Is skills development the answer to economic and social upgradation in the Global South? Some reflections on evidence from India

Anita Hammer reflects on the skills debate, and identifies the obstacles to the development of competitive skills ecosystems in the context of the political economy of India.

Skills are considered the answer to economic development and reduction in inequality in industrialised as well as industrialising societies. Not surprisingly, skill development has attracted considerable attention from policy makers in India, e.g. the formation of the National Skill Development Council to coordinate skill development and various public-private partnership initiatives on skill formation. The policy changes in India, evident in the National Skill Development Policy 2009, are in line with strategies elsewhere: skill formation and upgrading has assumed a critical role with increased global competition, either as a means to retain competitive advantage by industrialised economies or to upgrade by emerging economies.

 

India has witnessed an impressive increase in GDP growth over the last two decades. At the same time, it is undergoing a demographic shift i.e. an increase in the share of working-age population in total population. With a working age labour force of 431 million (those aged between 15 and 59 years) in the total labour force of 470 million (NSSO 2009-10), the challenge is employment creation and skills upgrading of the existing as well as growing workforce. The National Skill Development Policy 2009 set a target of 500 million to be skilled by 2022, with the Twelfth Plan (2012-17) target of skilling at least 50 million people by 2016-17. Indeed the fear is that if the skills challenge is not met within the next decade, India may not be able to sustain growth and it may leave large numbers among the increasingly youthful labour force unemployed with all its attendant negative implications for equality and social cohesion (Mehrotra et al. 2013). The key question is: can India remain competitive through its existing patterns of skill formation?

 

The role of skills is particularly emphasised in new industrial regions that are developing in order to attract industry, especially multinational firms. Specifically inserted into global production networks, such regions are often associated with skill development and/or overflow. In policy literature, this has been examined through the concept of skill ecosystems (Finegold 1999) that rests on a certain balance of power between firms, the state, and skilling institutions. My research conducted in the manufacturing firms of one such region in North India during 2014-15 reveals there are considerable institutional barriers to the emergence of a skills ecosystem. Trade unions are excluded from skilling decisions and institutions, and labour is not an actor in a context where post-independence compromise meant that the state represents the interests of labour. For unions, their exclusion takes skills out of their bargaining portfolio further weakening their position.

 

One-sided supply side skilling strategies persist in firms that reinforce the institutional fragmentation within the Indian skilling system as well as the considerable unequal power relations in the labour market. On the one hand, the system of skilling institutions is fragmented between public and private institutions, between centrally certified providers and others that go considerably beyond this and are oriented at the German system. On the other, when it comes to the demand for labour, recruitment decisions always have to be considered against strategies of in-house production vs. outsourcing. Inevitably, long supply chains in the textile and automotive industry draw on the informal economy which, to a large extent, is based on informal skilling practices. Informal workers are /remain weak in the absence of a clear employment contracts, and with limited union coverage and social security.  Because of their weak labour market position, even skilled informal workers cannot bargain for much. These factors combine to entrench disincentives by firms to train or to involve labour in skilling decisions. Only 17% of firms provide training in India. The political economy encourages outsourcing, and thereby further undermines any requirement to engage in skilling.

 

In conclusion, while the government has put forward an integrated and holistic policy, underpinned by the insight of the skills ecosystems literature, the new policy faces severe challenges in a context of fragmented institutional skilling structure and unequal capital and labour relations both nationally and in the region. With over 93% of workers as informal, power relations are skewed in favour of employers. The imbalances between capital and labour do not provide any collective constraints or offer firms any incentives to develop work organisations that require skilling in a coordinated institutional environment. Firms draw their competitive advantage from recruiting from and outsourcing to the informal economy. This is unsustainable in a globalizing world where other destinations may provide the cost advantage to capital that India currently does. No matter how comprehensive a policy, it is unlikely to succeed unless unequal power relations in the labour market are addressed.

 

 anitaAnita Hammer is a member of CROWE and CERC at Leicester Business School, De Montfort University, UK. Her research focuses on the Global South and examines the development trajectories of new industrial regions, changing patterns of work and employment and the role of the informal economy http://www.dmu.ac.uk/work-and-development-in-the-global-south

 

Skills in the age of over-qualification

 

 


Caroline Lloyd and CROWE’s Jonathan Payne summarise their major international research project on skills in service work, recently published as a monograph by Oxford University Press

 

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The service economy, in which most people earn their living, has been central to debates around the future of work. Some see the future for advanced economies in terms of a more ‘knowledge-based’ economy, in which more people can look forward to ‘good’ high skilled, high wage jobs, while others point to new forms of Taylorism, the persistence of low skill, low wage work and labour markets that are becoming increasingly polarized. There are, however, widespread concerns that many countries now face challenges in terms of ‘over-qualification’ and ‘skills wastage’. How then can we make better use of skills that workers already have? What can be done to develop ‘more and better jobs’? And what are implications for the way we think about the role and purpose of education? These are vital questions for anyone concerned with social and economic progress, which we seek to address in our new book, Skills in the Age of Over-qualification: Comparing Service Sector Work in Europe (Oxford University Press, 2016).

