No future for the unskilled as offshoring boom continues

Nov 08 2004 by Brian Amble Print This Article

Unskilled workers face a life of unemployment as British employers export growing numbers of low-skilled jobs overseas.

A survey of 150 company chairman and chief executives by the Confederation of British Industry has found that a growing number of firms are outsourcing work abroad.

Half of those surveyed said pressure to off-shore has increased over the past two years, with one in five describing these pressures as "very great".

One in three said they have already taken some activities overseas and almost one in four are considering doing so in future.

And with almost nine out of ten respondents expressing satisfaction with the off-shoring experience, there is no sign that the trend will slow down.

The survey found that the number of jobs lost to the UK was on average equal to about four per cent of a firm's UK workforce. But half of firms that moved jobs abroad also created other jobs in Britain.

While the main reason to off-shore is to cut costs and improve the speed and quality of services, the rising cost of compliance with regulations is also driving firms abroad, the CBI said.

A quarter of those considering a move said legislation was one reason for their decision.

The trend is also extending beyond manufacturing to areas like information technology, financial services, design, research and development, the CBI said.

As business leaders gather in Birmingham for the CBI's annual conference, its Director-General, Digby Jones, said: "Off-shoring is now part-and-parcel of doing business in the global economy.

"Make no mistake, this is a survival issue. Anyone who believes that firms have a great deal of choice are naive. Companies know if they don't do it, somebody else will. If competitors act and they don't respond, they may put their business at risk.

"It is short-sighted simply to see all this as a bad thing. Globalisation was made for Britain. Off-shoring means greater productivity and more efficient goods and services. It also means UK jobs will be of higher quality, more skilled and in many cases more secure," he added.

But he also warned that as semi-skilled and unskilled job creation moves off-shore, the outlook for unskilled workers in Britain is bleak.

"We think there will not be any work for unskilled people in a few years' time," he said.

"This is coming down the track very very quickly, certainly within a scholastic generation.

The challenge for Britain, Jones said, is to create more jobs in the UK are were lost to other countries, and to make sure people had the right skills, something that "remains a problem."

But with firms creating mostly skilled and graduate jobs in the UK, the country needs a "huge culture change" to make sure that young people leave education ready for the world of work, he added.

The survey confirms that China and India remain the most popular off-shore locations, each cited by around half of respondents. But firms see Eastern Europe as an increasingly attractive alternative, with Poland and the Czech Republic the leading options.

The CBI says the most important reasons for choosing a country were low employment costs and the availability of a skilled workforce.

Ian McCafferty, the CBI's chief economic adviser, estimated that UK companies had created 400,000 jobs overseas over the last decade. But while this resulted in 250,000 job losses in Britain, half a million other jobs had been created during the same period.