Employment and Working Conditions

At world level, the TEM sector as a whole grew moderately in production and employment throughout most of the 1980s, contracted in 1990-93, and began to recover very slowly and unevenly in 1994-95. This general trend reflects mainly the experience of the OECD countries. Several developing countries, mostly in Asia, performed differently. Some parts of the sector fared better than others.

The aerospace industry has been the most depressed, with large employment losses caused by disarmament and difficulties of conversion from military to civilian production in the low-growth economic environment which has prevailed in 1990-95. Even the non-military aircraft and aero-engines segments of the industry were hit by a slump in air transport in 1990-93 and a resulting oversupply of aircraft available for leasing; their prospects look much better for the late 1990s due to increasing air traffic volume and the ageing of current aircraft.

The shipbuilding industry experienced a long decline from the first oil shock (1973) to about 1988. Plant closures, rationalization and technological change led to a steeper fall in employment than output. The industry has since been recovering, due to a substantial rise in seaborne trade volume and a rising demand for new and larger ships to replace an ageing fleet. However, this recovery at world level has been largely concentrated in a few middle-income countries, whereas the Western European countries alone lost some 400,000 shipbuilding jobs between 1975 and 1990.

The railway equipment industry has had a long decline, owing to competition from other modes of transport. Conditions have improved in recent years as a result of the modernization of many railways and the gradual introduction of rolling stock for combined transport.

The automotive industry has faced excess capacity and depressed sales revenues since about 1990, leading to cost cutting and price competition and, thus, to lower profits and investment. The most likely scenario for the second half of the 1990s includes continued stagnation to minor recovery in the OECD countries, very slow growth in Latin America due to increased imports resulting from trade liberalization, moderate growth in Central and Eastern Europe, and continued high growth rates in South-East Asia.

The aerospace and related armaments industry will continue to face manpower difficulties in conversion, as many of the workers affected have the wrong skills, are too specialized, too highly paid and too old to find new jobs. They often need special retraining schemes or self-employment assistance programmes. In some regions of the United States and the former Soviet Union, higher investments than those made so far seem to be required for retraining the affected workforce, and for containing the social dislocations arising from the shut-down of obsolete plants and the shedding of surplus labour.

The generally unfavourable trend in recent years for the TE sector as a whole and, in particular, for the OECD countries, has not mixed well with rising international competition and increased opportunities for outsourcing and relocations that have emerged through the "globalization" process. For a long time, it was believed that the high quality of jobs and working conditions in the TE sector were largely protected by the technological supremacy of the industrialized countries. Now, however, the liberalization of once-protected markets and the increased mobility of enterprises are forcing radical changes in this view. The high capital-intensity of the TE industries and the concentration of markets in the OECD countries restrain companies in relocating existing plants. But to reduce costs, even some of the technologically most advanced companies (such as Porsche, Mercedes Benz, McDonnel-Douglas and Boeing) have been moving jobs from their home countries to middle-income countries through outsourcing. They are also investing in new plant capacity in such countries, to ensure access to the markets that are growing the most.

Low growth rates of output, combined with increased opportunities for relocation, have restrained employment expansion in most TE industries in the OECD countries. This so-called "jobless growth" has, in general, implied increased hours of work and more diversified patterns of employment. At the same time, independently of output growth rates, the TE industries have been increasingly adopting flexible schemes in working time and work rules. They have also introduced such production and management techniques as "lean production", just-in-time, and total quality control. In such ways, the TE sector workforce, particularly but not exclusively in the advanced industrialized countries, has been characterized by rising shares of part-time and temporary jobs, held mainly by women. The percentage of women in the TE workforce has grown significantly, but with lower paying jobs than those held previously by men. In several OECD countries and some upper-middle-income countries, workers have made concessions on earnings in order to preserve a measure of job security.

Links to Employment information in other ILO Departments

Small Enterprise Development
- Local Adjustment to Globalization: A Comparative Study of Foreign Investment in Two Regions of Brazil, Greater ABC and Greater Porto Alegre (focusing on the automotive production sector.)