High skills, low wages: global auction for brainpower

10 March 2009

Assumptions that the United Kingdom will be able to remain a globally competitive, high-wage economy provided it has a sufficiently skilled workforce will be challenged at a seminar organised as part of the Economic and Social Research Council's forthcoming Festival of Social Science (6-15 March).

The belief that the UK's future prosperity depends on gaining competitive advantage in a skills-based, global knowledge economy is reflected in a range of government policies, notably the expansion of higher education. High skills are seen as core not only to economic success, but as a route to individual prosperity, social justice and social cohesion.

The skills debate has become increasingly intense in recent months, with the global economic downturn focussing attention on future education and skills needs and politicians of all the major parties arguing that the UK economy must become less reliant on financial and business services.

The seminar, drawing on findings from an extensive ESRC-funded study of global corporate strategies and the future of skills, will suggest that assumptions behind current policies are likely to become redundant in the early decades of the 21st century. It will consider issues including:

The competitive challenge posed to developed economies such as the UK from the widespread emergence of a global supply of highly skilled, low cost knowledge workers in developing countries; and

The implications for education and labour market policies of the rise in Britain and elsewhere of a highly skilled yet low waged workforce.

Researchers Phillip Brown, David Ashton and Gerbrand Tholen (Cardiff University) and Hugh Lauder (University of Bath) highlight the ability of multi-national companies to locate high skill operations in emerging economies where labour costs are lower. As economic competition becomes increasingly based on 'quality and price', and skilled workers find themselves increasingly in competition for a finite supply of 'good jobs', so the returns to high level skills for many are starting to be eroded.

Many so-called knowledge workers, they argue, 'will be feeling the pinch'. Policymakers too are left to grapple with these new realities. As the political arithmetic of high skills equals high wages ceases to add up, so the challenge becomes one of involving as many people as possible in innovative high-end activities that cannot be easily replicated elsewhere, while confronting the distributional issues of 'who gets what?'

The study involved leading transnational companies and policymakers in China, Germany, India, Korea, Singapore, the United States and the UK. It was conducted by Skope - the ESRC Centre on Skills, Knowledge and Organisational Performance - which is housed jointly at the universities of Oxford and Cardiff.

The ESRC Festival of Social Science takes place from 6-15 March. It is run by the ESRC to celebrate some of the country's leading social science research, showing how the work of social scientists makes a difference to all our lives.

For further information contact

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Notes for editors

  1. The seminar High Skills, Low Wages: Global Auction for Brainpower will take place on Wednesday 11 March from noon until 16.00 at: Committee rooms 1 and 2, Cardiff School of Social Sciences, University of Cardiff, Glamorgan Building, King Edward VII Avenue, Cardiff CF10 3WT. For further details:
  2. The Festival of Social Science week is run by the Economic and Social Research Council which runs from the 6 - 15 March 2009, alongside National Science and Engineering Week. It celebrates some of the very best British social science research, as well as highlighting the ways in which social science makes a difference to everyday lives.
  3. The Economic and Social Research Council (ESRC) is the UK's largest funding agency for research and postgraduate training relating to social and economic issues. It supports independent, high quality research which impacts on business, the public sector and the third sector. The ESRC's planned total expenditure in 2008/09 is £203 million. At any one time the ESRC supports over 4,000 researchers and postgraduate students in academic institutions and research policy institutes.