Presentation to the Annual Conference of the Industry Training Federation, 16 July, 2004, Wellington.
Keywords: Education; Labour Studies;
Economists are not very good at forecasting the future. I look at what I wrote twenty years ago, and realise just how much I got it wrong. Or you might consider that before you is one of the first New Zealand university students to use a mainframe computer, someone who encouraged his children to use ZX81s, who was probably one of the first economists in New Zealand to use a PC (a 186), and who still failed to forecast the ICT revolution.
So let me talk a bit about the past. One of my embarrassments is that I am the only member of my parental family who does not have a ‘ticket’. A ‘ticket’ was the Christchurch working-class expression for having passed an apprenticeship of some kind, or in the case of women (when one thought about them in this context) an equivalent technical qualification. You might think that a university degree was considered of greater significance than a ticket, but the ticket was evidenced that one could coordinate hand and brain (and indeed eye and other senses), whereas a degree only evidenced use of the brain. (I add that today I take pride that my son has rebuilt a car, worked as a mechanic in a mountain-bike shop, and regularly strips and rebuilds computers, despite his professional occupation. His grandfathers, were they here, would take pride in the demonstration of those manual skills too.)
I do not want to focus on apprenticeships, because today industry training has a wider remit. What I want to talk about is the importance of pride. In my youth, being a skilled craftsman was not evidence of failure, but a matter of pride: pride in having skills, of having those skills recognised, respected and rewarded, and of being able to apply those skills as independent human beings for a socially usefully purpose. The most important thing an industrial training program can give a worker is that pride, pride that he or she is doing a good job together with the confidence that he or she can adapt to new circumstances as the job evolves.
Looking ahead this need to adapt is crucial. I remember the pleasure as a student learning the chemical symbol for lead, Pb, was derived from the Latin word plumbum, which is also the root of the term plumber. Today’s plumbers work with many more materials than lead. That leaves a problem for those of you training plumbers. We cannot predict all the materials that future plumbers will use, so you have to teach generic material skills. And a whole lot more besides. Today’s plumbers use computers. I bet they were not a part of their industry training a few decades ago. (As an aside, the way New Zealanders have has seized upon using computers is an tribute to our education system.)
Adaptability relates to every one of your training programs, and not just for plumbers. The training focus must not just be the here and now, but giving the students the generic skills for an unknown future and the confidence to apply them. Why is this adaptability needed, why are jobs change faster than at any previous time in human existence? We can group all the reasons into three categories: technological change; consumer demands; and globalisation.
As I have said, I cant tell you much about the future technology. Even if the rate of innovation of general purpose technologies were to stall, those recently put in place are likely to cause major change for at least a generation, as their implications are developed. Canterbury University economist Ken Carlaw, in a new book which he co-authors, reminds us that it took a couple of decades for manufacturers to realise that when electric motors replaced steam power, they no longer had to organise their factories around a central power generator, but could completely reorganise it according to workflow – hence the assembly line. There are similar rearrangements of the workplace arising from the computer which we can only dimly discern.
The second source of change is consumer demands. Once upon a time provision was on the basis of one size fits all. Today with affluence and increasing social heterogeneity, the customer has diversified wants. These run from non-standard products to accompanying service. I do not expect that trend to change much, although the use of the web is cutting out some middle retailing. That sharpens up the service requirements of those left. Others, tradesmen among them, may have to sharpen up their service needs too.
As well as quality of service, there is a need for improving quality of design. New Zealand tradesmen have not generally been design conscious: the expressions ‘jerry job’ and ‘botch’ were part of the lexicon that I grew up with. But consumers are becoming more design conscious – look around an upmarket furniture or fashion shop, while ‘Lord of the Rings’ was a design job we are greatly proud of. We end could up with design consciousness in some areas, but not others. To avoid the cleavage, and improve export prospects to more design conscious markets, we need to promote design as an integral part of a job.
The third big source of change is globalisation. There is a tendency to see it in terms of particular policies – such as free trade, or institutions – such as the World Trade Organisation. However, it is more helpful to see the closer integration of the world economy as the consequence of the diminishing reduction in the cost of distance. That these falls have been dramatic is easily demonstrated by considering the world centred on New Zealand. One hundred and fifty years ago it took three and more months to sail from Britain to New Zealand – carrying goods, people and information. Changes since then has reduced the shipping time to about three weeks, quartering the effective distance in the world. But people, and light valuable goods can fly to Britain in under two days, a reduction of more than 98 percent. Information can be zipped around the world virtually instantaneously.
