Impact of flexible labour market arrangements in the machinery
electrical and electronic industries
Report for discussion at the Tripartite Meeting on
the Impact of Flexible labour market Arrangements
in theMachinery, Electrical and Electronic Industries
Copyright ® 1999 International Labour Organization (ILO)
2. Global trends in the sector
International production --international sourcing of components in an integrated production chain -- plays a significant role in the machinery industry (electrical and non-electrical). Across sectors in general, a long-term trend can be discerned towards increased international outsourcing of intermediate production inputs in search of cost and quality advantages. Wide international outsourcing has been especially pronounced in technology-intensive industries, such as computers, motor vehicles, electronics and aerospace, as well as consumer goods such as textiles and clothing.(1) Closer integration of southern countries in the global economy, as reflected in imports of manufactured goods from these economies, is significantly linked with the decline in manufacturing employment that has been observed in virtually all OECD countries in the last 25 years, while intra-OECD trade has only had a minor impact, consistent with the fact that these countries exchange goods with similar factor intensity. Several interrelated forces are at play, although their relative importance remains a subject of much debate: faster productivity growth in manufacturing relative to services, changing natural and human resource endowments and factor prices, outsourcing, capital accumulation in the South and trade liberalization.(2)
2.1. Relocating employment to
low-cost countries
International outsourcing in the manufacture of machinery (electrical and non-electrical) is reflected in the growing share in world employment of countries other than high-income OECD nations, while the share of the former group in total world net output (measured as value added in current US dollars) has fallen. Geographic distribution, however, remains sharply contrasted. High-income OECD countries account for a third of world employment, but over two-thirds of total net output. The shares for various groups of countries, classified by levels of income, are shown in figure 2.1. The employment charts in figure 2.1, however, are not quite comparable with the value added charts with respect to their geographic coverage. Data on value added were missing for several countries, most notably the former USSR, Czechoslovakia and Yugoslavia, which jointly account for about a quarter of world employment. To facilitate comparisons, these countries have been included in the group "others." As a result, the shares in total net output of other regions are somewhat overstated in the charts.
Eastern Europe and Asia have been the main beneficiaries of the shift in the geography of production during this period. Western manufacturers are increasingly producing the lower part of their product range in Eastern European countries, where production costs are low. The Japanese industry is using nearby developing Asian nations in a similar manner to build regional production networks, especially in electrical machinery (inclusive of electronics).(3) At the international level, in 1996, 23 of the top 30 companies in the machine tool industry had operations outside their home country; nine were producing in more than four countries.(4)
Bearing in mind the shortcomings in the geographic coverage of the data, between 1980 and 1992, the latest year for which comprehensive international data are available, total world employment in the sector increased by 12 per cent (4.6 million jobs) and production by 113 per cent (measured as value added in current US dollars). The employment increase was accompanied by an important shift in favour of low-income countries in particular. High-income OECD countries reduced their share in world total employment from 36 to 30 per cent and maintained their share in total net output at 89-90 per cent. Low-income countries increased their share in world employment from 22 to 32 per cent, although their share in net output fell from 3.7 to 2.5 per cent. These figures, which amplify the information in figure 2.1, are reported in table 2.1.
The largest employment loss in the sector, of 832,000 between 1980 and 1992, was registered in high-income OECD countries, consistent with the long-term decline of manufacturing employment in the region. This decline occurred primarily during the economic downturns of the early 1980s and early 1990s. Middle-income countries experienced a decrease in employment over the period of about the same absolute amount -- substantially larger than high-income OECD countries in percentage terms. Conversely, other groups of countries expanded employment over the period.
Table 2.1. Geographical distribution of employment and production
(measured as value added) in the manufacture of machinery
(ISIC 382-383), 1980 and 1992 (per cent of world total)
1
Employment
in the machinery industry (ISIC 382-383, Rev.2) |
Value added
in the machinery industry (ISIC 382-383, Rev.2) (current US$) |
||||||||||
Region |
1980 |
1992 |
1980-92 |
Region |
1980 |
1992 |
|||||
Thousands |
% of total |
Thousands |
% of total |
% change |
Millions |
% of total |
Millions |
% of total |
|||
|
|||||||||||
HIO |
14 348 |
35.9 |
13 516 |
30.3 |
-5.8 |
HIO |
460 254 |
89.3 |
987 823 |
90.0 |
|
HINO |
1 544 |
3.9 |
1 787 |
4.0 |
15.7 |
HINO |
5 796 |
1.1 |
26 183 |
2.4 |
|
MIU |
1 713 |
4.3 |
1 436 |
3.2 |
-16.2 |
MIU |
15 085 |
2.9 |
31 918 |
2.9 |
|
MIL |
2 545 |
6.4 |
2 010 |
4.5 |
-21.0 |
MIL |
15 042 |
2.9 |
24 030 |
2.2 |
|
LI |
8 604 |
21.5 |
14 269 |
32.0 |
65.8 |
LI |
19 123 |
3.7 |
27 926 |
2.5 |
|
OTH |
11 267 |
