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Global economic challenge

18 July 2009

People writing

It is becoming necessary to confront the prospect of a high-skilled, low-waged economy for the UK, according to research from Cardiff University.

Professors Phillip Brown and David Ashton from the School of Social Sciences carried out an in-depth study with Professor Hugh Lauder, Department of Education at the University of Bath, examining the implications of a new global economic challenge.

A rapid growth in the number of people entering higher education worldwide has led to a massive increase in the global supply of a highly-educated, low-cost workforce. At present, China has more people in the higher education than the United States, and Asia is already producing twice as many engineers as the United States and Europe combined.

This has contributed to rapid economic development in emerging countries which is enabling them to compete for high-value work, offering the same skills as UK graduates but at a lower cost. Transnational companies are taking advantage of this new source of low-cost ‘talent’.

Professor Phillip Brown said: "Transnational companies are currently offshoring more of the jobs, such as research and development, we’d been previously told could only be performed by highly trained workers in affluent economies such as Britain.

"Our findings challenge the policy mantra of a high-skilled, high-waged economy. While the skills of the UK workforce remain important, they are no longer a source of decisive competitive advantage as many developing countries are adopting the same tactics. It is how the capabilities of the workforce are combined in innovative and productive ways that will hold the key in future.

"If the government fails to gain an accurate understanding of the global challenges and opportunities confronting Britain’s workforce as the world economy recovers from recession, it is likely to pay a high political price as individual expectation becomes further removed from economic realities."

The research, funded by the Economic and Social Research Council, is based on a study of seven countries: Britain, China, Germany, India, Korea, Singapore and the US. The research team are now engaged in a follow-up study to assess the impact of global recession on corporate and national economic strategies, funded by the ESRC Centre for Skills, Knowledge and Organisational Performance (SKOPE).

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