June 24, 2005
Cutting Here, but Hiring Over There
By STEVE LOHR
Even as it proceeds with layoffs of up to 13,000 workers in Europe and the United States, I.B.M. plans to increase its payroll in India this year by more than 14,000 workers, according to an internal company document.
Those numbers are telling evidence of the continuing globalization of work and the migration of some skilled jobs to low-wage countries like India. And I.B.M., the world's largest information technology company, is something of a corporate laboratory that highlights the trend. Its actions inform the worries and policy debate that surround the rise of a global labor force in science, engineering and other fields that require advanced education.
To critics, I.B.M. is a leading example of the corporate strategy of shopping the globe for the cheapest labor in a single-minded pursuit of profits, to the detriment of wages, benefits and job security here and in other developed countries. The company announced last month that it would cut 10,000 to 13,000 jobs, about a quarter of them in the United States and the bulk of the rest in Western Europe.
"I.B.M. is really pushing this offshore outsourcing to relentlessly cut costs and to export skilled jobs abroad," said Marcus Courtney, president of the Washington Alliance of Technology Workers, or WashTech, a group that seeks to unionize such workers. "The winners are the richest corporations in the world, and American workers lose."
WashTech, based in Washington State, gave the I.B.M. document on Indian employment to The New York Times. It is labeled "I.B.M. Confidential" and dated April 2005. An I.B.M. employee concerned about the shifting of jobs abroad provided the document to WashTech.
I.B.M. declined to comment on the document or the numbers in it, other than to say that there are many documents, charts and projections generated within the company.
But in an interview, Robert W. Moffat, an I.B.M. senior vice president, explained that the buildup in India was attributable to surging demand for technology services in the thriving Indian economy and the opportunity to tap the many skilled Indian software engineers to work on projects around the world.
Lower trade barriers and cheaper telecommunications and computing ability help allow a distant labor force to work on technology projects, he said.
Mr. Moffat said I.B.M. was making the shift from a classic multinational corporation with separate businesses in many different countries to a truly worldwide company whose work can be divided and parceled out to the most efficient locations.
Cost is part of the calculation, Mr. Moffat noted, but typically not the most important consideration. "People who say this is simply labor arbitrage don't get it," he said. "It's mostly about skills."
And Mr. Moffat said that I.B.M. was hiring people around the world, including many in the United States, in new businesses that the company has marked for growth, even as it trims elsewhere. The company's overall employment in the United States has held steady for the last few years, at about 130,000.
To foster growth, I.B.M. is increasingly trying to help its client companies use information technology rather than just selling them the hardware and software. So I.B.M. researchers and programmers are more and more being put to work for customers, redesigning and automating tasks like procurement, accounting and customer service.
Yet those advanced services projects will be broken into pieces, with different experts in different countries handling a slice. This emerging globalization of operations, Mr. Moffat noted, does lead to a global labor market in certain fields. "You are no longer competing just with the guy down the street, but also with people around the world," he said.
Such competition, however, can become particularly harsh for workers in the West when they are competing against well-educated workers in low-wage countries like India. An experienced software programmer in the United States earning $75,000 a year can often be replaced by an Indian programmer who earns $15,000 or so.
Most economic studies, including one last week by the McKinsey Global Institute, a research group, have concluded that the offshore outsourcing of work will not have a huge effect on American jobs as a whole.
But looking at job numbers alone, said Joseph E. Stiglitz, a Nobel Prize-winning economist and a professor at Columbia University, understates the potential problem. "What worries me is that it could have an enormous effect on wages, and that could have a wrenching impact on society," said Professor Stiglitz, a former chief economist of the World Bank.
The fact that globalization anxiety about jobs and wages does not extend to executive ranks has stirred resentment among workers. "Maybe the shareholders should look offshore for competitive executives who would collect less pay and fewer benefits," said Lee Conrad, national coordinator of the Alliance@IBM, a union-affiliated group that has 6,500 dues-paying members at I.B.M. "In all this talk of global competitiveness, the burden all falls on the workers."
Education and retraining, most experts agree, is a major part of the answer for helping skilled workers adjust and find new jobs to replace those lost to global competition. For its part, I.B.M. says it spends more than $700 million on training its employees for new jobs within the company, and for those laid off it offers severance packages that include career counseling and reimbursement for retraining.
Even some champions of globalization say the corporate winners should do more to ease the transition of the losers. "The wealth creation clearly has some fallout, and there is a responsibility for it," said Diana Farrell, director of the McKinsey Global Institute.
