of the new labor force, economists claim.

Across Africa, about 19 million informal jobs were generated in the 1980s--in contrast with only 2 million jobs in the formal sector, the ILO reports.

In the 1990s, Kenya’s formal sector, mainly small industries and tourism, is creating only about 40,000 jobs annually--at a time when 300,000 jobs are needed each year to accommodate young workers, the U.N. Development Program reports. Kenya’s next five-year development plan expects that more than 30% of new jobs will be in small manufacturing, marketing and service industries that grow out of the informal sector.

The informal sector is also a chief means for women to enter the work force. In the Central African state of the Congo, 87% of trade in the informal sector is run by women, the ILO says.

Meanwhile, in both the United States and Britain, where the wage gap between skilled and unskilled workers is growing, informals make up a growing proportion of the labor force.

In Washington, peddlers hawk everything from perfume to pajamas and from T-shirts to towels at card tables and in covered booths near the White House and on downtown thoroughfares.

Seeking Solutions

The employment crisis is so dire that theorists are rethinking the whole concept of work. “We have to find innovative ways to create new forms of work. Many developing societies have to move away from the Western idea of what a job is,” said Francisco Sagasti, a Peruvian economist.

Peru, where 15% of the labor force is unemployed and another 50% underemployed, is experimenting with alliances combining private-sector goods, state funds and unpaid labor. To provide breakfast for schoolchildren in the northern highlands, for example, the National Nutrition Agency puts out bids for cereals, wheat and milk from private industry. Women in grass-roots volunteer groups distribute the food.

“In the West, workers get income and benefits from their labor. This arrangement of alliances involves no salary, but people are also exchanging their services for goods,’ Sagasti said.

As the world’s job market goes through upheaval, flexibility and agility will be the keys to survival.

“Job growth is going to be unpredictable, so employers and employees need to be able to switch from what are the slower-growing areas this year to something else next year. They need to recognize where markets are moving and be responsive, quickly,” said Deferranti, the World Bank specialist.

“It means a totally different way of thinking and working. So far, most people aren’t moving fast enough.”

Education is the key. Studies show, for example, that farmers with no more than a grade school education still have higher yields than those with no education.

“Through education,’ Deferranti said, “people learn how to change or adapt to the environment.”

Region by Region: Employment in the ‘90s

WESTERN EUROPE, UNITED STATES, JAPAN: Job creation isn’t matching the pace of economic growth. Most industrialized countries face double-digit joblessness. U.S. unemployment rates have dropped, but new jobs often pay less, require fewer skills and are less secure.

EASTERN EUROPE: Millions of jobs are being eliminated during the transition from a controlled economy to free markets, with few jobs created in their place.

LATIN AMERICA: Rapid population growth, migration to urban areas and increasing female employment have created growing demand at the same time that states are cutting back public-sector jobs. Most new jobs are in the informal sector.

MIDDLE EAST, NORTH AFRICA: Declining oil revenues and burgeoning populations mean even rich governments can no longer guarantee jobs for their own college graduates, much less the millions from poorer Mideast countries they once absorbed.

SUB-SAHARAN AFRICA: More than half of non-agricultural jobs are provided by the state. But heavily indebted governments can’t raise wages of those they employ, much less absorb the huge labor force coming of age. More than 60% of the urban labor force is in informal sector.

ASIA: In East Asia, rapid economic growth has helped create a growing array of jobs in the developing world’s most hopeful region. But in South Asia, vast numbers of new jobs are needed to accommodate high birthrates, urban migration and women joining the labor force.

SOURCES: “The Employment Challenge: An Agenda for Action” by the U.N. Development Program; “World Unemployment 1995” by the International Labor Organization.

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Jobs on the Move

The structure of employment has changed worldwide since 1965, but the shifts are most dramatic between different types of economies.

% of workers employed by sector

* WORLD

1965

Agricultural: 57%

Industrial: 19%

Services: 24%

1989-’91

Agricultural: 48%

Industrial: 17%