Luddites, Productivity and Competition

From my school days it always seemed to me that economics was central to human welfare. The view has not changed. Our current politicians quite rightly remind us that if we want to offer social benefits, the key pre-requisite is a strong economy. Early in my business career I was very aware of the cost of labour and in an industry with a contracting market and ever increasing labour costs, head counts became a major issue.

The rural service business simply could not afford the level of service it was used to and our customers couldn’t afford to pay for it. Survival depended on increasing business volumes without a commensurate increase in labour costs. It’s called productivity. We survived by defensive mergers with like businesses, efficiencies and automation. Automation was aided by computerisation, particularly of clerical processes. I used to “bang-on” about the salesman/computer interface.These were tough times both for those having to ‘retire early’ and those making the decisions. Often the emotional impact of a staff member realising they were not wanted was worse than the financial consequences. It was grim stuff. In the business for which I was responsible we were able to break it into small units and measure whether each unit was making a positive contribution. The moral issues of what was fair and compassionate were confronting.

In later years I was visiting a tea producing farm in Africa and came face to face with a situation where labour intensive tea plucking was performed by African women who seemed to know personally every tea bush. There were 80,000 people (families) living on farm and this was an important part of family income. Mechanical tea harvesters were in the offing! Surely such automation should be resisted. The luddite approach seemed well justified. But, if you resist the efficiency opportunities and your competitor, locally or internationally doesn’t, you will be out of business. You proffer all the arguments about alternative employment opportunities, but the arguments simply don’t wash with those immediately impacted.

Yet history is clear that those businesses and countries that are most efficient, flexible and adaptable are the ones that thrive and their citizens benefit. Mobility is an important component-going to where the jobs are. But, that is not easy to see by those who are confronting such significant change. Sometimes Government, which means other individuals, need to assist the change, but change you must. Technology often challenges the status quo and a mental attitude whereby people embrace change and the opportunities it offers can be very constructive.

This post was stimulated by an ABC Radio National Programme-Future Tense

https://www.abc.net.au/radionational/programs/futuretense/outsourcing,-automation-and-the-messiness-of-global-labour/13394434

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