Our starting point is that an international comparative approach is vital. Too often national policy debates rein in possibilities by assuming that some jobs are simply the way they are and cannot be redesigned or made better. Comparing jobs across countries can help in terms of highlighting alternative possibilities as well as potential constraints. The specific question we ask in the book is whether particular jobs are different across countries or not, focusing primarily on work organisation and skills, while also taking into account broader aspects of job quality. In doing so, we wanted to build upon existing comparative studies of manufacturing jobs and low wage work to explore these questions in relation to service jobs. Specifically, what role do national institutions, sector dynamics and firms play in shaping how skills are formed and the way jobs are designed?

We focus on three occupations (vocational teacher, fitness instructor and café worker) in three countries (the UK, Norway and France). The jobs correspond roughly to professional, intermediate and entry-level positions, and the countries selected are widely viewed as ‘neo-liberal’, ‘coordinated’ and ‘state-regulated’ economies.  In total, 245 in-depth interviews were conducted across the three countries between 2009 and 2012. These took the form of interviews with key industry stakeholders, along with detailed workplace case studies involving interviews with those doing the job and their immediate supervisors and managers.

The evidence indicates that there are differences in the way that jobs can be designed and that choices are available to organisations in the way they organise work. For example, the inspections and intense managerial monitoring, faced by vocational teachers in England and Wales, are not a feature of vocational teachers’ work in France and Norway. For fitness instructors and café workers a more complex pattern emerges. French instructors are required to be more highly qualified by law, have more autonomy in the job, and yet also face high levels of work intensity. In Norway, the job is unregulated in terms of qualification requirements, while the UK uses a voluntary register of exercise professionals which guarantees minimum entry level qualifications.  Café work emerges as a relatively low skill job, requiring little training, in all three countries. And yet again there are differences, with those in Norway for example having more discretion when it comes to making products.

If you are worker in Norway in any of these jobs you are substantially better paid, even when factoring in differences in the cost of living.  Job security is also different. Vocational teachers in France and Norway are typically employed on secure, full-time contracts, while fitness instructors and café assistants are provided with guaranteed hours and more regular shift patterns. All three groups in the UK are more likely to be exposed to insecure work and involuntary part-time or variable hours’ contracts. There are of course limits to how far some jobs, like routine café work for example, can be redesigned or upskilled. Indeed, the persistence of relatively low skill work suggests that countries may need to think more carefully about the role of education in preparing people for personal development and life in general, irrespective of what jobs they end up doing in the labour market. Countries like France and Norway already provide vocational learners with a wider curriculum of general education compared with that on offer to their counterparts in the UK. Finally, even where jobs are difficult to redesign substantially, there is more scope to improve pay and conditions through higher minimum wages, more extensive collective bargaining and higher out-of-work benefits. Possibilities exist, but realising them requires challenging market-based orthodoxy and, more importantly, concerted action and societal pressure for change.

Caroline Lloyd is Professor at the School of Social Sciences, Cardiff University and an Associate Fellow at the centre on Skills, Knowledge and Organisational Performance. Her research focuses on the relationships between product markets, labour markets, work organisation and skills.

Jonathan Payne is Reader in Employment Studies at CROWE-DMU. His research interests and publications encompass the political economy of skill, vocational education and training policy, the changing meaning of ‘skill’, workplace innovation, and international comparative studies of work organisation and job quality.

The UK labour market and the visible hand of George Osborne.

George Osborne’s 2016 budget appears to have been a much less successful political exercise than his immediate post-election efforts. This is perhaps unsurprising given the contradictions involved in the joint pursuit of austerity, traditional Conservative instincts, and the attempt to manage party tensions on Europe through the mechanism of a referendum on European Union membership at a juncture where populist anti-elite pressures of varying political stripes are widespread and growing.

As an employment relations researcher, contradictions are particularly evident in the labour market sphere. In particular, it is worth thinking about the relations between the legislative attack on trade union freedom of the Trade Union Bill (which coincidentally sustained non-fundamental, but non-trivial damage in the House of Lords on the the day of the budget), the National Living Wage, the continued confusion around the introduction of an Apprenticeship Levy, and the wider approach to political economy of the current government.

