Two scientists at the French statistical institute (INSEE) have tried to quantify the impact of offshorisation on joblessness using a novel, indirect way, and their result are quite interesting.
Their approach, using the exhaustive statistical data available to INSEE, was to identify all cases where job losses in a group are accompanied by a surge of imports by this group of the product categories that it produced. This was done for all job losses throughout France for the years 1995-2001.
Thie conclusion is that offshorisation caused only 13,500 job losses per year in the manufacturing sector (out of 500,000 total jobs lost per year) - and more than half of that went to high-income countries.
Offshore Outsourcing and the size of the French Industrial Labor Force (pdf, 48 pages, in French)
Abstract
We estimate the amount of job losses in the manufacturing sector in France due to offshore outsourcing. Our estimation is based on exhaustive, micro-level data covering all firms in the manufacturing sector in France from 1995 to 2001. We identify the groups or firms where employment decreases in French units and, at the same time, for which the imports of the good previously produced in France increases.
Between 1995 and 2001, 13 500 jobs are lost each year on average in France due to offshore outsourcing in the manufacturing sector. In slightly less than half of the cases, offshore outsourcing is directed towards a low wage country : mainly China, but also North Africa, Eastern Europe, Asia, Brazil. Job losses are more frequent in some sectors, such as clothing, textile, domestic equipment, manufacture of electronic equipments and components. Nonetheless, offshore outsourcing is observed in nearly all sectors.
Of course, things may have changed in recent years, especially with China's emergence as a major industrial power, but it does relativise the scale of the phenomenon. (China was already the first destination for offshorisation back then, but not in a scale significantly larger than movements to france's neighbors of the USA)
The study also provides the following bits of information:
- it's mostly the big companies that offshorise, whether French or foreign;
- some sectors are a lot more touched (like textile, leather goods, home appliances) than others, but this applies to all;
- the intra-OECD movements appear related to internal reorganisation of production within large groups whose main motivation does not appear to be labor costs;
- jobs are lost pretty equally across all categories of employees in companies that offshorise, but companies with larger shares of unqualified jobs offshorise to low income countries, whereas offshorisations to high income countries apply more to companies with higher shares of qualified jobs:
("ouvrier" = worker, the other categories should be clear. The first table shows the structure of jobs before the job losses, the second one, the jobs lost. The first column applies to all offshorised jobs, the second to offshorisations to high income countries, the third to low income countries).
While any offshorisation is a tragedy to those that have to live through it, it appears not to be a significant macro-economic phenomenon yet. The authors have stated that they will update their study once they have data for more recent years, so we'll see if there has been an acceleration.
in the meantime, remember - the competition comes first from other rich countries.