September 15, 2003

I start this article with a little bit of trepidation because this topic is huge. Not only is this topic huge, but it is fraught with pitfalls and sidesteps. The best way to talk about the new world of work is to try and talk about the old world of work. The old work world was a world that was perceived ( note the world "perceived" ) as a place where if you got a good education that would serve you well. It was a world where if you got a "good" job with benefits and worked hard, your work would be recognised by your employer and you would be rewarded with raises, promotions and generally a whole bunch of "attaboys". With this situation you could plan your life, get into debt for a home, toys and other assorted goodies and live the good life with a job well done and in a world of security. Sounds good ... not sure it was all that nice but there was a certain "understanding" between employee and employer.

Then came the new world, the world of downsizing, "rightsizing", wage rollbacks, layoffs, contracting out, and other assorted assaults on the wage earner. Suddenly, you start to hear about people who had the good paying benefit type jobs having to work for half as much to support their families as they were downsized. Some people now work 2 jobs just to make ends meet, or to have some chance of getting ahead.

What happened?

Lets take a quick look at the past 30 years and the way the economy and industry responded to downturns in the economy. In the early 1970's North America, and much of the world went into a recession. Industry responded by laying off workers until demand picked up again and then recalled those workers. Employment (unemployment) insurance supported layed off workers as it was intended. This happened again in the later 1970's and the layoff and recall process worked again for companies and workers. In the early 1980's a similar recession happened, but something different happened to certain industries and the workers in those industries, the workers got layed off, but they were not called back. Employment insurance ran out, workers stayed on longer than ever. Governments started cutting back on benefits provided because the original concept was to provide help for short term periods, not for long term displacements.

Resource industries like forestry, mining, and some manufacturing jobs disappeared replaced by equipment upgrades, technological gains, or outsourcing to other countries. The economy shifted, restructured and shed certain types of jobs, especially low skilled or higher paying semi-skilled jobs. The economy developed and grew a demand for trained higher skilled workers that could operate the new equipment industry was using and that invention that took over - computers.

Another recession happened in the late 1980's and again jobs were shed never to come back. By the early 1990's corporate response to drops in demand in North America was quick, resulting in quicker downsizing and faster technological upgrades and further outsourcing. Profits soared, new jobs were developed in information technology and the dot com boom grew into the huge bubble it became.

Now, after the bubble, companies almost respond instantly to decreased demand by reducing workforces and outsourcing. The relationship of the worker and the employer has changed. That implicit agreement that was one of loyalty to the employee in exchange for loyalty and hard work by the employee has changed.

Author Stephan Pollan who wrote "Die Broke" says that this change, also changes the nature of what the employee (and employer) should expect from each other. Mr. Pollan indicates that the employee should become more mercenary in their view of employment and be always on the lookout for a better deal, as regardless of how good you may be as an employee, you may be downsized at any moment. Why stick around if it doesn't pay to do so? So he suggests that a worker always be ready to move if the payoff is right. He also suggests that moving out may be better than moving up in an organization.

I think that there is something to what he is saying. I think the world of work has changed in that I have never known so many people that have more that one job, or a home business. Also, people's attitude towards work is very different, people who used to love their job now hate it. More work has been piled on to fewer people. People have the highest levels of personal debt seen in years. So, as a result, people have to work at what they don't like to service that debt.

This is creating a very unhappy situation. On top of all this we have had the stock market collapse, 9/11, Iraq, SARS, Mad cow, West Nile virus and various other calamities.

What does the future hold? I don't know, but when the baby boomers start to retire from now until 2012 there will be a halving of the number of new people entering the workforce. This will impact the nature of the labour force. It will be interesting to see how the impact of the changed understanding of the workforce affects the ability of companies to attract and retain skilled employees over the next decade. It will also be interesting to see if the "new" employee, the same employee that has been downsized several times, will “buy into” a work environment where suddenly companies are providing incentives and promises to entice workers to come and stay. Will employees of the future believe it? Or, will they continue to see security as having that second job, or that home business, and not devoting their lives to their employers as employees have done in the past? Having multiple sources of income is the avenue by which employees seem to be seeking some measure of security now. Will this persist?

I will also be watching how the companies I invest in are dealing with labour issues. I remember when McDonalds was having trouble finding good help in the later 1990's and had to pay higher wages and provide incentives in some regions to find workers due to labours shortages. What is going to happen when the labour shortage is everywhere?