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How Exactly Do Uk Workers Compete?

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http://www.guardian.co.uk/supermarkets/sto...2161301,00.html

13 pence an hour vs £5.35 minimum. Same goes for jobs in many sectors.

Short answer is that they can't, which is why manufacturing of low value items where human labour is a material component of the final unit cost has all but stopped in the UK. The longer answer involves jobs which can't be exported (e.g. cleaning, hairdressing, building etc) along with jobs where labour is not the biggest percentage of the cost of the finished product (e.g. cars, very high end clothing and some others that I can't think of right now).

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In our industry, labour accounts for around only 5-10% of the cost of the product, so we can compete by:

a) increased effieciency (ie not spedning all day on HPC)

B) reduced margins (current)

c) higher volumes

but long term, we're ******ed.

although there is an arguement people still prefer brisih made goods. Our problem will come when all our materials are made in the far east. That will kill it dead.

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and 13 pence an hour is a good wage in India. it equates to £250 a year. You can buy a nice little house for £250 in many quaint villages. Thats 1x annual salary. A british worker would need to earn £200K. Its all relative.

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The only way now is to have a job that some foreigner cant to. If your job isn't difficult then you're toast.

I doubt that very much. There will always be jobs here. Wages may suffer downward pressure. They might even fall a bit. But jobs will still be here.

It really surprises me how many people on here think that employment is some sort of pure free market enterprise, where natural forces result in the lowest wage costs. Personally, I've NEVER seen a recruitement take place with cost of wage as the top factor. In fact, it often works the other way round: the cheap candidates are suspected of being poor candidates, at least until they've been interviewed.

There are language difficulties. There are reasons why some jobs will never be offshored. There are jobs where the wage cost is tiny compared to the value generated, so saving 50% on wages, or even 90% is of no interest if it slows things down or makes them unfamiliar.

The wealth of nations may level off in years to come. And it might, just might involve an absolute drop in living standards here. But it may not. It might just involve a flattening, and a rise in living standards abroad. The cheap labour Eastern nations have many infrastructural problems which will act against them, even though they have cheap labour in their favour. It's NOT as simple as is trotted out on here all the time.

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For the vast majority of people in this country foreign trade means a higher standard of living.

Look up "comparative advantage" on Wikipedia, and find out why no serious economist worries about globalisation.

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For the vast majority of people in this country foreign trade means a higher standard of living.

Look up "comparative advantage" on Wikipedia, and find out why no serious economist worries about globalisation.

I'm always a bit doubtful when I hear that all serious economists agree. It's all well and good while the goings good but when the party stops and you find you have one large housing estate and, for example, no farming industry to feed the occupants with and suddenly no one's exporting their grain (vide eg Russian export freeze just imposed) you might regret your faith in total exposure to the markets. I think the idea of letting it all rip without retaining and even protecting strategic industries is unwise.

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Where a job can be off-shored there isnt much hope assuming skills and quality of work remain the same.

However where a job can not be off-shored ie it requires someone in person to be present in this country then you compete with the local market rates.

In my job, a computer programmer I've had to compete with the global market but some points I have noticed, overseas programmers dont always have local market knowledge which adds to development costs things like knowing VAT has to be added for systems dealing with finance or Sales Tax in the US for example. Sure it can be argued that designs specs would include the VAT requirement and that would be true but then someone needs to be in teh local market speccing out the work but some companies will send a programmer onsite to sit with a customer and deal with things directly.

Secondly using productive tools will make you competitive, good programmers are employed becuase of the experience and code libraries/utils they bring with them to a job certainly true for C/C++ programmers. If you take VB programmers, anyone can pretty much class themselves as a VB programmer, but inexperienced programmers generally consider themselves to be good programmers becuase they have yet to learn the extent of their field and know their weaknesses, yet experienced programmers generally consider themselves bad programmers becuase they know the extent of their field and know their weaknesses. I dont program in VB btw.

