Labor and Skill availability - Tobi Abimbola

Description

Majority of manufacturing is done in the East while consumption of goods in mostly in the West, this is evident in the largest volume of raw materials consumed in Asia and the largest volume of waste is more in the landfills in the United states. Essentially the East produces more, and will need more labor. One of the reason for this is the availability of affordable labor in Asia. If labor becomes scarce due to mass immigration of skilled labor into the west from Asia, it may lead to increases in labor cost because of it's scarcity and lead to possible rise in cost of manufacturing in the East.

This can impact the way things are manufactured or even where things are manufactured, as these can change not just the way things are manufactured but also consumer behavior. It can affect the way raw materials are sourced and where they are sourced as factories may relocate back to the west where the labor have migrated to.

Or the ever growing youthful and skillful population in Asia and Sub-Saharan African (SSA) can lead to economic power shift from the West to the East. With the aging population in Europe having lesser buying power compared to the youthful population in Asia and SSA. It then only makes sense to focus both manufacturing and selling in a region like Africa and Asia where both skill and market opportunity exists.

Enablers

Immigration : Mass human migration can lead to the shift in skill and labor distribution, leading to scarcity in some areas and more availability in others. This will definitely affect the way things are manufactured.

Globalization : The world becoming very closely knitted such that supply chains and IT infrastructures are very capable of reducing or eliminating connection barriers. Then it will not matter where things are manufactured or where raw materials are sourced because supply chain and connectivity are very efficient leading to very low and efficient cost and time.

Economic growth : Regional economic growths can lead to shift in consumption patterns and consumer purchasing power. If there becomes an economic boom in Africa and the middle class progresses, the huge population will lead to huge potential consumers with high buying power, leading manufacturers to focus on the region and may lead to change in the way they manufacture.

War and Conflicts : War and Conflicts leads to mass immigration and economic downturns leading to the factors described above.

Global Pandemic : Pandemics can lead to the fall of some economies and the scarcity of labor in some parts leading to supply chain problems and force manufactures to review the ways that materials are sourced and how goods are delivered.

Industrialization : Massive Industrialization of poor economies and regions can lead economic growth in those regions and lead to the factors described in Economic growth.

Inhibitors

Technology : Advanced technology will lead to lean production processes with more efficient manufacturing systems and less and less reliance of human skills and labor. This can decrease the number of skill needed to complete a task and reduce demand of labor

Automation : Automated manufacturing may lead to more reliance on digitalization and less need for labor, in this case the skillset may change from say physical skill to more cognitive skills. However the requirement for labor will decrease as more processes will be Automated.

Politics : Political effect like immigration laws and far left activists can make migration less desirable, inhibiting the effect of migration and leading to keeping the status quo the way it is.

Paradigm

Availability of labor can shift the dynamics and behavioral decisions of manufacturers. Manufacturers care about optimizing cost and maximizing profit. So, they will move to locations where that make more business sense irrespective of the region. These decisions can change the ways manufacturing is done. Availability or lack of skill and labor can lead to this decisions.

Timing

After the collapse of European economies and infrastructure at the end of world war 2, there was serious need for skills and labor to rebuild the cities in Europe and a lot of investments to recover from the war. This created opportunities for labor to move from different regions into Europe as there was high demand for labor. It help industrialize Europe and made it a manufacturing hub.

However, in recent times there is been gradual shift in investment and economic activities in emerging economies like Asia and Africa with growing middle class economy. Manufacturer are now focusing on those regions, with high human capital and growing spending power.

Web Resources

https://www.investopedia.com/articles/economics/12/employability-labor-force-economy.asp https://www.dallasfed.org/~/media/documents/educate/everyday/labor.pdf https://www.economicsdiscussion.net/economic-growth/role-of-labour-in-economic-development/4445 https://smallbusiness.chron.com/hiring-additional-employees-affect-economy-31964.html