ILO Home

See text links
below

Technology and employment in the food and drink industries

Report for discussion at the, Technology and Employment in the Food and Drink Industries

Part 7    

Copyright ® 1999 International Labour Organization (ILO)

7. Summary and points for discussion

Summary

Recent trends

The FD industries have played a significant role in improving global food security. Better processing and packaging technologies as well as efficient distribution networks have prevented much food raw material from being spoilt and wasted. The volume of output of FD products in the industrialized world has grown slowly in recent years due to market saturation, but many companies have managed to increase their turnover by adding more value to their products. Affluence and health concerns have also resulted in the growing consumption of more convenient and nutritional foods. The FD industries in some developing countries achieved a high growth rate in response to a rapid increase in demand for processed foods among middle-class, urban dwellers, the number of whom is rising.

International trade in FD products has increased for a number of reasons. Many FD manufacturers are looking for opportunities elsewhere as their domestic markets are saturated. Many developing countries are trying to develop their food-processing sectors into viable export industries rather than simply exporting agricultural commodities. The gradual removal of non-tariff barriers that had impeded trade in agricultural products has also facilitated international trade related to the FD industries.

Against this backdrop, competition among FD manufacturers for survival or a larger market share has intensified. In addition to competition among themselves, FD firms face increasing pressure from retailers who control shelf space as well as sell FD products under their own label. Retailers can enjoy a greater margin by selling their own-label products, which require little promotion. Despite the FD manufacturers' costly promotional activities, there is no guarantee that their brands will remain popular with choosy and fickle consumers. The retailers' greater margins allow them to invest further in product improvement. Therefore, FD firms can no longer simply consider own-label products to be cheap substitutes for popular brands. In view of the intensified competition from all sides, FD firms have no choice but to become more energetic in developing and marketing the kinds of products that meet changing demand in terms of price and quality.

Technological change

The new technologies that the FD industries have increasingly adopted can largely be classified into two groups. One is the computer-based technology applied to machinery and automated process control devices to ensure efficiency in production and packaging, and accuracy and uniformity in the quality of final products. The labour-saving aspect of this technology has eliminated many repetitive jobs performed by non-skilled workers. The other is food technology, which has enabled the development of new FD products which, because of their taste, nutritional value and shelf-life provide more added value. This has opened up numerous employment opportunities for specialized technicians and researchers.

Eager to improve their competitiveness, many large FD manufacturers invested heavily in the 1980s and the first half of the 1990s in new facilities where automated process control or state-of-the-art machinery was installed. They also built new laboratories or modernized existing ones and allocated large sums for research and development. New machinery and facilities have led to higher productivity and efficiency in the FD industries, making it possible for these industries to produce more products of higher quality with fewer workers.

Impact of new technology on employment

New technology has had a significant impact on employment in many FD companies. FD employment in a number of developing countries expanded as demand for processed FD products continued to grow along with economic development. Employment in the drink industry has generally been affected more seriously than that in the food industry because the former lends itself better to capital-intensive technologies. Low-skilled workers are the ones who have been affected most seriously by new technology as machines tended to dispense with their repetitive jobs. Because of their concentration in low-skilled jobs, many women are among those most affected by new technology.

The FD industries have become increasingly concentrated and are dominated by fewer and more powerful companies which often build their strong positions through mergers and acquisitions. Mergers and acquisitions are often followed by the restructuring of the newly formed companies where non-core activities or non-performing businesses may be sold or closed down and excess capacity shed. New management often concentrates on core activities and seeks to make the overall operation leaner, more efficient and more profitable by further investing in state-of-the-art machinery to take advantage of economies of scale. All these moves have affected many jobs.

FD manufacturers' attempts to recover their investments in the shortest possible periods and to reduce waste have led to growing employment flexibility, for example in plants which are operated around the clock by teams of shiftworkers. Many regular employees have also been replaced by non-regular workers, often on a part-time or subcontracting basis. Flexible employment is often more advantageous for handling seasonal raw materials or seasonal production. Many companies have managed to reduce overtime work and absenteeism through team-based rotational shiftwork combined with a system of annualized hours. Flexible employment can also be beneficial to those workers who wish to combine work with other activities.

The rigid division of labour, giving different categories of workers narrowly defined tasks, has been the traditional form of work organization in many factories. Today, work organization is characterized by fewer hierarchical layers, and workers are expected to have higher and multiple skills as well as to participate fully in flexible, innovative teamwork within more consultative management systems. This has led to the elimination of many middle-managerial and supervisory positions. More companies have now introduced quality control circles (QCCs) and total quality management (TQM) programmes which all workers are expected to participate in to achieve the company objective of improving product quality and reducing wastage. The new form of work organization has led to both job enlargement and enrichment for many line workers who now have more responsibility than before.