28.2 |
11 612 |
26.0 |
3.1 |
OTH |
- |
- |
- |
- |
|
Total |
40 021 |
100.0 |
44 630 |
100.0 |
11.5 |
Total |
515 301 |
100.0 |
1 097 880 |
100.0 |
|
|
|||||||||||
Employment
in machinery, except electrical (ISIC 382, Rev.2) |
Value added
in machinery, except electrical (ISIC 382, Rev.2) (current US$) |
||||||||||
Region |
1980 |
1992 |
1980-92 |
Region |
1980 |
1992 |
|||||
Thousands |
% of total |
Thousands |
% of total |
% change |
Millions |
% of total |
Millions |
% of total |
|||
|
|||||||||||
HIO |
7 509 |
29.5 |
6 897 |
25.5 |
-8.2 |
HIO |
252 066 |
88.6 |
507 034 |
91.0 |
|
HINO |
638 |
2.5 |
813 |
3.0 |
27.4 |
HINO |
1 205 |
0.4 |
8 482 |
1.5 |
|
MIU |
955 |
3.8 |
607 |
2.2 |
-36.5 |
MIU |
7 577 |
2.7 |
13 932 |
2.5 |
|
MIL |
1 716 |
6.7 |
1 169 |
4.3 |
-31.9 |
MIL |
8 994 |
3.2 |
12 140 |
2.2 |
|
LI |
6 719 |
26.4 |
10 181 |
37.6 |
51.5 |
LI |
14 649 |
5.1 |
15 820 |
2.8 |
|
OTH |
7 899 |
31.1 |
7 410 |
27.4 |
-6.2 |
OTH |
- |
- |
- |
- |
|
Total |
25 436 |
100.0 |
27 076 |
100.0 |
6.4 |
Total |
284 491 |
100.0 |
557 407 |
100.0 |
|
|
|||||||||||
Employment
in electrical machinery (ISIC 383, Rev.2) |
Value added
in electrical machinery (ISIC 383, Rev.2) (current US$) |
||||||||||
Region |
1980 |
1992 |
1980-92 |
Region |
1980 |
1992 |
|||||
Thousands |
% of total |
Thousands |
% of total |
% change |
Millions |
% of total |
Millions |
% of total |
|||
|
|||||||||||
HIO |
6 839 |
46.9 |
6 619 |
37.7 |
-3.2 |
HIO |
208 188 |
90.2 |
480 789 |
89.0 |
|
HINO |
906 |
6.2 |
974 |
5.5 |
7.5 |
HINO |
4 591 |
2.0 |
17 701 |
3.3 |
|
MIU |
758 |
5.2 |
829 |
4.7 |
9.3 |
MIU |
7 508 |
3.3 |
17 986 |
3.3 |
|
MIL |
829 |
5.7 |
842 |
4.8 |
1.5 |
MIL |
6 048 |
2.6 |
11 890 |
2.2 |
|
LI |
1 885 |
12.9 |
4 088 |
23.3 |
116.9 |
LI |
4 474 |
1.9 |
12 107 |
2.2 |
|
OTH |
3 368 |
23.1 |
4 202 |
23.9 |
24.8 |
OTH |
- |
- |
- |
- |
|
Total |
14 585 |
100.0 |
17 554 |
100.0 |
20.4 |
Total |
230 809 |
100.0 |
540 473 |
100.0 |
|
1 HIO = high-income OECD; HINO = high-income non-OECD; MIU = middle income (upper); MIL = middle income (lower); LI = low income; OTH = others, which for the present purpose include former Czechoslovakia, former Yugoslavia and former USSR. See also notes of figure 2.1. |
|||||||||||
Source: ibid. |
|||||||||||
Between 1990 and 1997, the employment record remained rather poor in both subsectors in high-income OECD countries, but was better in electrical than in non-electrical machinery; the incidence of employment losses was still somewhat higher in the nineties than in the eighties in both subsectors, but more so for non-electrical machinery. Nearly a dozen countries were able to regain or surpass the 1990 levels of employment in one or both subsectors: in non-electrical machinery, in decreasing order, the Republic of Korea, Canada, Ireland, the United States, New Zealand, Norway, Portugal and the United Kingdom; and in electrical machinery, Luxembourg, Ireland, Norway, Finland, Italy, New Zealand, the United States and the Republic of Korea (see tables 2.2 and 2.3). There were signs of a recovery, or at least a respite in the decline, in another four cases (Austria, the Netherlands, Sweden and Switzerland). Thus, between 1992 and 1997, the United States added 411,000 jobs in this sector, to reach a total of 3.8 million employees in November 1997.(5) Strong growth was also registered in the Republic of Korea, which created 117,000 jobs between 1992 and 1995, followed by the United Kingdom with 85,000 jobs and Canada with 14,600 jobs (see table L, The industry in numbers).(6) But this still fails to fully offset the employment loss the high-income OECD countries have experienced during the 1980-92 period. Further, nearly three-quarters of leading firms in the machinery industry expanded employment between 1996 and 1997, according to the Financial Times' Global 500 list (see table 2.4), which ranks companies according to the market value of their shares; however, 44 per cent are American and 33 per cent Japanese.
As a result of job displacements, the share of low-income countries in world employment in 1992 was the largest, at 32 per cent. In the machinery industries in general, low-income countries also created the most employment in absolute numbers; between 1980 and 1992, the number increased from 8.6 to 14.3 million jobs. In 1992, China alone accounted for nearly 30 per cent of world employment, having thus become the largest employer in the sector after several years of steady growth, followed by the countries of the former USSR with 24 per cent and the United States, which accounted for less than 8 per cent. These shares are reported in table 2.5, which provides a comprehensive cross-section for the year 1992 of the data discussed in this chapter (all the variables are expressed in current US dollars and can therefore serve to draw international comparisons; the same set of countries has been used to create the charts shown in figure 2.1). By 1994, however, China had again lost 2 million jobs; the small increase in the manufacture of electrical machinery and electronics somewhat offset the substantial loss registered in non-electrical machinery industries. This trend might continue as foreign investors reassess their investment plans based on past performance, which often fell short of expectations, and on other structural problems; the enthusiasm for Sino-foreign joint ventures has apparently cooled.(7)
