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'BPO not to curb US job recovery'

March 31, 2004 14:41 IST

Pessimistic predictions about a wholesale export of Unites States' service jobs are unlikely to materialise because outsourcing will be uneconomical for many types of jobs, particularly high-value ones, according to a member of the Federal Reserve Board of Governors, the policy-making body of the US central bank.

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The pace of outsourcing was likely to be slower than implied by such predictions, Governor Ben Bernanke said in North Carolina on Tuesday.

He said outsourcing has proved profitable primarily for clearly defined jobs involving routine activities and most high-value service jobs require workers to have physical proximity to each other, personal contacts or shared cultural experience.

Bernanke said outsourcing was not likely to restrain employment recovery in any significant way and a theory which blames outsourcing for the recent weakness in the US labour market lacked merit.

He said "astonishing" rates of productivity growth, not outsourcing, have allowed US industries to do more with fewer employees. But, because such rates were probably unsustainable as economic growth continues at its current pace, job creation will soon follow.

Bernanke presented historic data to support the view that although international trade both destroyed and created jobs, its impact on a country's long-term employment potential was marginal.

Bernanke cited statistical evidence indicating that only slightly more than two per cent of gross job losses in the US market in the past 10 years were a result of import competition.

And "to the extent that trade patterns are contributing at all to the current weakness in employment, the more relevant concern is that foreign economies are not growing as fast as our own and hence are not generating as much demand for our exports as we would like," he said.

Factors other than trade, such as population growth, education and training, determine the level and composition of employment, he added.

The approach to be followed should be to make sure that jobs become available for those who have been displaced and help workers affected by changes in the marketplace acquire knowledge and skills necessary to fill those positions.

Outsourcing of jobs has become a major election issue in the US. The Senate earlier passed a measure that would restrict outsourcing of many jobs paid for by the federal US government.


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