In addition to having a certain degree of numeracy and computer literacy, today's workers are required to have the multiple skills necessary to rotate through different jobs in teamwork. They are also expected to perform quality control checks and preventive maintenance work as well as to correct or recover quickly from any machine failures, so as to minimize machine down time and damage to product quality. In addition, teamwork and greater team autonomy require them to have a good sense of judgement, and better leadership and communication skills. Increased knowledge in the area of hygiene and food safety such as the Hazard Analysis and Critical Control Point (HACCP) system and ISO 9000 series standards is also highly recommended.

Impact of new technology on working conditions

New technology has not generally affected the total number of hours of work in many countries, other than the fact that hours of work have become more flexible due to increased shift work or the introduction of annualized hours. When workers in the food and drink industries are compared, those in the latter are generally better paid mainly because they are relatively more highly skilled, in keeping with the technology they use. Although available information shows that average earnings have generally improved for FD workers in recent years, some are dissatisfied with the extent to which their increased skills and responsibilities are reflected in their earnings.

In many companies the continuous rotating shift (CRS) system has eliminated or reduced the payment of a special premium for night work or work on weekends or holidays. Since many plants are now being operated 24 hours a day, seven days a week and 365 days a year, and almost all production workers are expected to take part in the system, the concept of work during special hours or on special days is no longer considered valid by management. However, many workers complain that this system has brought about fragmented family life, displaced daily rest, shortened or destroyed weekends with the family and disarranged meal times, resulting in increased indigestion and insomnia.

New technology has enabled workers to handle many tasks much more safely and to work in a cleaner environment. Many companies have thus reduced the incidence of occupational accidents and diseases, which is reflected in official statistics in some countries. However, the statistics for many countries show that safety and health records in the FD industries are still worse than in most other manufacturing sectors. A high accident rate is costly not only for employers but also for workers, who are increasingly finding themselves as contingent workers with less protection. While new technology might have reduced accidents, an increasing number of cases of stress associated with employment flexibility and insecurity as well as other pressures at work are being reported. Therefore, safety and health issues remain a vital concern for both employers and workers.

Coping with the effects of change

Collective bargaining has undergone considerable change over the past decade in many parts of the world. It has become more decentralized, with an emphasis on plant-level negotiation. Both management and workers generally recognize the need for companies to adopt new technology and restructure work organization for their survival and competitiveness. However, many employers have felt that disputes over demarcation issues were formerly a major impediment to growth and development, and plant-level negotiation has enabled them to more readily upskill their staff by removing any "ownership" of work tasks from a particular union. Trade unions, however, tend to think the real motive behind changes to work organization is to weaken them and their influence over workers.

Before adopting new technology that affects both employment and working conditions, many insist on the need for careful planning and adequate management-worker consultations from the outset. Some assert that a planning period of up to two years is vital, during which equipment suppliers can be evaluated, suitable equipment chosen and installed, staff training provided and workers adapted to changes in responsibilities and work organization. Early consultations are particularly important when changes are expected to result in collective lay-offs. Trade unions are usually involved in consultations, but their involvement is often limited to bargaining on matters of employment and working conditions, rather than on strategic issues such as investment and the choice of technology.

Some EU member countries have made it a legal requirement for large enterprises to establish works councils where management and workers' representatives discuss solutions and alternatives to the repercussions on employment and working conditions of new technology, company restructuring and closures. The European Works Council Directive does not make it mandatory for companies to deal with trade unions, but the major trade union representing FD workers wants to ensure that any European Works Council to be established would include, as a minimum, union recognition, all-European coverage and joint union-management responsibility in the structure and operation of the works councils.

During the process of company restructuring, workers usually seek to negotiate with management to save employment as much as possible through job-sharing, redeployment and secondment. If no such options are possible, attempts are made to obtain the best possible early retirement packages for affected workers. Many non-regular workers, however, are made redundant with no compensation. Workers insist that whether or not to opt for early retirement accompanied by financial incentives should be strictly a voluntary decision.

In view of rapid changes in skill requirements due to technological development, many companies now provide continuous training on and off their premises, often in conjunction with local training institutions, to ensure that their employees are capable of producing quality products efficiently. Higher and multiple skills should also lead to more employment security for workers. Despite the fact that technological trends in the future will demand ever-higher skills, training provided for many workers is still not adequate. In some cases, training is not well-structured or does not lead to the type of job targeted due to still existing traditional job demarcations, for example, along gender lines. While more training opportunities are desired, many workers would also like to see the establishment of improved systems of skill evaluation/certification and job placement that may facilitate their mobility regionally or nationally in view of continued job displacement due to rapid technological change.