Former centrally planned economies of Central and Eastern Europe gained more than 0.3 million jobs between 1980 and 1989, prior to their integration in the world economy, which in the short term was catastrophic for employment and production. In the years following that integration, available evidence indicates that employment in machinery industries more or less halved in most countries of the region: Bulgaria, Croatia, Czech Republic, Kyrgyzstan, Poland, Romania and Slovakia. In Latvia, by 1994, production had dropped to a quarter of its pre-1989 level. In Germany, lay-offs in the engineering industry led to a further employment reduction of 60,000 between 1995 and 1997.(8) Hungary seems to be the only country of the region to have registered a recovery in 1994-95 (see table L, The industry in numbers).
Table 2.2. Manufacture of machinery, except electrical, in high-income
OECD countries (ISIC 382, Rev.2), 1990-97 (1990 = 100)
Production (real value added) 1 |
||||||||
Country |
1990 |
1991 |
1992 |
1993 |
1994 |
1995 |
1996 |
1997 (April) |
Australia 2 |
100 |
96 |
105 |
113 |
- |
- |
- |
- |
Austria |
100 |
95 |
87 |
79 |
79 |
85 |
82 |
81 |
Belgium |
100 |
92 |
81 |
73 |
75 |
81 |
78 |
80 |
Canada |
100 |
90 |
88 |
100 |
129 |
152 |
139 |
137 |
Denmark |
100 |
96 |
98 |
91 |
95 |
101 |
97 |
106 |
Finland 3 |
100 |
73 |
70 |
71 |
82 |
99 |
102 |
112 |
France 4 |
100 |
90 |
82 |
72 |
76 |
78 |
77 |
82 |
Germany (West) |
100 |
95 |
82 |
70 |
70 |
72 |
72 |
72 |
Ireland |
100 |
91 |
100 |
101 |
109 |
151 |
162 |
183 |
Italy |
100 |
83 |
74 |
80 |
86 |
99 |
94 |
96 |
Japan |
100 |
98 |
83 |
73 |
73 |
77 |
82 |
81 |
Korea, Rep. of |
100 |
135 |
131 |
147 |
170 |
198 |
- |
- |
Luxembourg 5 |
100 |
106 |
88 |
80 |
77 |
79 |
87 |
75 |
Netherlands |
100 |
96 |
93 |
88 |
92 |
97 |
102 |
101 |
New Zealand |
100 |
102 |
105 |
- |
- |
- |
- |
- |
Norway |
100 |
96 |
106 |
108 |
112 |
102 |
- |
- |
Portugal |
100 |
79 |
64 |
58 |
55 |
53 |
58 |
69 |
Spain |
100 |
78 |
73 |
67 |
70 |
78 |
77 |
90 |
Sweden |
100 |
82 |
74 |
67 |
76 |
86 |
82 |
81 |
Switzerland |
100 |
97 |
92 |
83 |
83 |
- |
- |
- |
United Kingdom |
100 |
73 |
83 |
83 |
90 |
91 |
89 |
82 |
United States |
100 |
93 |
99 |
107 |
111 |
123 |
133 |
142 |
Employment |
||||||||
Country |
1990 |
1991 |
1992 |
1993 |
1994 |
1995 |
1996 |
1997 (April) |
Australia |
100 |
97 |
90 |
- |
- |
- |
- |
- |
Austria |
100 |
102 |
99 |
94 |
91 |
91 |
- |
- |
Belgium |
- |
- |
- |
- |
- |
- |
- |
- |
Canada |
100 |
79 |
80 |
88 |
98 |
117 |
128 |
145 |
Denmark |
100 |
95 |
94 |
86 |
- |
- |
- |
- |
Finland |
100 |
87 |
76 |
73 |
77 |
85 |
- |
- |
France |
100 |
99 |
95 |
89 |
87 |
- |
- |
- |
Germany 6 |
- |
98 |
93 |
93 |
83 |
- |
- |
- |
Ireland |
100 |
98 |
101 |
102 |
109 |
120 |
125 |
- |
Italy |
100 |
99 |
96 |
96 |
- |
- |
- |
- |
Japan |
100 |
102 |
103 |
98 |
94 |
92 |
91 |
- |
Korea, Rep. of |
100 |
124 |
119 |
130 |
139 |
154 |
- |
- |
Luxembourg 5 |
100 |
99 |
97 |
92 |
87 |
85 |
87 |
87 |
Netherlands |
100 |
102 |
102 |
96 |
96 |
95 |
- |
- |
New Zealand |
100 |
92 |
87 |
89 |
101 |
- |
- |
- |
Norway |
100 |
90 |
93 |
95 |
95 |
100 |
- |
- |
Portugal |
100 |
95 |
94 |
114 |
100 |
- |
- |
- |
Spain |
100 |
98 |
92 |
90 |
90 |
86 |
- |
- |
Sweden |
100 |
89 |
75 |
70 |
69 |
73 |
76 |
- |
Switzerland 7 |
100 |
98 |
91 |
86 |
80 |
80 |
80 |
- |
United Kingdom |
100 |
93 |
89 |
91 |
96 |
98 |
- |
- |
United States |
100 |
95 |
91 |
93 |
98 |
103 |
105 |
107 |
1 Value added in national currency, adjusted with the GDP deflator. 2 Including 383, and since 1993 also 385, but in 1994 series were suspended. 3 Excluding 3825 in 1990. 4 Since 1994, excluding 3825. 5 Excluding 3825. 6 Since 1991, includes East and West Germany. 7 Since 1991, including 384. |
||||||||
Source: Elaborated from OECD, Indicators of Industrial Activity (Paris), various volumes; and the UNIDO database Industrial Statistics, 1997. |
||||||||
Table 2.3. Manufacture of electrical machinery in high-income
OECD countries (ISIC 383, Rev.2), 1990-97 (1990 = 100)
Production (real value added) 1 |
||||||||
Country |
1990 |
1991 |
1992 |
1993 |
1994 |
1995 |
1996 |
1997 (April) |
Australia |
100 |
102 |
107 |
- |
- |
- |
- |
- |
Austria |
100 |
102 |
96 |
94 |
97 |
101 |
104 |
102 |
Belgium |
100 |
94 |
86 |
82 |
- |
- |
- |
- |
Canada |
100 |
93 |
93 |
93 |
102 |
113 |
118 |
128 |
Denmark 2 |
100 |
97 |
93 |
90 |
109 |
118 |
131 |
117 |
Finland |
100 |
89 |
112 |
142 |
188 |
245 |
265 |
301 |
France |
100 |
94 |
90 |
85 |
93 |
97 |
96 |
100 |
Germany (West) |
100 |
101 |
93 |
85 |
90 |
92 |
94 |
98 |
Ireland |
100 |
105 |
116 |
123 |
154 |
212 |
224 |
217 |
Italy |
100 |
92 |
83 |
83 |
84 |
86 |
82 |
88 |
Japan |
100 |
108 |
93 |
91 |
99 |
111 |
119 |
126 |
Korea, Rep. of |
100 |
99 |
101 |
119 |
150 |
175 |
- |
- |
Luxembourg 3 |
100 |
106 |
102 |
77 |
81 |
95 |
90 |
96 |
Netherlands 4 |
100 |
97 |
93 |
91 |
98 |
100 |
101 |
105 |
New Zealand |
100 |
98 |
101 |
- |
- |
- |
- |
- |
Norway |
100 |
92 |
94 |
98 |
104 |
109 |
- |
- |
Portugal |
100 |
92 |
85 |
78 |
75 |
85 |
85 |
90 |
Spain |
100 |
83 |
80 |
81 |
86 |
92 |
91 |
100 |
Sweden 4 |
100 |
92 |
98 |
100 |
124 |
170 |
215 |
223 |
Switzerland |
100 |
90 |
84 |
81 |
83 |
- |
- |
- |
United Kingdom |
100 |
96 |
81 |
80 |
85 |
88 |
87 |
80 |
United States |
100 |
97 |
102 |
109 |
128 |
147 |
159 |
167 |
Employment |
||||||||
Country |
1990 |
1991 |
1992 |
1993 |
1994 |
1995 |
1996 |
1997 (April) |
Australia |
100 |
92 |
85 |
- |
- |
- |
- |
- |
Austria |
100 |
100 |
96 |
91 |
89 |
89 |
- |
- |
Belgium |
- |
- |
- |
- |
- |
- |
- |
- |
Canada |
100 |
84 |
77 |
75 |
76 |
81 |
83 |
87 |
Denmark |
100 |
87 |
80 |
71 |
- |
- |
- |
- |
Finland |
100 |
95 |
82 |
78 |
86 |
107 |
- |
- |
France |
100 |
99 |
94 |
89 |
88 |
- |
- |
- |
Germany 5 |
- |
100 |
95 |
92 |
85 |
- |
- |
- |
Ireland |
100 |
100 |
104 |
108 |
118 |
131 |
141 |
- |
Italy |
100 |
99 |
100 |
101 |
- |
- |
- |
- |
Japan |
100 |
103 |
103 |
100 |
96 |
94 |
91 |
91 |
Korea, Rep. of |
100 |
90 |
87 |
88 |
91 |
97 |
- |
- |
Luxembourg 3 |
100 |
106 |
118 |
124 |
132 |
145 |
156 |
162 |
Netherlands |
100 |
91 |
89 |
76 |
76 |
76 |
- |
- |
New Zealand |
100 |
96 |
88 |
89 |
