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designers, and the demand for webmasters or web programmers
has risen. Economic and social gaps widen if economies do not
envisage mechanisms to help the labour force adapt to techno-
logical change.
The international context in which this new set of technologies
has been growing also reinforces its pervasiveness. Several interre-
lated trends in the world economy over the past decades have had
an impact on, and have been influenced by, the diffusion of ICT. The
most notable of these trends are the globalization of economic activ-
ity, tertiarization (increasing weight of services in world output) and
the increasing importance of knowledge in global production
processes. Indeed, services such as back office processes can now
be traded across ever widening geographical distances, increasing
employment opportunities in some places and reducing them in
others. This was simply impossible before the advent of ICT. Together,
the technologies not only enabled the rapid dissemination of ICT,
but have also contributed, via their effect on demand, to further
advances like the union between telecommunication and computer
technology, the dramatic decline in the price of information process-
ing, and the rapid growth in international electronic networking.
The recent report of the World Commission on the Social
Dimension of Globalization, entitled
A Fair Globalization: Creating
Opportunities for All
,
4
also identified ICT as one of the main drivers
of globalization through its impact on facilitating trade, invest-
ment and capital flows across national borders. The increasingly
footloose nature of international production is also to a large
extent enabled by ICT.
ICT enables globalization, but also transforms it. The digital
revolution made possible by the rapid advance of these technolo-
gies is affecting every aspect of the production process, thereby
transforming the economic structure and social dynamics in every
industry. Tasks can be automated to improve product quality and
consistency. The fall in processor prices and some standardization
in enterprise resource planning, computer aided design, inven-
tory and other process management strategies are simplifying the
integration of production throughout the world. To fully reap the
benefits of the adoption of ICT, major reorganizing and re-skilling
initiatives must be promoted. ICT boosts efficiency and produc-
tivity as long as it is accompanied by the right managerial
environment, the right process re-engineering, the right skills for
effective use and the right social learning processes. This must be
adopted in a climate where cooperation is possible – and this
requires effective social dialogue, perspectives for those who might
lose their employment because of structural change, and other
measures to promote mobility in labour markets.
ICT sets in motion a process of ‘creative destruction’. It make
jobs in certain production industries and locations redundant,
but creates more productive ones in others. There are serious
social adjustment costs involved in changing the fabric of job
distribution due to such restructuring. A strategy for effective ICT
implementation has to involve accommodating institutional and
industrial structures – as well as sound industrial relations – in
order to have a positive impact on competitiveness, growth and
decent employment. Institutional preparedness, especially of the
labour market, is crucial. Organization and voice, social dialogue,
fundamental principles and rights at work, as well as social protec-
tion, such as active labour market policies, are prime components
of such preparedness.
Institutions
As in products markets, the Internet is changing the working of
labour markets. It is doing so for exactly the same reasons that
markets for goods are changing. Search and transaction costs are
falling due to ICT. There are, however, additional factors that
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Internet café that also sells shoes, photocopies and long-distance calls, Bangalore
Photo: Crozet M