Effects of Technology on Employment by ftp85006

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									4 Indirect Employment Effects:
  Putting Technology in Context

The data from the surveys on changes in employment as a result of the
use of microelectronics, which were summarised in the first part of
Chapter 3 of this report and further analysed in the second part of
Chapter 3, are based on the answers given by respondents to the
following question:
      What has the introduction of new microelectronics technology in
      your products and/or production processes meant so far in changes
      in the number of jobs -- by roughly how many has the total number
      increased or decreased overall as a direct result of this in the past
      two years or so?

Direct effects of microelectronics
Thus the figures give a measure of the direct impact of
microelectronics in each workplace in the opinion of the managers
responsible for its introduction there. This is useful in that it gives an
indication of the scale and locations of the changes which are
happening and hence of the kinds of place where problems may arise
because, for instance, the changes are particularly large, or the new
jobs are different from the old ones they replace. The PSI surveys may
be regarded as particularly good for measuring this because the sample
is large and representative and the technical managers in the plants are
probably better placed than others for distinguishing the changes in
employment resulting directly from the use of microelectronics
technology from the changes resulting from the many other factors
which affect a plant’s employment level.


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Employment Effects of New Technology in Manufacturing


Indirect effects
However, it must be remembered that the direct effects are not the
only ones. There are also likely to be indirect ones, for example the
effects on a plant’s performance and success of improved
competitiveness; the effects on the suppliers of the equipment used in
the microelectronics-based production processes and on the users of
the chip-based products; and even more indirect effects through the
economic consequences of changes in spending patterns as a result of
changes in productivity, costs, and prices. Unfortunately, however,
these indirect effects are difficult to identify and measure.

Total changes in employment from all causes
With a view to throwing some light on the matter, PSI has undertaken
a further analysis comparing the total employment in the plants in the
survey with the total employment in the same plants at the time of the
previous survey two years before. These figures show the total change
in employment from all causes. Thus they incorporate both direct and
indirect effects of the introduction of microelectronics -- although also,
it must be stressed, changes due to other causes altogether, such as
investment in traditional technologies, changes in work organisation,
the introduction of new product lines, and changes in the market
situation. Nevertheless, the pattern revealed by these new figures has
interesting implications.
    The figures are set out in full below in Tables 4-8 in pairs, so that
figures for changes directly due to the use of microelectronics can be
compared easily with the adjacent ones for the total changes from all
causes. They are given both for the sample used in the surveys and
also weighted to represent all UK manufacturing establishments
employing 20 or more people. For most purposes the weighted figures
are more interesting than the sample ones, because they come nearer
to reflecting the national pattern of distribution. Also the figures for
changes are given in terms of the total number of jobs, the average
number per plant, and the total percentage change. For most purposes
the percentage change figures are the more interesting indicators, since
they are independent of the size and number of establishments in the
various categories considered.




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                                              Indirect Employment Effects


Users and non-users        (Table 4)
On the UK weighted basis, the figures in Table 4 show a decrease in
employment directly due to their use of microelectronics of about 2
per cent for the establishments using microelectronics and, naturally,
no change for the non-users. However, the decline in employment
from all causes between 1985 and 1987 was about three times as great
for the non-users as for the users of microelectronics; and for the
non-users with scope for applications which they were not using the
decline was five times as great as for the users. (The differences were
less marked when measured in terms of average or total jobs rather
than percentage changes, because the non-users tend to be smaller and
there are fewer of them.)

Applications in products and in processes
The decline in jobs directly due to use of microelectronics was about
four times as high (in percentage terms) in the establishments with
applications only in their production processes as in those with
applications also in their products. However, the change in jobs from
all causes was broadly similar for both groups.

Size of establishment (Table 5)
Decreases in employment directly due to the use of microelectronics
were below the average in the smaller plants employing 20-199
people, and above the average in the larger ones employing 500 or
more people. However, decreases in employment from all causes
were above the average in the small plants employing less than 100
people, but below the average in the plants in the 500-999 size band,
while the largest ones employing 1,000 or more actually experienced
an increase in jobs.

Industry (Table 6)
Industries with a high incidence of use of microelectronics, such as
food and drink and printing and publishing, tended to have a greater
than average decrease in employment as a direct result of their use of
microelectronics, while those with a low incidence of use, such as
clothing and textiles, a smaller than average decrease. However, the
decline in employment from all causes was less than the average in
high-use industries such as food and printing, and more than the
average in low-use industries such as clothing and textiles, while there

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Employment Effects of New Technology in Manufacturing


was actually some increase in employment from all causes in high-use
industries such as food and printing.

Extent of use        (Table 7)
The plants using microelectronics in over half their production
processes showed a much greater decrease in employment due to their
use of microelectronics than those using it in only 10 per cent or less
of their processes; and similarly with the extent of use of applications
in products. The decrease in employment from all causes, however,
was similar for those using microelectronics in the majority of their
processes and for those using it in only a few of them; and the decrease
from all causes was much less for those using microelectronics in more
than half their products than for those using it in 10 per cent or less of
them.

Application         (Table 8)
The decrease in employment directly due to the use of micro-
electronics was below the average in plants using only stand-alone
applications and above the average in plants using centrally integrated
control systems; it was also above the average in plants using
automated handling or storage systems, or CNC machine tools or
robots. The decrease in employment from all causes, however, was
above the average in the plants with only stand-alone applications, but
below the average for those with centrally integrated systems and those
using automated handling, while there was actually an increase in
employment in those using automated storage, CNC machine tools or
robots.

Implications
The pattern is not entirely uniform, but in general the changes in
employment from all causes appear to have been the reverse of the
changes seen as resulting directly from the use of microelectronics.
    The explanation for the different pattern of the changes in
employment from all causes is not entirely clear. It may be that these
reflect various indirect effects of the use of microelectronics which
tend to have a more positive impact on jobs, for example by making
a plant more competitive and better able to sustain employment. Or
it may be that the kinds of establishment which use new technology
are, by and large, the kinds which are innovative and efficient in other

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                                             Indirect Employment Effects


ways, and are therefore more likely to be successful and to maintain
their levels of employment. Or it may be that use of microelectronics
is correlated with other plant characteristics, some of which happen to
be associated with employment growth or loss for reasons not
necessarily related to the use of new technology.
    Thus the conclusions to be drawn from the figures for changes in
employment from all causes cannot be precise or conclusive.
Certainly, however, they do not appear to give any support to the idea
that the full impact of microelectronics on employment is greater than
that suggested by the estimates of the direct effects provided by the
survey respondents. On the contrary, they would seem to suggest that
the indirect effects on employment, although difficult to identify, may
often be positive and may well go much of the way to offset the
negative direct effects.




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Employment Effects of New Technology in Manufacturing




                     Table 4 (landscape)




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                      Indirect Employment Effects




Table 5 (landscape)




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Employment Effects of New Technology in Manufacturing




                     Table 6 (landscape)




36
                      Indirect Employment Effects




Table 7 (landscape)




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Employment Effects of New Technology in Manufacturing




                     Table 8 (landscape)




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