100 |
- |
- |
- |
Norway |
100 |
100 |
98 |
91 |
106 |
109 |
- |
- |
Portugal |
100 |
105 |
99 |
82 |
79 |
- |
- |
- |
Spain |
100 |
99 |
96 |
95 |
91 |
87 |
- |
- |
Sweden |
100 |
84 |
82 |
68 |
73 |
- |
- |
- |
Switzerland 6 |
100 |
101 |
91 |
88 |
83 |
82 |
81 |
- |
United Kingdom |
100 |
92 |
85 |
76 |
80 |
87 |
93 |
90 |
United States |
100 |
95 |
92 |
92 |
96 |
99 |
100 |
99 |
1 Value added in national currency, adjusted with the GDP deflator. 2 Since 1994, including 385. 3 Including 3825 and 385. 4 Since 1994, excluding 3833. 5 Since 1991, includes East and West Germany. 6 Since 1991, including 385, except 3853. |
||||||||
Source: ibid. |
||||||||
Table 2.4. Machinery and electrical companies in the Financial Times
Global 500, 1996-97
Rank |
Rank |
Company |
Country or area 1 |
Market
capitalization |
Number
of employees |
Sector code 3 |
|||||||
1996-97 |
Year earlier |
% change 1996-97 |
|||||||||||
1 |
1 |
General Electric |
US |
222 748.3 |
239 000 |
222 000 |
7.7 |
541 |
|||||
6 |
10 |
Intel Corp. |
US |
150 837.8 |
48 500 |
41 600 |
16.6 |
551 |
|||||
11 |
16 |
Intl. Business Machines Corp. |
US |
104 119.6 |
240 615 |
225 350 |
6.8 |
531 |
|||||
24 |
27 |
Hewlett-Packard Co. |
US |
72 227.8 |
112 000 |
102 300 |
9.5 |
531 |
|||||
34 |
171 |
Compaq Computer Corp. |
US |
56 585.8 |
18 863 |
17 060 |
10.6 |
531 |
|||||
51 |
52 |
Cisco Systems Inc. |
US |
49 008.4 |
11 000 |
8 782 |
25.3 |
533 |
|||||
57 |
97 |
Ericsson LM |
S |
46 174.0 |
89 391 |
80 338 |
11.3 |
533 |
|||||
62 |
65 |
Motorola Inc. |
US |
42 789.2 |
139 000 |
142 000 |
-2.1 |
551 |
|||||
69 |
51 |
Matsushita Electric Industrial Co. |
J |
38 099.2 |
270 651 |
265 538 |
1.9 |
551 |
|||||
73 |
69 |
Siemens |
D |
37 357.7 |
378 800 |
376 100 |
0.7 |
541 |
|||||
75 |
99 |
Sony Corporation |
J |
37 171.3 |
163 000 |
151 000 |
7.9 |
402 |
|||||
89 |
491 |
Dell Computer Corp. |
US |
32 046.3 |
10 350 |
8 400 |
23.2 |
531 |
|||||
102 |
248 |
Philips |
NL |
29 015.5 |
272 270 |
263 554 |
3.3 |
541 |
|||||
103 |
62 |
Hitachi |
J |
28 998.8 |
330 152 |
331 673 |
-0.5 |
551 |
|||||
108 |
226 |
Nokia |
SF |
28 145.0 |
31 766 |
31 948 |
-0.6 |
551 |
|||||
116 |
170 |
Xerox Corp. |
US |
27 342.0 |
86 700 |
85 200 |
1.8 |
534 |
|||||
122 |
121 |
ABB Group |
CH/S |
26 483.9 |
214 894 |
209 637 |
2.5 |
541 |
|||||
125 |
300 |
Texas Instruments Inc. |
US |
26 147.3 |
59 927 |
59 570 |
0.6 |
551 |
|||||
134 |
133 |
Emerson Electric Co. |
US |
25 554.1 |
86 400 |
78 900 |
9.5 |
541 |
|||||
136 |
173 |
Canon Inc. |
J |
25 294.5 |
75 628 |
72 280 |
4.6 |
534 |
|||||
148 |
160 |
Fujitsu |
J |
23 234.6 |
167 000 |
165 056 |
1.2 |
531 |
|||||
169 |
220 |
Alcatel Alsthom |
F |
21 275.6 |
190 600 |
191 830 |
0.6 |
533 |
|||||
181 |
207 |
Caterpillar |
US |
20 080.0 |
57 026 |
54 350 |
4.9 |
564 |
|||||
186 |
151 |
NEC Corporation |
J |
19 423.0 |
151 966 |
152 719 |
0.5 |
551 |
|||||
190 |
Taiwan Semiconductor |
Taiwan, China |
19 063.1 |
4 117 |
3 412 |
20.7 |
531 |
||||||
208 |
316 |
3Com Corp. |
US |
17 729.9 |
7 109 |
5 190 |
37.0 |
533 |
|||||
209 |
431 |
Westinghouse Electric Corp. |
US |
17 503.9 |
52 945 |
77 810 |
-32.0 |
541 |
|||||
210 |
172 |
General Electric Company |
UK |
17 472.0 |
79 846 |
82 967 |
-3.8 |
551 |
|||||
214 |
Applied Materials |
US |
17 362.6 |
11 403 |
10 504 |
8.5 |
566 |
||||||
215 |
264 |
Sun Microsystems |
US |
17 343.2 |
21 500 |
17 407 |
23.5 |
531 |
|||||
216 |
217 |
Mannesmann |
D |
17 341.2 |
120 467 |
122 684 |
-1.8 |
563 |
|||||
228 |
109 |
Toshiba Corporation |
J |
16 300.1 |
186 000 |
186 000 |
-2.1 |
551 |
|||||
265 |
EMC Corp. |
US |
14 401.8 |
4 800 |
4 100 |
17.1 |
531 |
||||||
281 |
282 |
Deere & Co. |
US |
13 551.0 |
33 919 |
33 380 |
1.6 |
565 |
|||||
288 |
457 |
Rohm |
J |
13 404.2 |
12 614 |
a |
13 739 |
-8.2 |
551 |
||||
322 |
224 |
Kyocera Corporation |
J |
12 406.2 |
40 000 |
31 000 |
29.0 |
551 |
|||||
332 |
427 |
Pitney Bowes Inc. |
US |
12 002.3 |
28 625 |
27 720 |
3.3 |
534 |
|||||
335 |
399 |
TDK Corporation |
J |
11 901.8 |
28 055 |
29 070 |
-3.5 |
402 |
|||||
343 |
392 |
AMP |
US |
11 764.1 |
44 985 |
40 800 |
10.3 |
541 |
|||||
378 |
United Micro Electronics |
Taiwan, China |
10 692.8 |
2 750 |
2 982 |
-7.8 |
551 |
||||||
383 |
Tokyo Electron |
J |
10 461.8 |
6 277 |
a |
5 616 |
11.8 |
551 |
|||||
392 |
145 |
Sharp Corporation |
J |
10 252.6 |
45 117 |
44 789 |
0.7 |
402 |
|||||
393 |
386 |
Murata Manufacturing |
J |
10 218.9 |
4 263 |
a |
4 095 |
4.1 |
551 |
||||
405 |
498 |
Ricoh |
J |
10 027.3 |
12 895 |
13 109 |
-1.6 |
534 |
|||||
428 |
Tellabs Inc. |
US |
9 346.0 |
3 418 |
2 810 |
21.6 |
533 |
||||||
443 |
375 |
Fanuc |
J |
9 095.3 |
2 089 |
a |
2 121 |
-1.5 |
552 |
||||
460 |
Advantest Corporation |
J |
8 874.6 |
1 359 |
1 285 |
5.8 |
552 |
||||||
461 |
Seagate Technology |
US |
8 864.9 |
111 000 |
87 000 |
27.6 |
531 |
||||||
464 |
Sandvik |
S |
8 776.7 |
30 249 |
29 862 |
1.3 |
562 |
||||||
475 |
416 |
Honeywell Inc. |
US |
8 552.2 |
53 000 |
50 100 |
5.8 |
552 |
|||||
480 |
199 |
Mitsubishi Electric Corporation |
J |
8 438.4 |
113 353 |
111 585 |
1.6 |
551 |
|||||
497 |
Clevo |
Taiwan, China |
8 094.2 |
1 500 |
551 |
||||||||
a Parent company account. 3 Sector codes:
Source: Financial Times, Supplement, 22 Jan. 1998, pp. 1-14; and supplementary data provided to the ILO by the Financial Times in a communication of 7 Apr. 1998. |
|||||||||||||
Table 2.5. International comparisons in the manufacture of machinery
(ISIC 382-383, Rev.2),
1992 (current US$) 1
Country or area 2 |
Employment |
Value added
(VA) |
Value
added per employee |
Wages |
Labour's share |
|||||||||
Number |
% of total |
Millions |
% of total |
|||||||||||
High income OECD |
13 516 211 |
30.285 |
987 823.0 |
89.975 |
73 084 |
32 959 |
44.9 |
|||||||
Australia |
109 000 |
10.244 |
5 768.6 |
0.525 |
52 923 |
22 133 |
41.8 |
