Tuesday, March 22, 2011

Towards a society of services or servants?

Most people would do their cleaning themselves if they had to pay the cleaning lady the same salary as their own, it is as simple as that.

It is said that we are moving towards a society of services. There is some truth in this, even if manufacturing still plays a bigger role than many believe. Globally manufacturing is actually not shrinking, even if it goes down in high-income countries. On the global level, the striking change is from agriculture to services. Historically there was a transformation from agriculture to industry to services but in some countries, notably in Sub-Saharan Africa, there is no such transition; people move out from the agriculture sector directly to the service sector. When we look at the proportion of people employed in different sectors, and not the absolute number of people, we forget that the number of people working in e.g. farming is very high and in most parts of the world actually rather stable. Between 1970 and 2000 the number of people engaged in the farm sector in Latin America was more or less constant (Ploeg 2009). Perhaps even more surprising for many is that despite the rapid pace of urbanization the number of people in rural areas and the number of farms are increasing and not decreasing (although this will change quite soon and the number of farmers certainly is on a rapid decrease in high-income countries).

Table 19: World employment by sector 1998-2008

Agriculture (%)

Industry (%)

Service (%)














High-Income countries







Source: KILM 2010

We can see more detail from the US employment data, where retail trade is a bigger employer than manufacturing, however in terms of economic output it only “produce” one third as much value. Professional and business service is a growth sector as well as health care. 9.6 million were employed in food services (restaurants, bars, catering) and 1.5 million in food manufacturing, 15.3 million in retail, compared to just above 2 million in the agriculture sector (Bartsch 2009)

The statistics mask that earlier a lot of the services, e.g. health care and personal care was performed outside of the formal labour market, mainly in the families. Also, manufacturing has outsourced a lot of functions which means that was earlier counted as “manufacturing” is today called services. The growing service sector has four distinct segments. One is the professional services oriented to the business and industries, it can be auditing, engineering, back office functions of many kinds. In the statistics, these same jobs if they are performed in-house the factory would be qualified as a manufacturing job. These kinds of services are generally speaking well paid. Second, we have the whole apparatus of wholesale, transport and retail, together representing 17-18 percent of the work force in the USA. Some of that is also oriented to manufacturing, but most of it is for the consumer market. There is a hospitality industry dominated by restaurants, bars and drinking places with almost ten percent of the work force. This sector is where we find a lot of low-paid low skilled work. Third, we have the police, health care and education, things that in most countries are performed by the public sector. Often these jobs are quite badly paid, but have better employment conditions than the retail or restaurants. Fourth, there is the pure personal service sector, cleaning, massage, shoe-shining etc. things that historically were done by servants. Here conditions are often bad, in some countries a lot of it is done by migrant workers, legal or illegal. Those who predict that there will be a lot of growth in that sector also predicts that we will continue to have big differences in income because it is basically differences in income that drives and make possible most of these kinds of services.

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