Exploring a new services agenda

October 8, 2015 at 14:30

IN the run-up to the Apec Economic Leaders’ Meeting and the Apec CEO Summit in November, we have been working closely with the government in organizing a series of roundtables and dialogues between government officials and private-sector executives from across Apec. Since May, these meetings have been timed to run alongside the meetings of senior officials and ministers. One of these was a series of three forums on the importance of services as a contributor to the economy.

At the Apec Business Advisory Council, we have looked at two new concepts which we think provide a fresh perspective on trade in services. The first is the “New Global Worker.” This explores the notion that work and, therefore, the worker are being redefined. This has broad implications on many things, including the education and training of future workers and where work even takes place. The second concept is “Earn, Learn and Return.” This explores circulatory movement of labor, where people move from place to place around the world, earning a living, learning new things, and returning home to apply their lessons and experience.

There are at least three drivers for these new concepts.

The first is demographics. There are differences between aging and younger populations across economies. Developed countries tend to have lower population-growth rates and older populations than developing countries. This can have a large effect on the availability of workers in some places.

The second is technology. Technology is redefining what jobs and work are and where it takes place. It is generating new requirements for skills and competencies. Even within a sector—say, manufacturing or power-plant operation or engineering—certain skills will no longer be in demand, while other skills will be created. The net effect is the creation of the new global worker.

Third, in today’s global value chain, products are manufactured everywhere. Services are performed anywhere. Components are created in several locations, while assembly may take place in an
entirely different location.

The net effect is that there is a job/skill mismatch globally and domestically across the world.  Where these gaps exist, some of them can be addressed by services performed in different economies (e.g., the job moves to worker; outsourcing) or through labor mobility (e.g., the worker moves to the job).

Given these three trends, we need to ask ourselves four important questions in our approach to mobility. How can we make mobility rewarding for more workers, and not just the highly skilled worker? How does mobility facilitate the growth plans of an aspiring global business? And how can worker mobility help both sending and receiving countries achieve their economic and social goals? Can freer movement of people lead to Inclusive growth globally ?

The fact is, mobility is already happening. The Philippines is, of course, just one example. We have approximately 10 million overseas Filipinos stationed in over 100 countries, remitting over $20 billion a year to families here. But it’s not just countries sending people abroad. Companies are doing it, too. Global companies and multinationals are moving staff around for a number of reasons. They want to plug their own internal skills shortages. They also want to accelerate global thinking in their own company and build up their leadership pool internally. International assignments help build up those skills. Moreover, a growing number of companies, even small companies and start-ups, are attempting to go global.

Workers themselves are looking for flexible international assignments. Instead of long-term asssignments, there are now short-term project assignments. Middle managers are now being sent overseas, not just senior executives. And don’t forget: millennials love to travel.

What are the implications of mobility on the global economy and businesses? Aside from the obvious pressure it will place on education and training, there will be implications in other aspects. To what extent will qualifications and credentials need to be standardized and harmonized? This is an obvious area for the national governments seeking to protect domestic labor markets but industry sectors and multinational companies may already be putting in such standards for their workers.

What impact will mobility have on compensation? Connected to that, while we need portability of skills, what about portability of benefits (e.g., health insurance, retirement, bonuses, etc.)? As people move around, will their benefits move around with them?

For the Philippines, these are important questions to ask. With almost 10 percent of our population living abroad, an economy still dependent on overseas remittances, and a growing domestic services sector catering to international clients (e.g., business- and knowledge- process outsourcing), we need to embrace the concepts of the New Global Worker and Earn, Learn and Return.

More important, we need to understand that mobility is a two-way street. We shouldn’t be asking for access to overseas services markets if we are not prepared to open up our own markets to foreign service providers and professionals. The trade-off for international access to markets is increased competition domestically.

At the end of the day, maintaining barriers to services raises the cost of goods and services in a domestic economy. It makes sense to remove those barriers while going after other markets.

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