|||||||
Austria |
142 000 |
0.318 |
7 392.0 |
0.673 |
52 057 |
33 162 |
63.7 |
|||||||
Canada |
238 000 |
0.533 |
13 378.0 |
1.219 |
56 210 |
28 859 |
51.3 |
|||||||
Denmark |
101 952 |
0.228 |
4 737.9 |
0.432 |
46 472 |
34 119 |
73.4 |
|||||||
Finland |
67 300 |
0.151 |
3 571.9 |
0.325 |
53 074 |
27 253 |
51.3 |
|||||||
France |
877 600 |
1.966 |
51 784.2 |
4.717 |
59 007 |
41 438 |
70.2 |
|||||||
Germany (West) |
2 138 259 |
4.791 |
169 322.7 |
d |
15.423 |
79 187 |
37 954 |
47.9 |
d |
|||||
Ireland |
39 505 |
0.089 |
4 951.7 |
0.451 |
125 343 |
24 677 |
19.7 |
|||||||
Italy |
629 096 |
1.410 |
35 554.1 |
3.238 |
56 516 |
40 356 |
71.4 |
|||||||
Japan |
3 220 000 |
7.215 |
291 259.4 |
26.529 |
90 453 |
34 464 |
38.1 |
|||||||
Korea, Republic of |
640 694 |
1.436 |
25 791.2 |
2.349 |
40 255 |
11 964 |
29.7 |
|||||||
Luxembourg |
4 600 |
0.010 |
242.8 |
0.022 |
52 782 |
34 079 |
64.6 |
|||||||
Netherlands |
180 363 |
0.404 |
9 677.0 |
0.881 |
53 653 |
33 424 |
62.3 |
|||||||
New Zealand |
21 075 |
0.047 |
583.8 |
0.053 |
27 703 |
16 571 |
59.8 |
|||||||
Norway |
48 188 |
0.108 |
2 569.5 |
0.234 |
53 322 |
46 437 |
87.1 |
|||||||
Portugal |
50 227 |
0.113 |
1 629.7 |
0.148 |
32 446 |
12 619 |
38.9 |
|||||||
Spain |
233 015 |
0.522 |
11 495.6 |
1.047 |
49 334 |
24 826 |
50.3 |
|||||||
Sweden |
153 637 |
0.344 |
8 443.7 |
0.769 |
54 958 |
31 656 |
57.6 |
|||||||
Switzerland |
269 700 |
0.604 |
15 812.1 |
1.440 |
58 629 |
- |
- |
|||||||
United Kingdom |
937 000 |
2.099 |
49 809.2 |
4.537 |
53 158 |
27 001 |
50.8 |
|||||||
United States |
3 415 000 |
7.652 |
274 048.0 |
24.962 |
80 248 |
32 039 |
39.9 |
|||||||
High income non-OECD |
1 786 587 |
4.003 |
26 182.8 |
2.385 |
31 485 |
14 066 |
44.7 |
|||||||
Cyprus |
1 996 |
0.004 |
41.0 |
0.004 |
20 538 |
11 428 |
55.6 |
|||||||
Germany (East) |
955 000 |
b |
2.140 |
- |
- |
- |
- |
- |
||||||
Hong Kong |
92 500 |
0.207 |
2 471.8 |
0.225 |
26 722 |
11 889 |
44.5 |
|||||||
Israel |
55 000 |
0.123 |
2 718.1 |
0.248 |
49 419 |
33 434 |
67.7 |
|||||||
Kuwait |
5 086 |
0.011 |
71.8 |
0.007 |
14 117 |
6 793 |
48.1 |
|||||||
Macau |
743 |
0.002 |
6.8 |
0.001 |
9 186 |
4 799 |
52.2 |
|||||||
Singapore |
168 528 |
0.378 |
7 022.8 |
0.640 |
41 671 |
13 505 |
32.4 |
|||||||
Taiwan, China |
507 734 |
1.138 |
13 850.5 |
1.262 |
27 279 |
12 648 |
46.4 |
|||||||
Middle income (upper) |
1 435 945 |
3.217 |
31 918.0 |
2.907 |
22 514 |
7 398 |
32.9 |
|||||||
Argentina |
87 241 |
e |
0.195 |
2 849.1 |
e |
0.260 |
32 658 |
e |
14 532 |
e |
44.5 |
e |
||
Barbados |
420 |
0.001 |
5.1 |
0.000 |
12 095 |
6 919 |
57.2 |
|||||||
Brazil |
512 875 |
1.149 |
17 652.0 |
1.608 |
34 418 |
8 486 |
24.7 |
|||||||
Chile |
16 844 |
0.038 |
371.1 |
0.034 |
22 031 |
9 007 |
40.9 |
|||||||
Greece |
19 916 |
0.045 |
714.2 |
0.065 |
35 862 |
13 091 |
36.5 |
|||||||
Hungary |
162 000 |
0.363 |
912.8 |
0.083 |
5 635 |
3 200 |
56.8 |
|||||||
Malaysia |
317 800 |
0.712 |
4 207.8 |
0.383 |
13 240 |
3 899 |
29.4 |
|||||||
Malta |
3 151 |
0.007 |
78.6 |
0.007 |
24 930 |
12 288 |
49.3 |
|||||||
Mauritius |
1 456 |
0.003 |
6.9 |
0.001 |
4 766 |
3 802 |
79.8 |
|||||||
Mexico |
120 722 |
0.270 |
2 219.8 |
0.202 |
18 387 |
6 302 |
34.3 |
|||||||
Puerto Rico |
18 250 |
0.041 |
- |
- |
- |
- |
- |
|||||||
South Africa |
167 000 |
0.374 |
2 772.2 |
0.253 |
16 600 |
11 065 |
66.7 |
|||||||
Trinidad and Tobago |
1 631 |
0.004 |
14.8 |
0.001 |
9 045 |
6 238 |
69.0 |
|||||||
Uruguay |
6 639 |
0.015 |
113.6 |
0.010 |
17 114 |
4 830 |
28.2 |
|||||||
Middle income (lower) |
2 010 324 |
4.504 |
24 030.1 |
2.189 |
13 521 |
2 580 |
19.1 |
|||||||
Algeria |
21 691 |
0.049 |
308.6 |
0.028 |
14 228 |
4 058 |
28.5 |
|||||||
Bolivia |
708 |
0.002 |
4.4 |
0.000 |
6 247 |
1 528 |
24.5 |
|||||||
Bulgaria |
217 100 |
0.486 |
- |
- |
- |
- |
- |
|||||||
Colombia |
38 552 |
0.086 |
432.5 |
0.039 |
11 219 |
2 440 |
21.8 |
|||||||
Costa Rica |
9 353 |
0.021 |
72.1 |
0.007 |
7 714 |
3 416 |
44.3 |
|||||||
Ecuador |
4 876 |
0.011 |
39.0 |
0.004 |
8 002 |
3 389 |
42.4 |
|||||||
Egypt |
70 600 |
0.158 |
291.3 |
0.027 |
4 125 |
1 802 |
43.7 |
|||||||
El Salvador |
648 |
0.001 |
20.4 |
e |
0.002 |
31 420 |
e |
5 057 |
e |
16.1 |
e |
|||
Indonesia |
120 698 |
0.270 |
1 208.1 |
0.110 |
10 010 |
1 188 |
11.9 |
|||||||
Iran, Islamic Rep. of |
75 538 |
0.169 |
1 115.9 |
0.102 |
14 772 |
5 203 |
35.2 |
|||||||
Iraq |
16 000 |
0.036 |
- |
- |
- |
- |
- |
|||||||
Jordan |
1 312 |
0.003 |
22.1 |
0.002 |
16 847 |
4 062 |
24.1 |
|||||||
Morocco |
17 855 |
0.040 |
174.5 |
e |
0.016 |
9 758 |
e |
5 418 |
51.9 |
e |
||||
Panama |
161 |
0.000 |
4.3 |
0.000 |
26 810 |
5 722 |
21.3 |
|||||||
Peru |
15 196 |
0.034 |
232.1 |
0.021 |
15 277 |
4 116 |
26.9 |
|||||||
Philippines |
122 700 |
0.275 |
1 137.8 |
0.104 |
9 273 |
2 804 |
30.2 |
|||||||
Poland |
442 000 |
0.990 |
2 286.4 |
0.208 |
5 173 |
2 485 |
48.0 |
|||||||
Romania |
567 000 |
1.270 |
886.2 |
0.081 |
1 563 |
743 |
47.6 |
|||||||
Thailand |
132 597 |
d |
0.297 |
11 470.0 |
d |
1.045 |
86 503 |
d |
4 091 |
d |
4.7 |
d |
||
Tunisia |
12 463 |
e |
0.028 |
150.0 |
0.014 |
11 743 |
e |
5 429 |
e |
46.3 |
||||
Turkey |
86 876 |
0.195 |
3 608.5 |
0.329 |
41 536 |
10 070 |
24.2 |
|||||||
Venezuela |
36 400 |
0.082 |
565.8 |
0.052 |
15 544 |
4 696 |
30.2 |
|||||||
Low income |
14 269 006 |
31.972 |
27 926.3 |
2.544 |
1 957 |
518 |
25.2 |
|||||||
Bangladesh |
19 615 |
0.044 |
39.6 |
0.004 |
2 020 |
788 |
39.0 |
|||||||
China |
13 280 000 |
29.756 |
23 557.1 |
2.146 |
1 774 |
390 |
a |
21.9 |
a |
|||||
Honduras |
1 223 |
0.003 |
8.2 |
0.001 |
6 699 |
3 129 |
46.7 |
|||||||
India |
907 569 |
2.034 |
3 827.5 |
0.349 |
4 217 |
1 579 |
37.5 |
|||||||
Kenya |
4 250 |
0.010 |
47.8 |
0.004 |
11 247 |
1 952 |
17.4 |
|||||||
Pakistan |
43 698 |
0.098 |
334.4 |
0.030 |
7 652 |
2 634 |
34.4 |
|||||||
Senegal |
464 |
