Global supply chains (GSCs) are defined as demand-supply relationships where different tasks of a production process are performed in two or more countries and can involve both goods and services. They developed at a fast rate over the last two decades and the number of jobs associated with them grew rapidly from the late 1990s until the financial crisis, reaching almost 500 million by 2007. But after a sharp drop in 2009, GSC-related jobs have only recovered modestly and their share of total employment in emerging economies has continued to decline, according to the International Labour Organization’s (ILO) World Employment and Social Outlook 2015.
Raymond Torres, Director of the ILO Research Department and lead author of the report commented, “In some cases, previously outsourced activities were brought back to the country of origin of the lead enterprise. But there are other root causes behind this slowdown—sluggish global growth and weak aggregate demand has continued to weigh on trade, which is growing much more slowly than in the two previous decades.”
The crisis hit some export-orientated sectors, such as transport equipment and machinery, particularly hard. In addition, the increased availability of domestic inputs in some emerging countries, such as manufacturing parts and components that were previously imported, has reduced trade in intermediate inputs of those countries and is believed to explain part of the slowdown in global trade growth since the crisis. In general, this points to an increased perception of risks related to GSCs during the crisis.
Among the countries and areas included in the review, Taiwan has the largest share of jobs associated with GSCs—with more than half of its workforce involved in global supply chain jobs—followed by the Republic of Korea and the European Union, where around one third of workers hold a job related to GSCs.
By contrast, Japan and the United States have smaller shares of the workforce in jobs related to GSCs—15% and 11%, respectively. This is partly due to their large internal markets and less dependency on foreign demand, but also because outsourcing to higher-wage and cost locations such as the US and Japan rather than to other locations, is less likely to be profitable for foreign companies.
Paul Arkwright
Publisher