That generates an example of the rearranging of the workplace. Today the workflow may not just go from bench to bench or office to office. Outsourcing means it may go from establishment to establishment, and the establishments may not be different towns or even different countries. I happen to have a Marsden Research Grant on globalisation so it is a topic I can go on at some length, but today I want to focus on the implications for industrial training.
What globalisation means, what it has meant for the last two centuries, is that jobs are being relocated, a relocation not just between towns in a country but between countries. The New Zealand economy was built upon such a relocation: of sheep and dairy farms from Britain, following the fall in the costs of distance from refrigeration, steam ships, and telegraph cable.
We have some understanding of the future trends – those which are already underway. Let me illustrate them by reference to China, for it seems likely that Chinese manufacturing is going to set the standard for general manufacturing, that is manufacturing which requires relatively untrained workers. China has a lot of them – mainly on farms in the interior, and the expectation is that they will flow into the Chinese factories on their Pacific Coast, and that probably means there will no significant rise in their real wages for some decades, even though the manufacturing process will get more efficient. Meanwhile China is getting better access to the world markets. It has joined the WTO which gives it lower (most favoured nation) tariffs. and these will come down further as a result of the Doha round trade negotiations. We must expect is to see Chinese manufacturing increase a proportion of the world supply. (And even if they cock up their economy, there are other Asian countries – Indonesia – which will play a similar role.)
Fortunately many of our industries – such as those which will export food and tourist services to the Chinese – will benefit. The future for general manufacturing in New Zealand is less rosy. Basically it can compete only by paying Chinese peasant wages. Some will argue the case for barricading the New Zealand manufacturing market with tariffs and import controls, in effect subsidising New Zealand manufacturing wages by everyone being paid partly at the Chinese wage rate via high priced local products. However, that does help manufacturing exports, because around 30 percent of New Zealand’s exports of goods and services are manufacturing of one kind or another (and that excludes primary product processing such as dairy factories and freezing works). A barricaded manufacturing sector is going to be a greatly diminished one.
This fate is a danger for some of the service industry too, insofar as the ICT revolution makes it possible to supply many services offshore – outsourcing to Bangalore is the parallel most used, but dont forget retain competition from the likes of amazon.com. And if parts of the manufacturing and service sector are poorly functioning, those who provide services to them – the rest of the economy – will suffer too.
What are options? One would be to close down the relevant sectors. The alternative is to shift into those activities which the poor of the world – the ones we symbolise by Chinese and Indians – cannot compete: that is to move out of low wage general manufacturing and tradeable services into the high wage high skill parts of each sector. What we have to do is produce things which the poor low-skilled workers can not or, rather, we have to produce in ways which they can not. That means using our higher level of education and skills in the production process.
Thus the ITOs have a crucial role in the economic strategy, for if we dont upgrade skills we cant run the production processes which pay wages above the Chinese rate. This is not just a matter of raising skills for our current industries, but contributing to the shift towards more advanced industries by providing for their skills too, as current activities get competed out of business.
This approach has to be seen in a context of the current strategy of workplace reform: Smart Enterprises and Smart Workers. An illustration of the approach comes from the education industry. In the early 1990s we tried to improve teaching by putting schools under competitive pressure in the belief that this would raise educational standards. It was an approach riddled with ideology so the outcomes were not properly monitored, but there is no evidence it actually worked, although it did lead to an flowering of schools’ public relations activities. More recently, the government has restrained the competitive dogs of war, and focussed on how the teaching workplace can be enhanced, particularly by changing teacher attitudes and improving teaching practices. What is happening in that workplace reflects a wider change off attitude to the workplace represented by the switch for the narrow legalistic hierarchical approach of the Employments Contract Act to the broader person-centred co-operative approach of the Employment Relations Act. Workers and employers are working together to improve business productivity rather than hoping that external competition and management imposition will do the job for them.
Industrial training is a part of this new strategy, not simply by giving workers the skills the need and will need. By getting them to invest in the work process, they will enhance productivity directly through their better skills and indirectly through their greater commitment. Pride of work is a crucial element in this nexus. The pride in having skills, of having those skills recognised, respected and rewarded, and of being able to apply those skills as independent human beings for a socially usefully purpose. It’s a pride my Dad’s generation valued. We must ensure that his grandchildren’s and succeeding generations respect it as greatly.