0.001 |
5.1 |
0.000 |
10 959 |
7 434 |
67.8 |
|||||||
Sri Lanka |
3 487 |
0.008 |
24.1 |
0.002 |
6 902 |
948 |
13.7 |
|||||||
Zimbabwe |
8 700 |
0.019 |
82.6 |
0.008 |
9 495 |
2 829 |
29.8 |
|||||||
Others |
11 612 000 |
26.018 |
||||||||||||
Czechoslovakia (former) |
569 000 |
d |
1.275 |
- |
- |
- |
- |
- |
||||||
Yugoslavia (former) |
441 000 |
b |
0.988 |
- |
- |
- |
- |
- |
||||||
USSR (former) |
10 602 000 |
c |
23.755 |
- |
- |
- |
- |
- |
||||||
Total |
44 630 073 |
100.000 |
1 097 880.2 |
100.000 |
||||||||||
a 1986.
b 1989. c 1990. d 1991. e 1993. |
||||||||||||||
2.2. Moving into high-technology employment
The relocation of employment to low-wage countries has been most substantial in the "low-tech" subsectors of the machinery industries. In the OECD, employment has expanded since the 1970s in high-technology, high-wage and science-based manufacturing industries, in sharp contrast with the stagnation in medium-technology sectors and the job losses in low-technology, low-wage and labour-intensive industries. With few exceptions, countries of the region have tended to shift out of the latter type of industries into medium- and high-technology manufacturing employment.(9) Thus, employment expanded rapidly in computers, whereas it declined in non-electrical machinery. But the shares of machinery industries in total manufacturing employment, shown in figure 2.2, declined more frequently in electrical than in non-electrical machinery, although the former represents a smaller percentage change for the OECD as a whole (-0.04 per cent against -0.30 per cent in non-electrical machinery between 1985 and 1994). By 1994, both subsectors accounted for 10.6 per cent of total manufacturing employment in the OECD.
These differences between subsectors of the machinery sector are also apparent in worldwide trends. Between 1980 and 1992, employment growth was more pronounced in electrical machinery (20 per cent) than in non-electrical machinery (6 per cent). Net output also expanded more rapidly in the former group of industries (134 per cent in current US$) than in non-electrical machinery (96 per cent).
Between 1980 and 1992, high-income OECD countries experienced most of their overall employment loss in non-electrical machinery manufacturing (0.6 million jobs, against 0.2 million in electrical machinery). The shift of employment to low-income countries was especially marked in that set of industries, in which they gained 3.5 million jobs. Non-OECD high-income countries were the only other group of countries that also experienced employment creation in non-electrical machinery manufacturing (less than 0.2 million). Conversely, in the manufacture of electrical machinery employment relocation was more diffuse: it grew in all regions, although most new jobs (2.2 million) were again created in low-income countries. Finally, a sectoral shift can be observed in middle-income countries; they experienced a decrease in employment in non-electrical machinery (0.9 million) which was somewhat offset by a small gain in electrical machinery (84,000 jobs). Similarly, the former centrally planned economies of Central and Eastern Europe registered a loss of nearly 0.5 million jobs in the former industries, compensated by a gain of more than 0.8 million in the latter.
The relocation of jobs has accelerated in the 1990s; employment losses have been more frequent in the 1990s than in the 1980s, especially in non-electrical machinery and in high-income OECD countries. This is consistent with the findings of other studies. In the 1990s, the shift in the structural composition of employment (both economy-wide and within manufacturing) has accelerated in almost all OECD countries after a slowdown in the 1980s. The United States was the first G7 country to restructure its manufacturing activities, while continental European countries such as France and Germany are only now beginning to undertake this kind of transformation, which entails large employment shifts between industries.(10)
These interregional shifts, however, mask important variations within groups. In non-electrical machinery industries, the countries that experienced the fastest (annual) employment growth over the 1970-95 period are, in decreasing order, Thailand (13.6 per cent), Singapore (13.1 per cent), Jordan (12.6 per cent) and Mexico (10.6 per cent); and for the OECD, the Republic of Korea (10.7 per cent), Ireland (7.5 per cent) and Norway (2.0 per cent). The highest (annual) rate of job destruction is found in Slovenia (-7.6 per cent), Hungary (-3.1 per cent), Sri Lanka (-3.0 per cent) and the United Kingdom (-2.3 per cent). In electrical machinery, the fastest (annual) growth occurred again in Jordan (12.0 per cent), and in Malaysia (21.9 per cent), Indonesia (16.7 per cent) and Costa Rica (16.7 per cent); and for the OECD, again in the Republic of Korea (10.2 per cent) and Ireland (4.2 per cent), but also Luxembourg (6.2 per cent). Countries that experienced the fastest (annual) rate of job destruction are again Slovenia (-6.6 per cent), in addition to Australia (-3.0 per cent), Chile (-3.1 per cent) and Hungary (-2.9 per cent) (see table Q, The industry in numbers).
2.3. Output continues to expand, especially
in high-income OECD countries
Between 1980 and 1992, net output (value added) increased for all regions (see table 2.1). High-income OECD countries registered the largest absolute increase with a gain of US$527.5 billion at current exchange rates, while their share in the world total remained nearly the same. Non-OECD high-income countries gained $20.4 billion, upper middle-income countries $16.8 billion, lower middle-income countries $9.0 billion and low-income countries $8.8 billion. Growth was strongest in electrical machinery for all groups of countries.