Of these, the Trade Union Bill is the simplest to decipher, representing as it does a straightforward continuity with Thatcherism. Nobody with experience of the 1980s and 1990s history of regulation of industrial relations would be particularly surprised that a Conservative government would pursue such policies. In industrial relations terms most initial academic commentary seems to have concentrated on the increased balloting thresholds for strike action, and to a lesser extent on the issue of trade union facility time. Important as these are, it is regrettable that the proposal to lift the ban on using agency workers to replace permanent staff during strikes, which represents a fundamental challenge to the right to strike as understood in ILO conventions, has not taken greater prominence in the debates on and opposition to the Bill.

The National Living Wage and Apprenticeship Levy, however, need somewhat more thinking about. Having worked as a researcher on wage protection at the time that the National Minimum Wage was proposed and introduced by the first Blair government, and witnessed the extent of Thatcherite-Conservative opposition to the “interference” in the labour market that statutory wage protection represents, it is clear that Osborne represents something of a departure here from Keith Joseph.

The current upgrading of the minimum wage, while welcome if taken on its own, does not represent a progressive policy, coming as it does in the context of a shrinking of the benefits system that of course is profoundly regressive. It is also worth noting in passing the “National Living Wage” is nothing of the kind – any basic or minimum income level, however calculated, clearly has to be expressed on a weekly or monthly basis. Very obviously, if sustenance comes from waged labour, then an hourly rate is only as good as the multiplier of how many hours of work are paid for. Given those at the bottom of the labour market are generally on marginal part-time or zero-hours contracts, a vocabulary of “living” wage is not appropriate. That George Osborne is prepared to use this language for political reasons is one thing, but those in favour of redistribution to the working poor should not.

Nonetheless, proposing non-trivial increases to minimum wages, in the context of austerian governance, does represent something of a change of thinking as to how the right goes about shrinking the state. The Thatcherite position of avoiding ‘constraints’ on employers in order to encourage the free market to clear has morphed into a position where the over-riding imperative is that the poor are not sustained by the state, even if this involves what a previous generation of Conservatives would have termed “interference” in labour markets. Whether George Osborne is a convert to established social democratic arguments that increasing minimum wages has positive effects on productivity is unclear. Still, to some extent, austerity seems to have trumped the “old school” brand of neo-liberalism of the Thatcher/Major era.

This is also the case with the apprenticeship levy; essentially, a pay-bill tax on large employers to be dedicated to apprenticeship training, sweetened in the Budget by a government top-up. How this will work, in particular what the resources raised will be used for in an, at-best, confusing system of initial vocational training (see the work of CROWE colleague Jonathan Payne) is unclear. However, some of the motives are not dissimilar to the minimum wage increase; vocational training needs to be improved, and the state does not want to bear the financial or coordination costs, notwithstanding the exceptionally poor degree of coordination between firms on skills and training in the UK. It is worth noting that in my conversations with practitioners aiming to attract foreign direct investment to the UK, it is clear that the idea of a levy has a substantial degree of opposition from mobile firms, including many that do require advanced skills. Again, while individual labour market policies need to be looked at within the context of the overall political economy and distributional policies of the government, it remains interesting that the Osborne strategy does in places require a fairly visible hand.

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Phil Almond is Professor of Comparative Employment Relations at DMU. His research interests are in the theoretical and practical challenges of the governance of work and employment in contemporary global capitalism, with specific expertise on the social relations of multinationals.

Failures and fiascos in public sector outsourcing: will governments never learn?

 

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A review of What a waste: Outsourcing and how it goes wrong.

With increasing numbers of failures and fiascos of outsourced contracts hitting the headlines, the question ‘when will governments ever learn?’ springs readily to mind.  A hard-hitting new book, by researchers at CRESC/Manchester Capitalism, entitled What a Waste: Outsourcing and how it goes wrong have criticised the ‘disastrous’ practice of UK government outsourcing, but argue that the failures and fiascos are effectively pre-designed.  The authors state that ‘there is an overall logic to the process which costs citizens because outsourcing is what happens at the intersection between the political convenience of the (central state) and the opportunism of outsourcing companies and investors’. Outsourcing allows the shift of blame to private sector providers, and government abdicates responsibility for providing underfunded services and ‘toxic activities’ (border control, for example) in favour of private firms with poor management control.

‘The franchise state which exists to award and monitor contracts at the same time strips itself of institutional resources and intelligence previously used to deliver goods and services.  As outsourcing proceeds, the (central and local) state is increasingly disabled in that it no longer has the capability to deliver public services.’

This situation means that giant contractors and the state become bound together in a form of co-dependence and when it goes wrong the blame can easily be laid on outsourcing contractors or the individual public servants who wrote the contract, rather than the government.  Contracts typically cover mundane activities which too often allow profit taking at the expense of the tax payer and the workforce by outsourcers who do not make capital investment or take market risk.

