CHALLENGES FACED BY UNSKILLED WORKERS IN AN ORGANIZATION

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CHALLENGES FACED BY UNSKILLED WORKERS IN AN ORGANIZATION

CHAPTER ONE

INTRODUCTION

Background of the study

Across all industries, the complexity of jobs is increasing. This trend is driven by innovations in information technology (IT) and information and communication technologies (ICT). Especially in firms that make large investments in research and development, IT and ICT, or other technological and organizational developments, there is a growth in relative skill demand. Less skilled workers often do not possess adequate skills to operate the new technologies and processes. As a consequence of this, their wages are lowered or they lose their jobs (Machin, 2001).

Several authors argue that it is not only the introduction of information technology but also organizational change that induces ‘skill-biased technological change’. Actually, they assume that it is the combination of related innovations in information technology, workplace reorganization, and the introduction of new products and services that is responsible for the importance of upgrading the skills of the labour force (Caroli & Van Reenen, 2001; Bresnahan, Brynjolfsson & Hitt, 2002). This also means that the extent to which the complexity of jobs increases is much larger than the upgrading of the skills related to technology as such.

The upgrading of skills demanded in the labour market is also broadly recognized in public policy. The ‘White Paper’ on Growth, Competitiveness, and Employment issued by the European Commission (1993) argued that a highly skilled labour force in the European Union is required to catch up in the technological race with other developed countries. At the Lisbon European Council meeting in March 2000, the European Council formulated as the European Union’s “major strategic goal for the next decade: ” to become “the most competitive and dynamic knowledge economy in the world” (European Commission, 2000).

Apart from the upgrading of the skill level demanded in the labour market, technological and occupational changes induce shifts in the type of skills required. Green et al. (2000) found that in particular problem-solving skills, communication and social skills as well as computing skills are becoming increasingly important in many jobs, whereas the market price of manual skills declines. Workers employed in sectors experiencing rapid technological and organizational changes may therefore face obsolescence of their human capital. This may particularly hold for workers who have breaks in their employment. Also older workers, who possess older vintages of human capital, may severely suffer from skill obsolescence.

The need for (continuous) upgrading of the skill level in most occupational fields threatens the labour market position of low-skilled workers who are crowded out of their traditional occupational domains (Borghans & De Grip, 2000; Jacobebbinghaus & Zwick, 2002). This means that low-skilled workers are either locked up in poorly paid elementary jobs with flexible contracts that further weaken their labour market position or crowded out of employment entirely. A similar argument applies to female employees who have spent considerable periods outside the labour market to care for their children and to older employees who have outdated skills.

Many policy makers and experts argue that low-skilled workers can also benefit from the changes in the demand for skills if they receive additional training (Acemoglu & Pischke, 1999). From this perspective, the 2003 Employment Guidelines of the European Commission, derived from the so-called Lisbon agenda of the European Council, are targeted on a substantial increase in the adaptability of workers to the changing demands in the labour market (i.e. their employability) and improvements in access to training, in particular for low-skilled workers (European Commission, 2003a).

In this paper, we will go further into the question to what extent the employability of lowskilled workers is threatened by the changes in the demand for skills, because low-skilled workers may lack the skills necessary for more knowledge intensive jobs. Moreover, we will discuss whether low-skilled workers are able to improve their employability by further investment in their human capital. We will particularly focus on (1) the older lowskilled workers, who might face skill obsolescence due to the fact that they represent less recent vintages of human capital or because new technologies depreciate the value of their (previous) work experience, and (2) low-skilled female workers, who might face skill obsolescence due to career interruptions in which they were not able to keep their skills up to date.

To answer the question whether the employability of low-skilled workers is threatened by the changes in the demand for skills, we will discuss the relations between technological change, organizational change, and the level and type of skills demanded. Furthermore, we will discuss the effects of these interactive developments on the labour market position of low-skilled workers, older workers, and female workers who take career breaks to care for children. For a better understanding of the effects of the changes in the economy, we will present a more detailed analysis of the development in the tasks workers have to do in their jobs and the skills necessary for an optimal performance in these tasks. And finally, it will be studied how low-skilled workers could acquire these skills.

The structure of the paper is as follows. In section 2, we will briefly discuss the literature on skill-biased technological and organizational change. Section 3 describes the way in which shifts in the skills demanded in the labour market can induce skill obsolescence. In Section 4, we will analyse which types of skills are especially demanded nowadays. Section 5 shows the development of the employment shares and labour market participation of (older) low-skilled workers in various European countries, which indicates to what extent low-skilled workers are crowded out of employment. Section 6 deals with various aspects of the employability of low-skilled workers. In section 7, we will discuss on the one hand to what extent participation in training could contribute to an improvement in the employability of low-skilled workers, and on the other hand the reasons for the low rates of training participation of (older) low-skilled workers.

Statement of the problem

There may have been previous researches in this subject. This work gives further explanations and analysis in challenges faced by unskilled workers in an organization

Objectives of the study
To understand the impact of skilled workers in an organization
To understand the relationship between workers’ level of skills and organizational performance