In 1992, the single largest producer was Japan, accounting for 27 per cent of world production in machinery industries, followed by the United States (25 per cent) and Western Germany (15 per cent) (see table 2.4). The early nineties were years of recession. In 1994-95, some countries began to recover. Thus, in high-income OECD countries, in electrical machinery, production adjusted for inflation had surpassed 1990 levels in 11 countries by 1997. Growth was strongest in Finland, followed by Sweden and Ireland. Austria, France, Western Germany, Luxembourg and Spain more or less reached 1990 levels, while Belgium, Italy, Portugal, Switzerland and the United Kingdom were still below them. Expansion was less pronounced in non-electrical machinery. Only eight countries were able to surpass 1990 levels by 1997. Growth was strongest in the Republic of Korea, followed by Ireland and the United States. Again Belgium, Portugal, Switzerland and the United Kingdom, but also Austria, France, Western Germany, Japan, Luxembourg, Spain and Sweden were still below 1990 levels, while Italy, the Netherlands and Norway had more or less recovered them (see tables 2.2 and 2.3).
In the rest of the world, between 1970 and 1995, the fastest (annual) growth in net output for non-electrical machinery was registered in Bolivia (34 per cent, but starting from a low base), Thailand (29.6 per cent), Jordan (22.2 per cent), Singapore (21.4 per cent) and Indonesia (20.1 per cent). Some countries were expanding their production rapidly in both sets of industries. Thus, for electrical machinery, the fastest (annual) expansion occurred again in Thailand (36.2 per cent), Indonesia (25.7 per cent), Bolivia (13.7 per cent) and Singapore (13.6 per cent), as well as Malaysia (23.2 per cent), China (16.3 per cent) and Malta (14.9 per cent).
Although production generally increased between 1970 and 1995, this masks a globally worse performance in the 1990s compared to the 1980s. In spite of some bright spots (see below) net output declined more frequently in the nineties; this was especially the case in non-electrical machinery in high-income OECD countries, consistent with the globally slower growth of these industries and the sizeable relocation of production to the South. A few countries however registered a net loss for the overall 1970-95 period. In these cases both sets of industries were usually affected. In non-electrical machinery, the (annual) decrease was most pronounced in Romania (-26.1 per cent over five years), Brazil (-11.8 per cent), Panama (-5.7 per cent), Sri Lanka (-4.7 per cent), Slovenia (-3.7 per cent) and Israel (-3.2 per cent). In electrical machinery, the (annual) rate of decline was most rapid again in Romania (-20.1 per cent per year), Brazil (-5.6 per cent) and Slovenia (-4.4 per cent), in addition to Chile (-3.3 per cent) and Turkey (-2.6 per cent) (see table Q, The industry in numbers).
2.4. Labour-saving expansionary growth
in high-income OECD countries
With classical patterns of adjustment, output and employment would be expected to move in the same direction, in spite of lags in the adjustment process. Generally, this was indeed the case over the 1970-95 period, especially in the manufacture of electrical machinery and electronics. But output declined less frequently than employment, both in the 1980s and in the 1990s. This reduction in job intensity could be due to rationalization, which seeks to reduce unit labour costs through capital deepening (the capital-labour ratio increases) or to expansionary labour-saving process innovations, which endeavour to increase output and capital widening (the capital-labour ratio remains the same).(11)
There is no agreement, however, on whether new technologies and associated process innovations have an expansionary impact on employment and productivity (see also Chapter 8). The direct labour-saving impact might be swamped by an indirect compensation mechanism that has an expansionary effect on employment. For instance, new technology, in raising productivity and output, may lower prices -- or firms can offer new products, of a higher quality and a wider range, thus improving competitiveness and creating employment. In the past, the introduction of new technologies, in particular information technology (IT), often resulted in a productivity slowdown (a phenomenon known to economists as the Solow Paradox). But this slowdown might be overstated because of time lags in the process of adjustment and shortcomings in measuring productivity (for example a fall in product prices, due to an expansion in the volume of production, will understate productivity increments measured in value). Moreover, factors pertaining to organizational structure, skills, workers' training and managerial abilities are also put forward to explain this apparent contradiction. The institutional context and the organization of firms determine the effectiveness and impact of new technologies and of organizational change itself.(12)
With the present set of data, expansionary labour-saving restructuring would presumably show as an increment in output and a simultaneous reduction of employment. Output (value added) per person would also rise, and labour's earnings could be expected to increase; if not, restructuring would not really benefit workers. Output per person, however, does not actually measure labour productivity, which refers to labour's production on an hourly basis. An increase in output per person might therefore mean either that labour productivity is rising, or that workers work longer hours owing to an increment in overtime and/or a reduction in the proportion of part-time employees in the total labour force.
Patterns pointing to expansionary labour-saving restructuring could be found in several instances for the 1970-95 period. Significantly, it is much more common in high-income OECD countries, especially in electrical machinery and electronics. In these industries, this pattern can be found in Australia, Canada, Finland, Norway, Spain, the United Kingdom and the United States, as well as in Ecuador, Greece and Singapore. Moreover, in the 1990s, real earnings increased rapidly in Canada, Norway, Singapore and Spain. Production and employment indices for 1990-97 reported in table 2.3 reveal that this list could be expanded: the same pattern seems to hold for Austria, Japan, the Republic of Korea, the Netherlands, New Zealand and Sweden; in Ireland, output grew considerably faster than employment.
For non-electrical machinery, during the 1970-95 period, this pattern emerges for Australia, Denmark, Spain and the United States, as well as for Ecuador, Malta and the Philippines. Wages increased substantially in the 1990s in Malta, the Philippines and Spain. In Ecuador, however, they declined in both sets of industries; labour did not benefit from the expansion of output, neither with respect to employment levels nor in terms of earnings. This pattern could also be observed in China although information on wages was not available. Again, indices for 1990-97 reported in table 2.2 suggest that New Zealand should be added to this list.
Available information on hours of work suggests that, among the cases listed above, increments in output per employee over the period can be attributed to rising labour productivity rather than to a longer working week in the following countries: Australia, Canada, Denmark, Finland, Greece, Norway, Singapore, Spain and the United Kingdom, and for the 1990s, Ireland, Japan, the Republic of Korea and the Netherlands. In these cases, average hours actually worked decreased or remained stable, owing in part to an expansion in the proportion of part-time employment in metal manufacturing (with the exception of Denmark), as will be seen in Chapter 6.
Labour-saving expansion, however, is only one type of adjustment. The graphs in figure 2.3 illustrate the diverse range of possibilities. The trend over the period 1985-95 is shown for 24 countries which have been classified by their level of income. Four variables are represented: production (value added), employment, earnings and the share of labour in value added; production and earnings have been adjusted for inflation. Decreasing output per employee shows on the graphs as a narrowing of the vertical distance between the production and employment curves (and vice versa). Strikingly, in Asian countries production has generally grown much more rapidly than earnings. Conversely, in North America and European countries (plus Israel and Japan) no such pattern can be observed, although in North America the gap has widened in recent years.
2.5. Increasing
real wages and
output per employee
Parallel to this expansion of output, real wages also generally increased over the period 1970-95. The growth rate was highest in Bolivia, Pakistan, Chile, Malta, Indonesia, Cyprus, Singapore and Thailand; among OECD countries, the Republic of Korea, Italy and Ireland performed best (see table Q, The industry in numbers). However, there were a few exceptions. The decline of wages was especially pronounced for Romania, Kenya, Mexico, Bangladesh, Panama and Algeria.
