The end of the western middle class?

The western countries have lately experienced a tougher economic climate where we’ve among other things seen increasing differences in wages. You can find high paid jobs which require a lot of qualifications and experience and very low paid jobs that people in the west are not interested in!? There are less and less jobs in the middle. Another interesting trend is that we haven’t seen any creation of new jobs even after economical crisis. According to economical theories the increase and recovery of GNP will also lead to new jobs. This has not been the case in the west. These two factors have lead to an intense debate in the Anglo-Saxon countries where the question up for debate is if we in the west will see the same development for our service jobs as we have seen for our industry jobs. Our industry jobs have moved to other parts of the world. Is this then the end of the western middle class?  This was the topic of a seminar last week at Kairos Future. They have recently released a report with the title “The end of the western middle class?” Here follows a short review from the seminar and the discussions.

What background factors can help us to explain the development? One factor is globalization of the world’s economy. Economical, political and juridical barriers have during the latest decade been lowered. Further the decrease of transportation and transaction costs has made it possible to produce goods where it is cheapest and sell them to another part of the world. The pressure to deliver better value to customers and to be competitive has lead to a more global perspective when management is optimizing resources. Jobs in production have moved from the west to for example China and India. The western countries have developed from being industry economies to “knowledge economies” where headquarter functions have stayed in the west. Isn’t this just the beginning of globalization? Will now the service jobs make the same journey? Thomas Friedman calls it Globalisation 3.0. One driving force behind is the development of the new IT infrastructure with the investment in broadband connections. More and more people are now connected. How do we use the new technology and which jobs will it affect? Location has always been a strong argument for service jobs to stay in the west. Service jobs within health care can for example not be allocated to another geographical environment or can they? Cisco has introduced tele health. With the help of technology like videoconferencing and sensors doctors now can treat more patients at a distance and at a cheaper cost. The service is almost the same as meeting the doctor in real life. We in Sweden can for example get access to the best specialist in the US.

The analysts at Kairos also pointed out that we will see a transfer of knowledge work as the education level of China and India has risen. New knowledge centers have been established and we see more innovations coming from the east like high speed trains, super computers and electric cars. Technology development of robots is also an explanation to why jobs disappear from the west. Service jobs like stock brokers and lawyers have seen some part of their jobs being automated, specially the parts where you have to go through a large quantity of information.

In the seminar we discussed which service jobs that can be replaced by robots and the majority were of the opinion that jobs characterized with structure, information rich and logical features will be replaced. The seminar group however meant that creative jobs were less likely. Fashion designer was mentioned as an example of a profession that could be hard to be replaced since it would be hard for a robot to decide what beauty is. Beauty also varies from culture to culture. In many companies values and experience play important parts. Only logical based solutions might not be always be the best solution. Finally we are social creatures and many jobs are depending on social ability can hardly be done by a robot. We like to work and be a part of a team, weather the team member is in China or in France. So the technological development is more seen as a work tool that will help us to work and collaborate better but most people in the seminar agreed that in the future we will see a tougher and more competitive work climate where the “middle wage” work might disappear.

What do you think? What jobs will be the future for the western economies? How will globalization and automation affect your work?

If you are interested in reading the whole report that also describes different future scenarios, please contact Kairos Future Club.

Leave a Reply

Your email address will not be published. Required fields are marked *