Ups and downs of economic year 2005

Industrial jobs decline, new opportunities arise

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By Juhana Rossi
     
      In 2005 people around the world had greater opportunities for personal enrichment than ever before.
      The lucky ones included Nicklas Zennström of Sweden and Janus Friis of Denmark, who sold the Skype Internet telephone programme to the online auction company eBay.
      Some commentators were reminded of the Internet frenzy of the turn of the decade. Undoubtedly, eBay paid a rather large amount of money - EUR 2.1 billion - for a loss-making company, whose turnover is estimated this year at about EUR 50 million.
      No matter what the final outcome of the Skype deal is, it serves as a reminder of the positive opportunities that today's world - where people, money, and labour move freely - has to offer.
      The success of Skype was not decided by the countries of origin of Zennström, Friis, and Skype's approximately 150 Estonian information and communications technology experts. What was significant was that they had a dream which they decided to implement.
     
Also moving ahead were the 92 Thais who travelled from their country to pick berries in Savukoski in Finnish Lapland. The Thais took a risk by borrowing money at home for their travel and housing expenses. The only certainty was that they would be doing piecework from dawn to dusk.
      According to the pickers' employer, the risk paid off. The best picker earned EUR 6,408 tax free, making in two months nearly the equivalent of the annual Thai per capita GDP.
     
But while 2005 offered opportunities for enrichment, it also led to the loss of many jobs in Europe and the United States.
      "This is a permanent transfer of planning and production to Asia", said deputy shop steward Janne Hämeenaho at Flextronics ODM Finland, in late July when the contract designer of mobile phones announced that it was slashing its work force in Oulu by 190-210 people.
      The job cuts that actually did take place were smaller than initially announced, and design work for mobile phones was not completely transferred to Asia. "There will be something somewhere else as well", said Hämeenaho five months later.
      In spite of the job cuts, Hämeenaho and his colleagues were in a relatively good position. They had the scope to adapt to demand on the labour market.
     
Things did not go as well for the 419 employees of the confectionery goods manufacturer Leaf, whose jobs will disappear when Leaf shuts down its factory in Turku at the end of 2006.
      "Things look bad", says head shop steward Raimo Häikiö, when commenting on the prospects for the workers to get new jobs.
      The average age of the Leaf workers is 44, and 80% of them are women. Their chances of getting work again are probably weaker than for Flextronics designers, for instance.
     
Reports of personnel cutbacks kept coming in at a steady pace through the year: Perlos, Foxconn, Steveco, Hartwall, Finlux, Finnet...
      If an entire factory was closed down, all jobs went, but often the cuts were smaller than the companies had initially announced when negotiations with staff began.
      In the autumn, the Uusikaupunki car assembly plant announced that it was hiring 150 new workers, and ABB said that it would take on 50 new workers for its Vuosaari factory to manufacture propeller systems for ships, and Aker Finnyards announced shortly before Christmas that its three shipyards in Finland had work for all of its employees until 2008.
      The number of people with jobs grew in Finland by 28,000 from November 2004 to November 2005, and the unemployment rate declined by 0.1 percentage points to exactly 8.0%.
     
The disappearance of jobs from Finland and other Western countries was explained by the notion that production is constantly seeking cheaper labour, whether in Eastern Europe, Central America, Asia, or above all China.
      Both poor and rich countries voiced fears that China is sucking the industrial jobs out of the rest of the world.
      This vision is one way to look at the mobility of work in a globalised world. But the situation can also be seen from the point of view of the Chinese. For them, every new job is important.
     
China's population officially exceeded the 1.3 billion level in 2005, and the growth continues.
      This number of people live in country which, according to some studies, would have enough resources to sustain the burden of about 700 million inhabitants.
      Under these conditions, China's governing Communist Party is trying to hold together a country in which a number of different realities intersect.
      In addition to the prosperous neon-lit coastal cities, China has 800 million people living in the countryside.
     
One indicator of conditions in China's rural areas comes in figures put out by the Ministry of Agriculture, according to which 240,000 people in rural China commit suicide every year.
      So it is no wonder that people in China who are eager to work are flowing from the countryside to the cities, even though the annual pay is just EUR 1,000, and although the danger of losing a limb or of getting killed in an industrial accident is a very real one.
     
For Finland and other Western countries this means that the disappearance of jobs is set to continue, but the cheap Chinese goods spreading around the world also mean that more people living in the West can satisfy needs in a way that they could not afford to before. At the same time, rising demand in China helps create jobs elsewhere.
      To satisfy the demand, only one commodity is needed: money, and there was plenty of that in the world in 2005.
      The amount of money in the euro zone grew so much that the European Central Bank became worried and raised the price of money by increasing its lending rate by 0.25%-points in early December.
     
One indicator of the amount of money in circulation comes from capital investors who amass money in order to make more money. In 2005 capital investors signed corporate deals all over the world worth hundreds of billions of euros.
      The consultant firm CapGemini and the investment bank Merrill Lynch calculated that the combined wealth of the world's 8.5 million richest people grew to EUR 27,000 billion.
      A person is considered rich if his or her net holdings are at least one million US dollars, or EUR 850,000.
      The increase in the money supply also meant that there was an intense search for targets of investment. The price of the most secure investment commodity - gold - rose to more than EUR 14,000 a kilo. Four years ago, gold was available for just half the price. Pushing up the price of gold was the high demand in the increasingly prosperous Chinese and Indian markets.
     
One of the most popular books of 2005 was The World is Flat by US author Thomas L. Friedman.
      The basic idea of Friedman's book is that the new communications technology - mainly the Internet - together with the end of the global split of the Cold War, have made the world flat.
      Now people in all parts of the world can seek prosperity and get their voices heard. Such people include the two Skype gents Niklas Zennström and Janus Friis, and the Thai berry-pickers.
      Many reviewers have criticised Friedman's book as too optimistic. The message it carries is of little comfort to the workers at Leaf who are losing their jobs to the other side of the flat world.
     
Helsingin Sanomat / First published in print 30.12.2005  


Previously in HS International Edition:
  Thai berry pickers earn money in Finnish Lapland (5.8.2005)
  Sweets manufacturer Leaf shuts down its plant in Turku (25.5.2005)

JUHANA ROSSI / Helsingin Sanomat
juhana.rossi@hs.fi