Working to rules: Battle for skills born in the USA

The final part of KEVIN TAYLOR's six-part series on the US workplace


Jobs - a lack of them - will be a key issue in this year's American presidential election.

While the US media was full of news in the last quarter of 2003 bemoaning a jobless economic recovery - the longer-term picture is very different.

As the huge population of American baby-boomers starts to retire - the oldest members are currently about 57 - a lack of skilled workers will start to bite.

That, according to the centrist Employment Policy Foundation in Washington DC, will be one of the key challenges facing the American workplace in the early 21st century.

In 2001, the foundation predicted that based on demographic trends and labour-force participation rates, American will face a shortage of 27.9 million employees by 2031.

US firms face fundamental challenges that threaten the viability of the world's richest nation to remain competitive in a global economy. These include:

* Recognising the inevitability of changes in the workplace - the rise of professional and managerial jobs and the decline of blue-collar work. Workplace policies blind to those realities will impede productivity growth and add "burdensome costs".

* Managing change in the diversity of the workforce, which is likely to include increased female and minority participation. Issues include managing language barriers and accommodating religious and cultural differences.

* Keeping the burden of workplace taxes and regulation, and rising health and pension costs, to a minimum to ensure productivity is kept high and costs competitive.

* Closing the skills gap. Technological change and occupational shifts from global competition are creating a demand for higher levels of education and training but the supply is falling short.

Foundation president Ed Potter says obsolete laws governing the American workplace - some dating from the 1930s - need modernising.

The foundation believes existing employment policy assumes all workplaces fit into a hierarchical, command and control structure and that the interests of employers and staff are fundamentally adversarial.

"Right now about 35 per cent of all jobs are managerial or professional jobs. The rest would be more or less blue collar, hourly pay jobs," Potter says.

"But if you look at the jobs that are going to be created over the next 10 years it has almost flipped on its head.

"Essentially we're going from a dirty-fingernail society, to a knowledge-based cognitive-ability one."

He says solutions to the looming labour crisis include immigration and higher workforce participation rates - but the country already has a 63 per cent participation rate.

"We put in more hours of work than any other nation - it's not likely we will do more hours of work - in fact I think the hours will decline."

That leaves productivity increases - and Potter believes it will be difficult to sustain the increases the US has been achieving.

There is continuing concern over the loss of manufacturing jobs, including claims they are not being replaced. But Potter says they are - in the health, education and business services sectors - which pay more but require fundamentally different skills only a responsive education and training system can provide.

Reasons cited for the current stagnant US jobs market include rising productivity allowing firms to do more with fewer staff, continued flight of manufacturing to foreign countries, and soaring employee benefit costs making firms reluctant to hire.

In September it was reported that 26 of the previous 32 months have seen job losses - the worst stretch since 1939. Since 2000, 2.8 million jobs have been lost in the economy.

In an October survey of economists, unemployment was still forecast to hover in the 5.8 to 6.0 per cent range for much of this year despite accelerating economic growth.

However, Potter looks longer-term. He is not alone. A recent New York Times article warned firms ignored the coming jobs crunch at their peril - and those discriminating on the basis of age even in its most subtle forms will regret it.

Philadelphia-based Steven Wall, a senior lawyer and manager of the labour and employment practice at law firm Morgan Lewis, predicts a coming battle for talent.

If New Zealand faces a similar predicament, how much work has been done by policymakers here? How prepared is this country for such a crisis?

* Kevin Taylor visited the US to study employment law after jointly winning the 2002 Business Roundtable Douglas Myers media scholarship.