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U.K.: Unskilled Jobs Leaving For Cheaper Foreign Markets

Faced with rising costs and a tangle of regulations, more and more British firms are moving their operations abroad, often to China and Eastern Europe. A new survey by the British employers' organization says "off-shoring" is a "matter of survival" for UK firms and predicts there may be no work for unskilled British laborers within a decade. But the survey also says that British workers need not worry as new skilled jobs are being simultaneously created.

London, 16 November 2004 (RFE/RL) -- For unskilled workers, it's a disturbing trend. But for British businesses, moving their service or manufacturing operations abroad looks increasingly like a necessity.

A new survey by the CBI, Britain's employers' organization, says that nearly one-third of U.K. firms have already moved some operations to countries such as China and India as well as "attractive alternatives" like Poland and the Czech Republic. And a quarter of British firms are also considering so-called "off-shoring" -- or what Americans call "outsourcing."

Dr. Anne Green is a researcher at the Employment Research Institute of the University of Warwick. She said "It's partly to do with labor costs, etc., partly to do with the skills of the people outside of the U.K. I think it's also something to do with getting a presence in new markets. So, I think it's a variety of reasons for it, and it may vary accordingly from one sector to another."
Some 43 percent of young Britons now go on to higher education, compared to just 6 percent in the 1960s.

The survey by the Confederation of British Industry questioned the chief executives of the United Kingdom's 150 biggest firms. It found that 87 percent of them were satisfied with relocating business operations to cheaper labor markets abroad.

Still, some trade union leaders and entrepreneurs are concerned that the U.K. is losing out in the process. CBI chief Digby Jones has predicted that within a decade Britain may well have no more unskilled jobs.

But economist Rachel Griffith believes there is no reason to be alarmed. Griffith is with the Advanced Institute of Management Research (AIMR) and was involved in the CBI report.

"What we often hear when people talk about off-shoring is that jobs are lost to the U.K. to India or something. But, what we are showing in this report is that's only half a picture, because foreign firms often purchase business services from the U.K.," he said. "And, actually, for the U.K. the net effect of this has been positive."

A study by the AIMR has found that hundreds of thousands of jobs have been created in the U.K. as foreign firms have sought to take advantage of British skills in computer services, architecture and corporate recruitment.

Meanwhile, statistics from the British Chamber of Commerce show that young Britons understand that they need to be skilled for the new jobs available to them. Some 43 percent of young Britons now go on to higher education, compared to just 6 percent in the 1960s.

Economist Green believes off-shoring is part of the natural dynamics of a market economy and should not be feared: "I am not saying that I am complacent or not worried -- there are valid concerns about it. But I think it's something that can be very easy to get quite excited and carried away about to say there will be no manufacturing in Britain or there will be no jobs for unskilled people. I think the economy is dynamic in a way that that is rather prescriptive. I don't think it will quite come to that."

For her part, Griffith believes the prediction that unskilled jobs will disappear is misleading. She says the real picture is more complicated -- and more positive as well: "I don't really see that, because, firstly, there are a large number of jobs that simply can't go off-shore. Cleaners, waitresses and waiters, taxi drivers clearly can't go off shore. But, secondly, I think that that statement is made on the presumption that the jobs that are moving off shore are low skill jobs. But, that's not what we see at all. Many of the jobs that are going to India, for example -- Reuters just moved a lot of its financial journalists to India -- are highly skilled jobs. And, many of the jobs that are moving to the U.K. bring both skilled and unskilled [jobs]."

Griffith explains that the survey also urges Britain to adapt to the changes and specialize in other activities: "Well, we can be competitive in other things. I think this is what this is saying. It seems that in business services -- the very much creative industries like advertising and technical consultancy -- the U.K. seems to be very good at. Rather than trying to preserve something that we seem to not have a comparative advantage at, we should focus on things that we can be good at, and make sure that we have institutions and run an economy that's flexible enough to adapt."

Green, meanwhile, concludes that some unskilled jobs will be always needed, and even unskilled workers can be trained.

She says she remains optimistic that the benefits of "off-shoring" can outweigh any of its costs.