In the last few months there have been a number of failures and fiascos in public sector outsourcing contracts.  In December 2015 a £160m contract between Cornwall County Council and corporate giant BT was scrapped following a High Court ruling.  The 10-year deal, signed in March 2013, was for BT to run IT, human resources and other services for the council. BT tried to fight the Council’s decision to end the contract after only two years but a ruling was made against them stating BT did not provide ‘the service it had promised to the standard it had promised’.  Again in December 2015 an £800million older people’s care contract in Cambridgeshire ended after just eight months because it was ‘no longer financially sustainable’.  These are some of the more ‘mundane’ failures that tend to slip under the radar, not to mention some of the more controversial outsourcing fiascos such as the recent G4S ‘red doors’ for refugees in Middlesbrough or the Clearsprings ‘coloured bands’ for asylum seekers in Cardiff.

What a Waste points out that there have been various experiments around outsourcing in local councils, notably in Birmingham and Barnet.  Barnet was labelled ‘easyCouncil’ by critics that complained services resembled low-cost, no frills airlines such as easyJet.  Other councils, such as Essex, Southampton City, Suffolk and Staffordshire have also taken up the outsourcing model.  However, as they allude to in the book, Northampton County Council (NCC) is taking the process a step further by transferring 3,850 of its 4,000 employees to 4 new dividend-paying service providers which would deliver all the council’s services, including social care for the elderly.  The Chief Executive is pushing through with plans to begin outsourcing the services in a move which he says will make a £148m saving by 2020, though some fear the plan is a step towards privatisation.  Under EU Procurement Law these contracts will have to go out to tender after 3 years, so fears of effective privatisation are well-founded.

The ‘commission-only’ model being adopted by NCC is likely to be increasingly replicated in Conservative-controlled shires and urban areas.  The fact that there is no real reflection as to how these activities will function under this ‘next generation’ council model is evidence to support many of the arguments in What a Waste.

‘The democratic tragedy of the franchise state is that today’s mainstream politicians are not protesting (or even examining) the outcomes of outsourcing but are planning to grant ever more local monopolies from which organised money can take profits (in many cases without the capital investment or revenue risk which legitimate capitalist profit)’.

In a context of austerity, TINA (There Is No Alternative) is brought to the fore in discussions around the need for cuts to local services, and therefore resistance feels muted.  The authors argue that there is an urgent need for resistance around outsourcing as it is spreading though to sectors which should remain under some form of state control:

‘the failure of politicians and policy makers to protest outsourcing has become an urgent matter because the state has outsourced or is now outsourcing services which are part of what we call the ‘foundational economy’ in health, adult care, welfare and security.  Many of these services are or will be used by most families or individuals because the foundational economy is the basis of material security and the infrastructure of civilised life for the whole population’.

The authors of What a Waste argue that government outsourcing should be curbed by politically agreed prohibitions on outsourcing which is not in the public interest.  In an interview for the book one of the authors, Professor Karel Williams, put forward three principles for public sector outsourcing: firstly, no large scale outsourcing in local government where officers and members do not have the expertise to negotiate contracts; secondly, no outsourcing of ‘politically toxic’ services like border controls because government should take responsibility for what it does; and thirdly, no total outsourcing of any important service like provision of care homes because the public sector needs its own expertise.  It seems unlikely that the current government will take heed of any of these principles.

What this book does not offer is a comprehensive strategy for resistance and the ways in which organised groups against outsourcing can fight the plans.  Past experience shows that even where campaigns have had wide levels of support and have made small gains, they have not been sufficient to block major outsourcing plans from going ahead.  A strategy of resistance needs a co-ordinated approach involving multiple groups which means drawing on the different sources of power both in and outside workplaces, organising in the community and through media campaigning and political lobbying.  Two key challenges for building resistance are first, the willingness to act, particularly among local government workers, where a culture of fear may be developed around whose job is ‘at risk’ as a result of outsourcing.  Second, with such campaigns comes the question about the alternatives to outsourcing.  Labour branded its approach to running Lambeth as the ‘John Lewis’ council operating on the basis of mutual and co-operative values. Is this the ‘least worst’ alternative that could be fought for at a local level?

 

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Dr. Heather Connolly is Senior Lecturer in Employment Relations at DMU. Her research interests are in the area of comparative employment relations and trade union strategies in Europe. She is currently working on projects looking at union responses to migration and social inclusion in Europe, and how unions respond to local government cuts and outsourcing in the UK.

 

This post was originally published on the SPERI blog , University of Sheffield, 9th March 2016.