You can't treat a skill-force like a workforce

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WHERE will the new jobs come from? The endemic levels of unemployment, particularly on the continent of Europe, and the almost daily announcements of job-shedding by large corporations, have reinforced the perception that shortage of jobs will be an enduring problem through the first part of the next century.

Even countries which appear to be successful in holding down unemployment do so at a heavy cost. Thus in the United States relatively low employment has been achieved at the cost of job security and low wages for the less skilled. In Japan, job security for existing "core" male employees has shifted the burden on to women, part-timers and new entrants to the labour market - unemployment among Japanese graduates is now higher than among British ones.

But while we focus on the problem, we neglect the process. There is much less attention paid to the seismic structural changes taking place in the job market than there is to the consequences that this has for the unemployment statistics. However understandable this is, it is a pity because the more we understand why the labour market is changing, the more likely governments are to frame policies which encourage the creation of jobs, rather than the destruction of them. So a new paper from the British-North American Committee, The New World of Work by Professor Stephen Barley of Stanford University, deserves a welcome. In particular, it explains why the job insecurity of the shop floor has now started to hit the managers too.

The starting point of the Barley thesis is that we are moving back to a job market which is much more akin to pre-industrial revolution times than it is to anything in our own experience. In the 18th century firms (and farms) were organised on a horizontal basis: they brought together a group of people who pooled their skills. The industrial revolution, with the factory system, led to a stratification of organisation - a vertical structure with a chain of command from the boss downwards.

Now, two big forces are slowly changing the organisation of the work back into a horizontal pattern. One is the breakdown of hierarchies into groups of occupations; the other, the growth in the need for highly specialised technical skills.

The two are linked. If you have enormous factories manned by thousands of assembly-line workers, you need a substantial management structure to run the show. But virtually all companies have now slimmed their production and no longer employ armies of factory workers. In some cases manufacturing is sub-contracted out altogether, maybe to firms in the newly industrialised countries of East Asia. Instead firms have had to build up their design and marketing arms, buying in a host of new skills. In management jargon, firms have become "people businesses".

Professor Barley does not put the point quite so bluntly, but these new people cannot be told what to do by an overbearing management. Or rather, when a company seeks to impose a traditional hierarchy, the good people walk out the door. We have seen countless examples of this in advertising and financial services: a company is taken over and the best people promptly leave, taking the business with them.

"Firms," writes Professor Barley, "begin to resemble confederacies of occupations rather than sleek pyramids of control."

You can trace this change in job types by looking at the way in which employment has been changing. The two charts reproduced here show, on the left, what has been happening over the past couple of decades in the UK, and on the right, projected changes in job categories to the end of the century in the US. The striking thing is the similarity. In both cases there is a sharply rising demand for professional and technical staff, and a less marked increase for service, managerial and sales employees. There is a corresponding decline in all other categories, in particular manual and craft workers. Moral: expect more of the structural changes we have recently experienced.

The more we understand these changes and accept that they will continue, the easier it will be to reshape companies, careers and policies to meet these changes. For companies, the horizontal division of labour means that the traditional legitimacy of management will begin to wane: the skills are at the bottom of the organisation among the young technical workers, not at the top. Professor Barley argues that most companies have yet to think about the problems of co-ordinating a diverse group of specialised workers. Even when they try to adopt more collaborative methods, they tend to slip back into hierarchical practices. He suggests that disciplines like medicine and organisations like universities (or even the military) provide better models for management than existing corporations.

People need to think differently about careers, too. Career progression will no longer mean going up a corporate structure, but rather gaining a better reputation as a skilled professional. Once companies understand that the key to their success is retaining skilled people and rewarding them appropriately, and once people understand that career progression will be across organisations and maybe between them, everyone will be happier.

This obviously has implications for training and for unemployment. We have to teach people not just the skills they will need, but also how to plan careers where there is only a weak hierarchy. We teach people how to fill in application forms for jobs, but we don't teach them how to plan a career of self-employment. As for unemployment, we have to recognise not just the problems of low-skilled workers, but also that of redundant managers. There will be many new jobs, but they will be different.

It would be silly to expect a detailed blueprint for policy in a single booklet, and this particular paper does not have a string of answers to the economic and social problems involved. It is helpful, though, to describe the process of change. It would be equally helpful to remind people that once this new world is understood, it can become a much more liberating environment than "command and control" - which is disappearing.

For the change is not all bad. Two points to illustrate this. The first, and much bigger point, concerns the policy makers. To listen to the yah- boo debates of our politicians on unemployment might lead us to think that none of them are aware that there is a fair amount of interesting academic literature on the changing nature of work. If this paper does nothing else, it should remind people that change in the labour market is a subject for serious analysis, not party politics.

The other is a conversation. I was talking recently to a friend, a highly skilled professional worker, whose employer had just carried out a restructuring in a particularly ham-fisted way.

"Well," he said, "the good news is that it won't happen again."

"What do you mean?" I asked, mindful of the fact that this was not the first down-sizing in the company for which he worked.

"Look," he replied, "the managers are dinosaurs. This is the last generation of managers who will even think this way. In 20 years' time the only companies which will survive will be those which are able to manage the talented people much more intelligently."

He is right, of course, though I fear that 20 years seems rather a long time to wait.