By one calculation, the cost of softening the blow might not be all that high. For every dollar invested offshore, American companies save 58 cents, McKinsey estimates. And 4 or 5 percent of those savings could pay for a theoretical wage insurance program that would cover 70 percent of the income lost between an old job and a new one, as well as subsidized health care coverage, McKinsey said.
Walter - even the Poles suspended their proposed "constitutional" referendum. Only Luxemburg will go ahead on July 10 >
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"It is clear that, in Mr Juncker's mind (and he was supported by the presidents of both the commission and the European Parliament), there can be only one acceptable outcome of this debate: eventual ratification of the constitution.
But Mr Juncker's arguments are as unrealistic as they are undemocratic. He is clinging to the hope that pressure might be applied to the French and the Dutch to vote again, after a series of ratifications by other EU members. That is surely unlikely. A succession of countries have made clear that they are deferring planned referendums or parliamentary ratifications indefinitely. Denmark, Portugal, Britain, Poland and the Czech Republic have all put their referendums on hold. "
http://www.economist.com/printedition/displayStory.cfm?Story_ID=4109116
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> and Juncker has promised to resign if his tiny country votes "no" - and it may well do just that
According to the last poll before voting, conducted more than a week ago, 55 percent of people questioned said YES and 45 percent said NO - that's in Luxembourg, of course.
nimh wrote:Tomorrow: elections in Bulgaria.
Looks like the Prime Minister who used to be King (really) will be voted out; and the results will instead make it very hard to form a new coalition, with no two combination of parties gaining a majority and no obvious three-party combinations with a majority in sight.
The parliamentary elections in Bulgaria have been won by the Socialist Party with just over 31 percent of the vote. The governing centre-right National Movement Simeon II party of prime minister and former king Simeon Saxe-Coburg received just under 20 percent. The turnout of 53 percent was lower than expected.
Seven parties gained seats in parliament by winning more than the electoral threshold of four percent of the vote. One of them was the new ultra-nationalist party Attack, which won just over eight percent.
Analysts expect negotiations on forming a new government to be difficult. Whoever does form the next government faces the task of preparing the country for possible entry into the European Union, scheduled for 2007.
[Courtesy of
Radio Netherlands]
Well, and it seems that Germany's European policy might change as well - if there really are new elections in October and if they'll get the expected result(s):
Quote:'Bavarian pit bull' aims to be German foreign minister
By Tony Paterson in Berlin
27 June 2005
Edmund Stoiber, the right-wing Eurosceptic Bavarian leader, is in line to become the next German foreign minister if, as expected, the conservatives win this autumn's general election, in a move that would transform Berlin's policies on Europe.
Party sources revealed that the 63-year-old intends to give up his job as Bavarian prime minister after the September election. Mr Stoiber is a fierce opponent of Turkey's accession to the European Union.
Germany's Bild am Sonntag newspaper said he had given a "personal undertaking" to Angela Merkel, the conservative leader, that he would serve in her government if she defeats the Chancellor, Gerhard Schröder. Opinion polls predict that Mrs Merkel's Christian Democrats are on course to win an absolute majority in the election.
For Mr Stoiber, who was narrowly defeated when he stood for chancellor in the 2002 general election, the post of foreign minister would mark a significant comeback. Nicknamed the "Bavarian pit bull", Mr Stoiber is well known for his tough anti-immigration stance, his opposition to European enlargement and above all as the driving force behind conservative attempts to block Turkey's membership of the EU.
In stark contrast to Germany's pro-European political mainstream, Mr Stoiber opposed the introduction of the euro and called for a national referendum on European enlargement. He was also one of the few German politicians to demand that the abortive European constitution be subject to a national referendum.
Mr Stoiber is not a Christian Democrat. He is leader of its smaller Bavarian sister, the right-wing Christian Social Union, a party often viewed with suspicion by CDU members because of its male-dominated, traditional Catholic roots.
As foreign minister he would reverse many of the EU policies espoused by Mr Schröder's coalition of Social Democrats and Greens and put Germany on a far more nationalist course likely to conflict, in particular, with Britain during the second half of its EU presidency.
Turkey could become a major source of friction between the two countries. Tony Blair, who will back American attempts to give Turkey full EU membership during Britain's presidency, is certain to run into stiff opposition to the idea from Germany's conservatives. In her first major interview since she became the conservative candidate for chancellor, Mrs Merkel insisted last week that the EU had reached the "limits of its ability to integrate" as a consequence of its enlargement policies.