If you take the case of the engineering, most mass production jobs have been off shored where possible, but sometimes you cant get certs for the material and companies are not all ISO rated. In addition stockholders have had to become more competitive by providing some services in house now, like bar cutting & sheet polishing becuase engineers dont have the space/money for the machines. Now if these machines are prohibitive in cost for UK engineering firms then what would it be like for overseas companies? Without often overseas investment its prohibitive for them as well.

India has an infrastructure problem but highly skilled people with English as their main language, china has excellent infrastructure but not as many highly skilled people with English. English is the international trading language so that alone is a skill we perhaps dont capitalise on as much as we should. I also happen to bring alot of work into the UK becuase I can do the job quicker than overseas people but thats only becuase I have developed code that replaces the programmer for some types of programming.

Anyway just some thoughts from my own experiences. :rolleyes:

I do agree with you, you make some excellent points that we have experienced also. Stockholders are also doing laser cutting, waterjet e.t.c and other services in order that they can supply the customers needs.

I would say in most poor countries, most of the labout done by these capital intensive machines is done instead by people on low labour rates with basic tools/machines. Clearly using this method the quality is not up to scratch for most western companies, although fine for most local uses.

in Kenya for example, we struggled to find a firm that owned a laser cutter, so the material we used there came from the UK. Not only did this mean that the quality was not as good, it actually made them uncompetitive. I did think this could be a great oppertunity, but it is not our field..

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Mr Rose made some interesting comments.

As for India, experience I've had with customers is that the Indians accents are too difficult to understand (not always, but generally) which makes customer services bad quality.

Programming is different, we've outsourced to India, fairly successfully, but sometimes the code is not upto standard, and developers in the UK have to "clean" it up.

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I'm always a bit doubtful when I hear that all serious economists agree. It's all well and good while the goings good but when the party stops and you find you have one large housing estate and, for example, no farming industry to feed the occupants with and suddenly no one's exporting their grain (vide eg Russian export freeze just imposed) you might regret your faith in total exposure to the markets. I think the idea of letting it all rip without retaining and even protecting strategic industries is unwise.

Nigwell, I'm not making a philosophical or political point. Comparative Advantage is a fundamental economic principle that demonstrates virtually everyone benefits from foreign trade (which is after all just the old name for globalisation).

Unfortunately some unscrupulous politicians know that most of us have a deeply ingrained xenophobic streak, and they pretend that foreign hordes are stealing our jobs. From a rational economics perspective it's pure nonsense. I genuinely and sincerely would advise anyone on this forum to look up "comparative advantage" on Wikipedia, it's not some wacky fringe theory, it's a fundamental and a broadly accepted basic principle of economics. In the same way that if a community of people specialise in specific areas there's a general increase in productivity that benefits them all, so if nations trade this encourages further specialisation which also produces a general increase in productivity.

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Nigwell, I'm not making a philosophical or political point. Comparative Advantage is a fundamental economic principle that demonstrates virtually everyone benefits from foreign trade (which is after all just the old name for globalisation).

Unfortunately some unscrupulous politicians know that most of us have a deeply ingrained xenophobic streak, and they pretend that foreign hordes are stealing our jobs. From a rational economics perspective it's pure nonsense. I genuinely and sincerely would advise anyone on this forum to look up "comparative advantage" on Wikipedia, it's not some wacky fringe theory, it's a fundamental and a broadly accepted basic principle of economics. In the same way that if a community of people specialise in specific areas there's a general increase in productivity that benefits them all, so if nations trade this encourages further specialisation which also produces a general increase in productivity.

Comparative advantage says nothing about the final distributions of wealth, only that the total amount is greater when producers specialise. If one country is 10 times richer at the start of the process, it could end up 90% as rich afterwards whilst the smaller is 300% as rich as when it started. There is strong evidence that this has happened to some categories of workers in the US who have seen their wages fall in real terms over the last decade. At the same time, the wages of many workers in China have increased several times over.

