What is the aim of the change?
Finland: a winner in the global share of labour
The world economy’s structure and the global share of labour have changed in many ways. The focus of economic growth has shifted to Asia and South America. A couple of billion new workers have entered the global labour market, particularly due to internal structural changes in China and India and their joining the world economy. The growth of emerging economies is largely based on industry and exports. In fact, Asia has become the largest producer in almost all key industrial sectors. However, the world economy is facing a new development phase: countries and regions no longer necessarily specialise by sector or line of business, but rather by production stage or task.
Finely split value networks
Production based on low cost levels has resulted in a rapid fall in the prices of industrial products. Companies in developed countries have dispersed their production and value networks into increasingly small units around the world, while outsourcing some of their operations. This change has been facilitated by digital technology. Digital technology and globalisation are transforming the economy and society to a similar – or even greater extent – than technological development based on steam or electricity once did. The boundary lines of specialisation and the global share of work are changing significantly, but in subtle ways.
Share of work is being defined in accordance with operations and tasks, rather than regions and industries. Finland and the developed nations have been among the winners in the new global share of work. Tasks that require a high level of education, and services at the beginning and end of the value chains, are centralised here. Even lower-level service duties have proliferated. On the other hand, the mid-level is being squeezed, often being replaced by ICT. This is already partly visible in pay trends and income differences. The income of those in demanding expert and executive positions has increased most in relative terms, albeit following a moderate trend in Finland.
Fast increasing interdependence
The digital revolution and opening up of economies have increased countries’ mutual dependence. Economic fluctuations – and crises – rapidly transfer from one country to another. For the first time in the history of the world economy, almost all countries reside within the same global economy. Since the possibilities to influence the economy through national policy have diminished, affecting decision-making in the EU in particular has become more important.
Markets in the global economy are providing opportunities to an increasing number of companies, including very small ones, which can utilise information networks for the distribution of digital services. For their part, industrial companies can specialise in tasks involving high added value, as part of the international value network. Success in a networked economy requires new kinds of competence and the ability to adapt rapidly, due to the often sudden and surprising nature of changes in the world economy.
High competence levels alone will not suffice to ensure that operations remain in the home country. It is vital that we try to influence the high value added parts of Finland’s value network, rather than lines of industry or sectors. We must consider which of these tasks can be anchored in Finland and how, and which parts of the value network are readily mobile. On the other hand, we must identify the kinds of digital service economy structures and application platforms that can be developed in Finland.