As emerging economies grow in scale, the real impact of their advances in growing globally competitive businesses will be seen in how they combine more up to date technology with an educated workforce with a more pragmatic view of the worth of their education and the value of a job.
Technology automates repetitive tasks, reduces error and allows people to focus on high value add tasks. Low skill jobs can be replaced, and people have the chance to deploy more of their skills, reaping the benefit of education and being paid more.
OK for the ’70s and ’80s in the old world, but once globalisation and a couple of generations of technological advances kick in, what used to be value add and worth a decent salary is just the starting point for emerging economies. Two key points.
First, new companies can go straight to newer technology, with higher levels of automation based on better process understanding of what has gone before. This allows them to recalibrate their organisations around which jobs are really transformational, and which ones have become the ‘techno-manual’, and not worth as much.
Second, educated middle classes are now all over the place. However, those in the BRICs have salary expectations and living costs a fraction of their peers in the developed, old economies. They also feel the competition around the substantial advantage of having a salaried position, and therefore are willing to accept less to have one.
Put these two together and you can create companies that can offer better or cheaper products and services based on more up to date technology, and or more profitable companies based on lower costs of production.
To compete, companies in the developed markets must look again at their organisations and re-calibrate what jobs are really worth the money. Wherever further analytical tools, or additional automation has been provided, have the associated jobs actually changed to add extra value? Have they simply absorbed the improvements while continuing to be paid the same for an easier job? Were the efficiency benefits actually achieved in greater output, or cheaper inputs?
This task would be immense. In fact against a back drop of entirely understandable self interest and decades of legislation, it seems so difficult as to be unrealistic.
This is why I believe emerging markets have the edge.