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Nigwell, I'm not making a philosophical or political point. Comparative Advantage is a fundamental economic principle that demonstrates virtually everyone benefits from foreign trade (which is after all just the old name for globalisation).

Unfortunately some unscrupulous politicians know that most of us have a deeply ingrained xenophobic streak, and they pretend that foreign hordes are stealing our jobs. From a rational economics perspective it's pure nonsense. I genuinely and sincerely would advise anyone on this forum to look up "comparative advantage" on Wikipedia, it's not some wacky fringe theory, it's a fundamental and a broadly accepted basic principle of economics. In the same way that if a community of people specialise in specific areas there's a general increase in productivity that benefits them all, so if nations trade this encourages further specialisation which also produces a general increase in productivity.

I am familiar with the argument and the merits. I merely observe that the human condition is such that when there is strain, shortage, fear, plague or panic the best laid plans of the economists end up in tatters and war. You allude to the problem yourself when you referred to politicians.

Economists have not yet managed to deal adequately with the human ingredient in their theories and calculations! ;)

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Comparative advantage says nothing about the final distributions of wealth, only that the total amount is greater when producers specialise. If one country is 10 times richer at the start of the process, it could end up 90% as rich afterwards whilst the smaller is 300% as rich as when it started. There is strong evidence that this has happened to some categories of workers in the US who have seen their wages fall in real terms over the last decade. At the same time, the wages of many workers in China have increased several times over.

No individual country, at the aggregate level, suffers a decline in wealth when it engages in foreign trade.

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No individual country, at the aggregate level, suffers a decline in wealth when it engages in foreign trade.

At the aggregate level probably, but it's quite possible for subgroups of people to do very badly from it even though, in total, the country becomes richer. That was the point of the OP's question I think. The answer to which, in terms of the comparative advantage theorem, is to do something that you have a competitive edge in over workers in other countries (e.g. anything which requires your physical presence).

Note that the Wikipedia article you referenced makes a related point too:

Optimizing trade equations for maximum total GDP may not necessarily optimize other factors, such as equality...

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No individual country, at the aggregate level, suffers a decline in wealth when it engages in foreign trade.

Until there are shortages of essentials (water, oil, food etc), perhaps, and then what happens? I suppose we'll find out.

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http://www.guardian.co.uk/supermarkets/sto...2161301,00.html

13 pence an hour vs £5.35 minimum. Same goes for jobs in many sectors.

We compete by evolving and moving with the times, in my industry what would have taken 100 hardware engineers to do in 1980 now takes only 5 of us working our little ar$es off, luckly the engineers that China and India are producing currently leaves alot to be desired compared to an average UK grad in my field, but they will catch us up and then we will be ***ked.

Edited by Jimmy2Times

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At the aggregate level probably, but it's quite possible for subgroups of people to do very badly from it even though, in total, the country becomes richer.

Agreed. In the short term at least British footwear industry workers haven't benefited from international trade, but even in this example most should eventually be re-employed at better rates in other British industries that are the beneficiaries of international trade.

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We compete by evolving and moving with the times, in my industry what would have taken 100 hardware engineers to do in 1980 now takes only 5 of us working our little ar$es off, luckly the engineers that China and India are producing currently leaves alot to be desired compared to an average UK grad in my field, but they will catch us up and then we will be ***ked.

China have a competative advantage in that when they have huge numbers of unemployed and the social security system breaks down they can simply be executed. We dont have this system here yet, however I suppose it wont be long before such a system is seen in the UK as simply a method of keeping a handle on the economy.

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Until there are shortages of essentials (water, oil, food etc), perhaps, and then what happens? I suppose we'll find out.

I don't follow you. In this country we get an increasing percentage of our oil and food (and many other raw materials) as a direct result of foreign trade. How would we better off in the UK by trying to be self sufficient in these commodities?

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Agreed. In the short term at least British footwear industry workers haven't benefited from international trade, but even in this example most should eventually be re-employed at better rates in other British industries that are the beneficiaries of international trade.

I'm not sure what we're arguing about here....can you remind me?

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