As would be expected, the drop in real wages over the period was generally associated with a deterioration in the growth of output, especially for non-electrical machinery, which had substantially relocated employment to low-income countries. Notable exceptions are Venezuela and Ecuador in non-electrical machinery and, in electrical machinery, Costa Rica, Ecuador and Kenya, where output was expanding. Conversely, decreasing output (value added) per person was not associated with any particular movement in real wages, either upward or downward. Moreover, in both sets of industries, output per person increased more rapidly (or fell less) than real wages in just over half the cases. This points to a generally sluggish adjustment of real wages in both directions, although they tended to display more downward stickiness in electrical machinery. As a result, the incidence of wage reductions was nonetheless globally comparable in the 1980s and 1990s, even though output and employment declined more frequently in the latter years.
From 1970 to 1995, in non-electrical machinery industries, output (value added) per person expanded most rapidly in Bolivia, followed by Thailand, Indonesia, Ireland, the Republic of Korea, Malta, Pakistan and Malaysia; and for electrical machinery, in Thailand, followed by China, Malta, the Republic of Korea, Ireland and Indonesia.


The sectoral and regional shifts that were highlighted at the beginning of this chapter are also reflected in the growth patterns of wages and output per person. The relocation to the South of employment in non-electrical machinery industries resulted, between 1970 and 1995, in more rapidly increasing (or less rapidly declining) real wages in these industries, relative to electrical machinery, for lower middle-income and low-income countries; it was generally also associated with a faster increase in output per employee. But in most of these cases employment trends were more positive in the other set of industries (electrical), which globally were growing more rapidly. Conversely, in high-income and upper middle-income countries, wages and output per person were generally increasing faster in electrical than non-electrical machinery, but without any clear link to employment creation.
2.6. Labour's share in value added declines,
especially in the South
Higher real wages do not necessarily imply that labour shares proportionately in the benefits of growth. Labour's share in value added provides an indicator of how these benefits are distributed. These shares have been calculated on the basis of labour's earnings (wages), which are more directly relevant to workers, not on the basis of total labour costs, which comprise all expenditures made by employers on behalf of their staff (the shares here are thus lower than those of the OECD, which are reported in Chapter 7).
As might be expected, labour's share in value added is generally much smaller in low-income countries (see table 2.4); in 1992, it reached 25 per cent, compared to 45 per cent in high-income OECD economies. Lower middle-income countries, however, had the smallest share -- only 19 per cent. Further, these shares differ from one subsector to another. In electrical machinery manufacturing, labour's shares in low-income countries reached about half the levels prevailing in high-income OECD economies, whereas in non-electrical machinery industries they approached OECD levels (see table P, The industry in numbers). The specific gender composition of the two sectors might partly explain these differences: electrical machinery/electronics generally employs a larger share of women (see Chapter 3). These factors probably contributed to the impressive relocation of employment to low-income countries in particular.
Globally, labour's shares tended to decrease between 1970 and 1995, especially in non-electrical machinery. This tendency was most pronounced in low-income countries. In some instances labour was nonetheless able to raise its share in value added, most notably in electrical machinery in high-income non-OECD and upper middle-income countries. In the 1990s, however, the situation globally improved: labour was able to increase its share in value added more frequently than in the 1980s. Similarly, in low-income countries a clear reversal of the tendency became apparent in three cases: Bangladesh and Honduras in both sets of industries, plus Pakistan in electrical machinery. Bangladesh is the only country in this group to report a net increase over the period in both sets of industries. Thus, with respect to wages, as measured by labour's share in value added, labour in the South did not really gain from international shifts in employment.
2.7. "Best performers" ... of yesterday?
Taking account of all four indicators -- output, employment, value added per person and real wages -- the following countries experienced the fastest growth, at least until 1995. In the manufacture of electrical machinery, the best performers were: Ireland, Malaysia and the Philippines. The Republic of Korea can be added to this list, although it lost jobs in the nineties. So can China, for which information on wages is missing, as well as Malta and Indonesia, which experienced a loss of output per person in the nineties. In the manufacture of non-electrical machinery, the best performers were again Ireland, the Republic of Korea, Malaysia and Indonesia, in addition to Singapore. But over the 1970-95 period labour's share in value added decreased in almost all cases. In the 1990s, this share was rising, except in Singapore, and in Malaysia and the Republic of Korea in electrical machinery. This assessment, however, does not account for other (qualitative) aspects of employment.
In 1997, industrial production was still expanding steadily, especially in Indonesia, Malaysia and China. But in early 1998 several of these best performers were still struggling with the aftermath of the Asian crisis and severe devaluations of their currencies in 1997: Indonesia, where hyperinflation is looming, Malaysia, Thailand, the Republic of Korea and the Philippines. As the International Monetary Fund (IMF) put together rescue packages for the Republic of Korea, Indonesia and Thailand, the threat of global deflation seemed to recede and Asian financial markets seemed to be stabilizing. But the long-term impact on trading patterns remained uncertain. With rapidly rising prices for imported production inputs, upon which exports heavily depend, machinery manufacture may experience difficulty maintaining its current production levels. Asian imports in general have declined sharply. Some countries of the region have also reappraised their planned foreign investments in the machinery sector. Conversely, the competitive position of its exports will improve and favour import penetration abroad. This will also benefit main trading partners like Japan, which had transferred much of its production abroad, in electrical machinery in particular. On the other hand, Ireland -- the darling of the European Union -- is predicted to become the ninth fastest-growing economy in 1998 and is therefore considered to be an "emerging tiger".(13)
1. OECD: Technology, productivity and job creation, Vol. 2, Analytical Report (Paris, 1996), p. 144.
2. S. Seager: "Globalization and deindustrialization: Myth and reality in the OECD", in Review of World Economics, 133(4) (1997), pp. 579-608.
3. Japanese Ministry of Labour: Analysis of labour markets (Roudou keizai no bunseki) (Tokyo, 1997) (in Japanese).
4. International Metalworkers' Federation (IMF), Mechanical Engineering Department: Global trends in the machine building industry, IMF-ILO Machinery Industry Conference, Geneva, 26-28 Nov. 1997, pp. 9-10.
5. This figure relates to industries which, in the United States classification, are included under the 1987 SIC Code 35 and 36 (US Bureau of Labor Statistics, Website http://stats.bls.gov/, 1997).
6. M. Dessing and O. Mutter: The machinery, electrical and electronic industries in numbers, Sectoral Activities Programme Working Paper No. 121 (Geneva, ILO, 1998); hereinafter referred to as The industry in numbers.
7. Financial Times, 16 Feb. 1998, p. 2.
8. N. Schmidt: "The development of the German (mechanical) engineering industry and trade union options", Paper presented at the IMF Engineering Industry Conference, Geneva, 26 Nov. 1997, p. 4.
9. OECD: The OECD jobs study: Evidence and explanations. Part I: Labour market trends and underlying forces of change (Paris, 1994); and OECD, Technology, op. cit., p 59.
10. OECD, Technology, op. cit., pp. 54-59.
11. M. Campbell: "The employment effects of new technology and organizational change: An empirical study", in New Technology, Work and Employment, 8(2), Sep. 1993, p. 136.
12. N. Greenan: "Progrès technique et changements organisationnels: leur impact sur l'emploi et les qualifications", in Economie et statistique, 8(298), 1996, pp. 35-37; and OECD, Technology, op. cit., pp. 43-49, 131.
13. The Economist, 17-23 Jan. 1998, p. 104; and Financial Times (21 Jan. 1998, p. 6; 22 Jan. 1998, p. 1; 23 Jan. 1998, p. 5; 12 Feb. 1998, p. 11; 4 Mar. 1998, p. 14).
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