Background

The rise of the service sectors has been one of the most dramatic economic developments of the past few decades, changing the structure of economic activities in industrialized, middle-income and low-income countries alike. These sectors have become the dominant source of employment in the wealthier countries, often accounting for over 60% of all jobs. Much recent employment growth has been in knowledge-intensive work, that undertaken by professional and managerial personnel. Figures from Australia, Canada, Ireland, Japan, the United Kingdom and the United States, for example, reveal that projected employment growth of professional and technical staff, and administrative and managerial personnel outstrips that of all other occupational groups for the last decade of the twentieth century.

Service industries differ from manufacturing and agriculture principally in the fact that they create economic value without creating a tangible product. Their "products" may include such intangibles as convenient access, information, advice, strategic planning, management, financial instruments, or simply customer satisfaction. Many of these intangibles account for much of the value added in such sectors as banking, finance and insurance, business and legal services, accounting and auditing, information processing, advertising and business consultancy. Increasingly, such service functions comprise a significant segment of employment in industry as well.

The emergence of a global economy and the intensified competition which has characterized its spread have affected service sector enterprises more in the past decade than in any previous one. Experience in the banking sector provides a striking example of how traditional, hierarchically structured organizations have adapted to the new demands for flexibility, customer orientation and responsiveness to a changing business environment which many service enterprises face today.

Banking had traditionally been a largely domestic and highly protected sector of national economies, but the rapid deployment of information technology and the liberalization of capital flows led to tremendous growth in international transactions and the interpenetration of banking operations across borders. Heightened competition, both domestically and internationally, have led to a greater awareness of costs and of the productivity gains to be realized from a reorganization of work.

Banking was the first major service industry to be heavily computerized. Initially, the computerization of banking operations led to a rapid expansion in turnover, as new services were offered and new accounts opened. Employment in the sector also expanded rapidly, particularly in data processing functions, but this initial expansion was reversed as the potential of information technology was gradually unleashed. Automation of repetitive tasks led to large-scale staff reductions, particularly affecting low-skilled workers. The employment structure of the sector shifted as lower-tier functions disappeared and new staff with higher educational qualifications were recruited.

The employment effects observed in the banking sector have proved typical of those which have occurred elsewhere, as organizations have reshaped themselves and information technology has come to permeate the working environments. Many large enterprises which were formerly characterized by strong internal labour markets have increasingly adopted a segmented approach to hiring with multiple entry levels. Employers rely more extensively on the external labour market to supply the skill mix needed for professional and specialist jobs; the middle-tier employees undergo extensive reskilling; and those at the lowest skill levels are put at risk.

The new knowledge-intensive jobs that have been created call for higher skill levels and a richer skill mix than ever before. In technically sophisticated business services, such as accounting, management consulting and computer software, support personnel typically account for less than a third of the total workforce. Most employees are university-educated, and an ever larger portion of staff is composed of managerial and professional personnel with advanced educational qualifications. The structural changes occurring in service sector enterprises have directly affected the roles, responsibilities and career paths of managerial and professional personnel. The corporate search for flexibility may involve a redefinition of the firm's objectives. It often entails the paring away of non-core functions, the shedding of staff and their replacement either by automated processes or contingent labour. The breakdown of old pyramid-type structures and the emergence of flat, flexible organizations have led to the compression of management layers and the outsourcing of a number of professional and technical services from independent contractors. These trends have all tended to blur the distinctions between professional and managerial personnel and other workers. In many firms, middle managers have seen their status threatened and their responsibilities redefined as networks replace old command and control-type structures.

Staff are expected to adopt flexible modes of working in a radically different, constantly fluctuating business environment. Horizontal job loading has been one result as middle-tier staff have been assigned to carry out multiple functions within the enterprise. These new multifunctional jobs call for a wider array of professional skills. Multi-skilling is seen as the new norm. Managers and other single-specialty professionals increasingly see multi-skilling as a necessary element in career advancement. It may even prove to be a requisite for employment.

New jobs generated in the service industries are clearly split into those which are knowledge-intensive and those which are not. Knowledge workers and others with highly developed skills have in large measure been able to grasp the opportunities offered by the rapidly changing, increasingly competitive business environment. The reverse is also true: recessions and other economic downturns are affecting white-collar workers to a greater extent than previously. Job security, career development prospects and the long-term value of professional qualifications have all been called into question.

Careers of the future will likely be marked by greater mobility within firms as well as among them. Upward mobility will no longer be simply defined as climbing the corporate ladder, but will increasingly imply changing employers, changing activities and even changing professions. Career patterns will thus become increasingly individualized, with many professionals spending at least a portion of their working life in self-employment. Because professionals will be stretched in new directions, a constant upgrading of professional skills will be seen as necessary for employability, which will increasingly replace the notion of job security.