The Kuznets swing and the market for labour and skills

You must have seen the headlines recently? British wages falling sharply in real terms versus our EU brethren…

We wrote about a particular economic phenomenon referred to in this post about economic cycles and particularly the Kuznets swing; which we find the most interesting and thought provoking cycle. The reason for this is that it is a generational cycle, only lasting or more accurately stated lasting anywhere between 15 – 25 years.

Image representing oDesk as depicted in CrunchBase
Image via CrunchBase

So where are we on this cycle and what does it mean for me, should be the two most obvious questions to answer?

Lets address both separately below.

Firstly we believe we are now around seven years into a downward phase of the Kuznets cycle, therefore to some analysts it would mean that we are either almost half way or to others around a third of the way through this cycle.

Secondly, and more importantly, the impact it has on market participants like all of us:

We believe that the downward phase of a Kuznets swing is the ‘exuberance‘ correcting phase; when markets and other factors of productions contributing to mostly normal market clearing activity ‘got slightly out of kilter’. The Kuznets swing is always there to bring these factors of production into alignment. It is a consolidation phase of the cycle and interestingly for this particular phase, it coincides with disruptive technological advances around Cloud Computing, dis-aggregation of intermediaries, especially in labour markets with labour or skills exchanges appearing everywhere.  Examples include, Elance, oDesk, PeoplePerHour, etc..

English: Cloud Computing
English: Cloud Computing (Photo credit: Wikipedia)

Furthermore, and this is the most import action point for our readers to understand and appreciate, this consolidation and technological advance has a severe impact of wages levels and the distribution of where actual ‘work’ is being performed.

Hence headlines like the one we spotted this morning regarding real wages in Britain declining relative to other (very unproductive EU cousins) are not helpful without the pundit exploring and engaging n deeper analysis of the underlying drivers for the pressure.

The Income and Substitution effects of a wage ...
The Income and Substitution effects of a wage increase (Photo credit: Wikipedia)

Our recommendation:

Understand that the world of work is changing much faster than we had ever become used to in previous generations. As active able and willing participants in this market for labour and skills we have clear choices: Up-skill, be competitive appreciate and plan for volatility in the labour supply market, by ensuring flexibility in location, skills and prices. It is especially painful to suffer real wage declines, but remember this is the market’s subtle way of signalling a problem or challenge in that particular market and a way of adjusting in order to restore the natural balance and clearing prices.

We believe every interfering politician and educating commentator should always bear this in mind.

theMarketSoul ©2013

Tags:

Core Values

As we wind down 2011 we have entered the ‘reflective season’, where due to the structure of the Gregorian calendar and the very long(est) night of the year (in the Northern Hemisphere), we naturally enter a more introspective mood.

English: Inscription on the grave of Gregory X...
Image via Wikipedia

Therefore, as we become more contemplative during this time, let’s reflect on our Core Values, both personal and organisational, and identify the gaps or misalignment between these two key areas of our daily existence.

Then start listing or rather prioritise these gaps and only focus on the one of two of the most feasibly achievable misaligned Core Values and develop a plan or incorporate it into your New Year’s resolutions.

If the gap requires coaching or input from people or personal development providers, do something as soon as possible to diarise or follow-up.

Keeping a diary supports personal development
Image by m-c via Flickr

Look at utilising some common reminder tools we have available; pen and paper, notes or your mobile device, calendar reminders, or even new Cloud services and Apps, etc. in order to assist your “Oh Yes!” reminder moments later, should now not be the right or appropriate time or place to do something about the Core Value alignment activities you need to take.

SLA's Core Values
Image by rorowe8 via Flickr

…Turning 2012 into Positive Opportunity

theMarketSoul ©2011

In the Cloud, Structure is everything!

We have been having several conversations with colleagues and practitioners in both the Enterprise Strategy and Architecture space around both Cloud Computing and the Integrated Service IT delivery space.

Our brief conclusion is that Organisational Structure is everything.

We believe that you cannot effectively move IT Service delivery into the ‘Cloud’ and / or integrate some of the hybrid Cloud solutions and other architecture requirements, without fundamentally adjusting / realigning your organisational structure to fit the new model or modus operandi.

Therefore, the first item on the IT Change Management agenda should be a fundamental rethink and adjustment of Structure.

What usually happens is that once IT Services gets delivered into divisionalised organisations, the service quality and cost gets fragmented and ‘scope drag’ and loss of focus and control occurs.

This makes us conclude that maybe the same approach utilised in Natural Gas extraction, namely ‘Fraking’ should be utilised in IT Service delivery, in the absence of Organisational Structure change:

Go in deep and then cut across the silos in order to get to the core solution (service) delivery, because in the absence of structural service alignment, the only other option is to be as scientific and innovative as you possibly can.

theMarketSoul ©2011

An Insight into Cloud Computing

It strikes us that managing IT Service delivery maturity is a bit like the ‘Clouds’ before the major storm.

Everyone is rushing around battening down the hatches, because the frameworks and tools are so rigid and require protecting; rather than having ‘modular’ solutions available that are both flexible enough to withstand the battering of the storm; yet can be re-instated very quickly and efficiently, should the storm have managed to ‘flatten’ the landscape.

We will begin to explore some of the Cloud Computing economic and philosophical issues in a series of new articles to follow.

theMarketSoul ©2011