Environmental issues

Although the FD industries have not been as polluting as some industries, FD plants have nevertheless contributed to the deterioration of the environment. In view of the fact that environmental damage can result in the contamination of food raw materials that can threaten the viability of the FD industries, FD manufacturers must become extra sensitive to environmental issues.

New technology has contributed greatly to making the workplace and nearby communities cleaner and safer, with energy-efficient machinery and devices that prevent the leakage of various liquids and gases, including dangerous substances. Improved waste water and smoke treatment devices that are installed in many plants today play important roles in environmental control, as municipalities impose increasingly stringent regulations. Biotechnology is also being applied in the area of effluent treatment where naturally occurring biological polymers can reduce biochemical oxygen demand (BOD) in the waste water.

The problem of an ever-increasing quantity of post-consumer packaging waste has also become a political issue. Although FD manufacturers are not the only ones responsible, the waste generated from FD products may be the most visible. In order to reduce the volume of packaging waste that ends up in landfill sites, there have been attempts to collect various materials and recycle them as an energy resource or as raw materials for new products. Many urge the continued use of refillable glass bottles for drink products in order to preserve both the environment and employment, but the use of such bottles is, in fact, not entirely environment-friendly.

New technology is also being applied to packaging materials. Today, metal cans are much thinner and lighter, which means less energy is required for distribution and recycling. New biodegradable materials have also been developed which may be the future answer to the problem of packaging waste. While the panacea to packaging is being sought, municipalities, the FD industries and consumers will have to continue cooperating in the collection and recycling of packaging materials to ensure a cleaner environment for all.

Environmental regulations are enforced by applying fines for violations. However, in some countries charges are often not high enough to offer much of an incentive for compliance. Regulations are also not adequately enforced, particularly on small- and medium-scale enterprises, with smaller companies often claiming that they lack the resources to tackle pollution problems on their own. The number of inspectors is also not adequate in many countries, and some inspectors lack a sufficient degree of technical competence to offer practical solutions and alternative advice to enterprises.

The general public's growing interest in environmental issues itself puts pressure on the FD enterprises to achieve better environmental performance. Although the net effects on employment of environmental protection measures are unclear, intensified efforts to improve the environment have had a positive effect on employment creation, as many companies have now created posts for environmental control technicians. More stringent regulations on packaging waste are also expected to generate employment. However, some fear that the gradual relaxation of the use of refillable glass bottles, for example, will seriously affect employment. Some also point out that the number of jobs created for environmental control will be limited, as such devices will require highly qualified technicians to operate them. Thus, high skill requirements are also being felt in the area of environmental control.

Suggested points for discussion

Technology and productivity

1. What is the scope for cooperation between employers' and workers' organizations in planning for and implementing technological and organizational changes designed to increase competitiveness and productivity, so that they meet the long-term interests of employers and workers in the food and drink industries?

Employment flexibility and new work organization

2. New technology has been responsible for increased employment flexibility and new work organization, both of which have affected the employment of many workers. How can employers and workers' organizations work together effectively to ensure adequate job security? What can governments, employers and workers' organizations do to assist those whose jobs have been most affected by technological change, such as women and low-skilled workers?

3. How should governments, employers and workers' organizations ensure that new entrants to the food and drink industries are appropriately trained in view of changing skill needs?

4. How can teamworking and multiskilling be developed and implemented so that they benefit the FD industries and the workforce?

Working conditions

5. How can governments, employers and workers' organizations ensure that new work arrangements, such as continuous rotating shiftwork, are integrated into workers' normal life patterns in such a way that both employers and workers will benefit?

6. What should employers' and workers' organizations do to ensure that a worker's remuneration is in line with the level of his or her responsibility under a new form of work organization?

7. Despite the fact that new technology has tended to reduce accidents in the FD industries, their accident rate is still one of the highest in manufacturing. How should employers' and workers' organizations tackle this problem?

8. What has been the experience with different forms of worker participation in decision-making at the enterprise level? How can such schemes contribute to the achievement of employers' and workers' separate but related interests in the context of improved competitiveness and increased emphasis on quality food and drink production? What new industrial relations approaches will be required as the FD industries become more global in outlook and operation?

Environmental management

9. What additional steps should employers' and workers' organizations take to ensure that environmental considerations are fully integrated into the activities of the FD industries? How can small and medium-scale enterprises be assisted to incorporate environmental considerations into their operations?

Role of the ILO

10. In order of priority, what measures should the ILO take to assist its constituents in meeting the challenges facing the FD industries and their workforce as technology continues to advance rapidly?

SECTORS | ACTIVITIES | MEETINGS | PUBLICATIONS