However, she added in a reference to Turkey: "We will have to abide by our agreements regarding Romania, Bulgaria and Croatia, but then we will have reached a point where we have to draw the line."
Mr Stoiber has in the past made it clear that he objects to the federalist polices on Europe adopted by Joschka Fischer, Germany's current Foreign Minister, who is a member of the Green Party. "On the economic front, Mr Stoiber is far more interested in a free market, competitive Europe that corresponds more with the British model," said an analyst at Germany's German-French institute.
Mr Stoiber's support for free-market economics in Europe might bring him closer to Britain and its demands for fundamental changes in European policy making.
However, it is doubtful whether he would accept British demands for a radical restructuring of the Common Agricultural Policy that were set out by Mr Blair last week.
A powerful farmers' lobby in Bavaria has persuaded the rank-and-file of Mr Stoiber's Christian Social Union that any unravelling of EU farm subsidy policy should be opposed.
Source
Life inside the maligned "French model" - attractive enough for many Britons to move house.
Quote: Many Britons Opting for Life in FranceAs France and Britain butt heads over which of their social systems is the right one for Europe, it's places like Dordogne that illustrate just how much France might have to lose by adopting a model based on fierce competition.
I don't think the question before France is so much the benefits and effectiveness of its social systems as it is can they sustain it in the face of objective factors such as aging population and insufficient economic growth and external factors such as global competition.
Dont tell any of my fellow citizens I said this (cause they'll kill me) ...but I think the answer to the ageing population, said to make our social system unaffordable once the baby boomers hit retirement age, could/will be renewed immigration rather than dismantling said system.
I suppose, you are right, nimh. (And my opinion can be told since it's known :wink: )
Interestingly, the Brits dont see any difference between Turkey or the Ukraine - they
don't want either of 'em in the EU - by almost exactly the same margins. Romania scores barely better. Least of all, they want Albania or Serbia in the EU; those countries actually score significantly worse than Turkey.
"But amongst other things is not to be forgotten that good peace that he made in this land; so that a man of any account might go over his kingdom unhurt with his bosom full of gold. No man durst slay another, had he never so much evil done to the other; and if any churl lay with a woman against her will, he soon lost the limb that he played with. He truly reigned over England; and by his capacity so thoroughly surveyed it, that there was not a hide of land in England that he wist not who had it, or what it was worth, and afterwards set it down in his book."
Source: The Anglo-Saxon Chronicle recalling (the Norman) King William in its entry for the year of his death 1087
No wonder that the English either put flowers on Harold's thomb at Waltham Abbey or want Norway to become an EU-member. :wink:
nimh wrote:Dont tell any of my fellow citizens I said this (cause they'll kill me) ...but I think the answer to the ageing population, said to make our social system unaffordable once the baby boomers hit retirement age, could/will be renewed immigration rather than dismantling said system.
I agree. Moreover it will likely "just happen' whether the recipient country wants it or not. The evidence suggest, however that this too will unleash the same competitive forces economically.
Quick note on statistics quoted earlier on thread: the EU "big six" (included in poll cited) approved by significant margins an eventual inclusion of Ukraine, and disapproved any inclusion of Turkey.
The negative votes in the UK were much higher for Turkey than for Ukraine.
Margins of error are higher in smaller samples, but strong negatives in large samples are by far better predictors of actual votes than 50-50 positives in polls where nobody has to say anything binding.
To paraphrase the great Disraeli - there are lies, there are damned lies, and then there are statistics, and THEN there is SELECTIVE QUOTATION from statistics.
The poll I just linked in concerned a YouGov / Sky News poll of 2,021 British adults; the margin of error is given as 2 per cent.
nimh wrote:Interestingly, the Brits dont see any difference between Turkey or the Ukraine - they
don't want either of 'em in the EU - by almost exactly the same margins. Romania scores barely better. Least of all, they want Albania or Serbia in the EU; those countries actually score significantly worse than Turkey.
Edit to include detail (relevant) of poll quoted in above
http://www.angus-reid.com/polls/index.cfm?fuseaction=viewItem&itemID=7822
The 3 countries scoring lowest (Russia, Albania, Serbia) haven't applied. Ukraine's eventual application would be backed by voters in most of the large EU countries unlike that of Turkey.
Edit again: the numbers as shown on link include some mistake in the percentages for Serbia.
it was only one bunch of flowers, i think, walter.
but the symbolism was profound, i agree
