The average Canadian worker has (at least) some college or university education. This fact is counter to presumptions in a question on the first day at the World Economic Forum by Fareed Zacharia, in an interview with Canadian Prime Minister Pierre Trudeau. Zacharia asked:
What do you say to the average worker in Canada, who may not have a fancy college degree — and I’m thinking about the average worker in America or in Europe, as well — who looks out at this world and says “I don’t see what globalization is doing for me. The jobs are going to South Korea and China and Vietnam and India. Technology is great, but I can’t afford the new iPad Pro, and more importantly, this technology means that it increasinly makes me less valuable. Why shouldn’t I be angry and involved the politics of progress?”
The response by Trudeau spoke to the Fourth Industrial Revolution, the theme of the Davos conference. He didn’t actually respond to the presumption on education.
In a national picture of educational attainment:
In 2012, about 53.6% of Canadians aged 15 and over had trade certificates, college diplomas and university degrees. This was an increase of 20.9 percentage points since 1990.
… says “The Indicators of Well-Being in Canada (2016)“, by Employment and Social Development Canada.
In the Economic Indicators for Canada,
Between 1999 and 2009, the proportion of adults aged 25 to 64 with tertiary education in Canada increased from 39% to 50%. In 2009, Canada had the highest proportion of the adult population with tertiary education among all reporting member countries of the OECD. By comparison, the 2009 OECD average was 30%.
… says Statistics Canada in “Educational Attainment and Employment: Canada in an International Context (February 2012)“.
If there’s going to be another industrial revolution, an educated population should be better positioned for it. What’s the fourth industrial revolution? The World Economic Forum describes “The Fourth Industrial Revolution: what it means, how to respond“:
daviding January 20th, 2016
How many employees can IBM sustain? At Dec. 31, 2013, IBM reported 431,212 employees for the company and wholly-owned subsidiaries. In February 2014, there were projections that 13,000 to 15,000 employees would be released within the year. The estimate for 2015 of 26% further reductions calculates to leave about 300,000 IBMers worldwide. This leads to three questions about the current situation (and potential other cases with similar circumstances).
The domain of business is a social science, so corporate decisions lead to paths where alternatives (i.e. the path not taken) can never be tested in reality. Thus, much of the thinking below is speculative.
Let’s look at history, published in annual reports. IBM reported 412,113 employees at Dec. 31, 1989. Under John Akers as CEO, the organization was trimmed down to 301,542 employees by the end of 1992. Lou Gerstner joined as CEO in April 1993, and job actions were announced by July.
The employees to be cut, mostly from overseas operations, will be given incentives to leave, but just what the financial package will be has not been determined. The $8.9 billion charge includes funds to pay for 25,000 additional job cuts under an early retirement program announced this year that has drawn 50,000 participants — twice as many as expected — and for 35,000 job cuts over the next 18 months. [….]
Of the $8.9 billion pretax charge for streamlining I.B.M., $2 billion is to pay for the additional 25,000 workers who took advantage of the company’s early-retirement program that began in 1993. Some $4 billion will go to pay for the 35,000 workers who will be trimmed over the next year to 18 months. The remaining $2.9 billion will go to retire surplus factories, equipment and office buildings [Lohr, 1993].
At the end of 1994, IBM reported a population of 219,839 employees. With a successful recovery by March 2002 for the handover from Gerstner to Palmisano, IBM reported that its employee population had grown to 319,876.From my experience in IBM Canada Plans & Controls in 1985-1987, I know that headcount in World Trade countries was justified on affordability. The affordability was expressed as additional revenue per additional employee. At the end of 1992, 301,542 employees were producing $214,077 per employee. At the end of 2001, 319,876 employees were producing $245,095 per employee. At the end of 2013, 431,213 employees were producing $226,803 per employee. While this doesn’t necessarily look so bad, let’s recognize inflation, and adjust to constant dollars. The U.S. Bureau of Labor Statistics provides a Consumer Price Index based on 1982-84. At the end of 1992 when Lou Gerstner was soon to become CEO, 301,542 employees were producing 152,584 1982-dollars per employee. At the end of 2001 when Sam Palmisano was about to become CEO, 319,876 employees were producing 138,396 1982-dollars per employee. At the end of 2013 following two years with Ginny Rometty as CEO, 431,213 employees were producing 97,735 1982-dollars per employee. On a constant dollar basis, this could be interpreted as a 30% drop in productivity by employees between 2001 and 2013. In order to maintain productivity per employee, either the revenue should have continue to rise, or else the number of employees should drop.
daviding January 26th, 2015
With the primaries in the United States making headlines, Americans have been making noises about revisiting NAFTA. Michael Hart and William Dymond provided a Canadian perspective1, with a global perspective on the larger trends.
If our neighbours elect a Democratic president, Senate and House on Nov. 4, things could get ugly, as a falling U.S. dollar, the credit crunch and serious troubles in the housing market add to recession anxieties.
The target for much of that ugliness will be China and other low-cost suppliers to the U.S. consumer market. Most Americans do not have much understanding of the role of these suppliers in maintaining U.S. economic activity. Both politicians and the public fail to realize the benefit of Chinese manufacturing goods produced to U.S. design and using U.S. technology. A recent University of California study found that, of an Apple iPod sold in the U.S. for $299, $160 goes to American companies that design, transport and retail iPods. Only $4 stays in China with the firms that assemble the devices.
I was curious about that $4, and tracked down the report to the Personal Computer Industry Center (PCIC), part of the Alfred P. Sloan Foundation. The paper by Dedrick, Kramer and Linden2 has some interesting tables. Here’s a breakdown from the $299 retail price of the iPod.
Table 5. Derivation of Apple’s Gross Margin on 30GB Video iPod
Retail Price $299 Distributor Discount
($30) Retailer Discount
($45) Sub-Total (estimated
$224 Factory Cost ($148) Remaining Balance
(estimated Apple gross margin)
Source: Authors’ calculations; see text
daviding March 22nd, 2008
Posted In: economics
The “new economy” of the 21st century can be interpreted in many ways. One foreshadowing view appeared in 1973 with The Coming of Post-Industrial Society by Daniel Bell. It can take academics years to accumulate enough data as evidence of real societal change. I had seen some cool diagrams in a presentation by Uday Karmakar in April 2007, so I searched for some more background. On the Papers & Articles page at The Business and Information Technologies (BIT) Project, I found a June 2007 paper1. The tables at the end of the publication say three things:
To make these ideas more digestible, I’ve reoriented and colour-coded the data.
Read this chart in the following way: the trends (i.e. the direction in which the lines are moving) have been a shrinking brown box in the upper left, with an expanding green box in the lower right.
daviding January 19th, 2008
Posted In: economics
Japan would seem to be a wonderful place to live, socially and economically. Merrill Lynch ranks Canadians as #2 in the G7. Here’s a summary that I’ve put together from news sources.
|Misery index (2007)||Misery index (2005)|
|Japan||1.6||< 3.2 (inferred)1|
|Germany||6.5||> 6.5 (inferred)1|
John Partridge, in the Globe & Mail, explains how these numbers are calculated:
daviding October 12th, 2007
Posted In: economics
I’m giving a lecture on business innovation at the University of Hull Business School this week. Preparing the lecture, I thought I might start with Schumpeter. Although some of the 1934 work, The Theory of Economic Development, is available on books.google.com, the more popular 1943 work, Capitalism, Socialism and Democracy (which writes more about “creative destruction“) isn’t.
Jennifer took me over to the University of Hull library, where there’s a really old volume, with the following publication information.
daviding May 14th, 2007
Posted In: economics