Friday, May 09, 2008

Labor day: Time for a reflection (II)

Between the years 1990 -2000, wages increased faster in high skilled occupations, than low skilled occupations. Therefore there is a widening gap between those two labour skill segment with further implications, such as increasing inequality, higher pressure on educational system to improve its ability to respond to labour market requirements, and social tensions between the winners and losers of globalization .-
On the other hand, free trade agreements make capital good, relatively cheaper than labour services, inducing both capital-labour substitution, and deepening the higher skilled labour demand. New technologies are knowledge intensive.
Thus, a side effect of these free trade agreement should a higher productivity level, but higher risk of greater inequality if the proper policies to improve labour skills are not implemented . More so, if we take into account the fact that low wage economies do not necessarily mean a threat to high wage economy ,precisely because the productivity gap associated to skill differential, therefore it is not easy to correct the wage imbalance throughout global market forces.-
A complementary approach ,could be to focus the attention upon the services sector ,and its job creation prospect, assuming that its skill requirement are not too high, compared to the capital intensive sector. In both western Europe and North America, the services sector has experienced the most robust growth ,both in terms of value added and employment. Between 1991 and 2003,for every 1% percentage point of growth in the services sector, employment increased by 0,57% in North America and 0,67% (Global Policy forum, KILM report 2005),in Europe ,which reinforce the labour intensive technology used in services activities, or at least the complementary nature of labour and services activities.-
Women are improving its share of labour participation, getting close to that one of men, although this does not mean women can get to the same jobs - equal wage, mechanism .There is still a wage gap between men and women, which might not be solve in the short run. However, new technologies available will make its way to reduce that gap, as it allows women to compensate time spend at home, using her own firms internal networks support ,to keep the paced with her jobs.-