Work in the New Economy

Goods producing versus service producing industries

Although the economy is undergoing rapid changes on many fronts, one trend continuously threads its way through the changes: the overtaking of the goods-producing sector by the service sector. In a 1991 report, Statistics Canada said: "Since the beginning of the century, the number of people working has grown more rapidly in the service sector than the goods-producing sector." It goes on to say that in 1911 one in three persons was employed in the service sector while, in 1991, more than two out of three were in that sector. In May 2000, Statistics Canada reported that employment grew the most in the service sector and declined the most in the goods sector, confirming that this trend had continued throughout the `90s (Benjamin, 2000).

The decline in the proportion of the national work force directly employed in the goods sector has been affected by several factors: weak demand, substantial increases in productivity due to technology and, to some degree, the loss of labour-intensive manufacturing industries to other countries. At the same time, the changing needs of society have shaped the shift of employment to the service sector. Increases in the disposable incomes of some groups and the increased participation of women in the paid labour force (necessitating replacement services for some of the unpaid work done in the home) have resulted in an increased need for services.

The Interplay of Industry and Occupation

Information on the growth or decline of an industry goes hand in hand with information on the growth or decline of employment in the occupations in those industries. Some occupations are specific to an industry, such as miner to mining, but many occupations are found in all industries, such as clerical occupations. Perhaps the biggest confusion about the industry/occupation distinction concerns service occupations versus service industries. Workers in service occupations are not necessarily employed in the service sector. Cooks also find employment in logging camps, and sales representatives work for manufacturing firms. But usually, workers in service occupations (such as cooks) work in a service industry (such as accommodation and food services).

Because industries provide information on where an occupation can be found, knowing which industries are thriving can help to increase the chances of a faster, successful job search by concentrating on those industries which offer the best opportunities for employment. The growth in the computer software industry, for example, means a secretary, warehouse shipper or accountant would likely have a better chance of finding work at such a company than finding work in mining or public administration.

Knowing about the growth of industries can help in predicting which jobs will offer the best long-term prospects. Two thirds of this decade's growth in professional, scientific and technical services come from computer design services and a number of consulting services (Statistics Canada, 1999).

Information and technology typify new-economy industries, which increasingly are demanding information workers and, specifically, knowledge workers who use information for idea creation and planning. Figure 8 shows the large difference in growth in the number of knowledge workers compared to goods-producing workers.

However, disruption still exists even in parts of the economy that have good prospects, such as health and telecommunications. Despite the growth of new-economy firms, downsizing is one of the most important cost-reduction strategies for large firms struggling to compete. Knowledge workers (e.g., pure and applied scientists, engineers and social scientists) are now more likely than in past years to lose their jobs. But, it is generally agreed that knowledge workers have a better chance than data or other types of workers of finding new jobs.

Focus on the Service Sector

A common misconception is that all jobs in the service sector are low skilled. However, many jobs in this sector actually require higher literacy levels than did the low- or medium-skilled, goods-sector jobs that have disappeared.

The service sector embraces a wide variety of occupations:

• from clerical, such as library clerk, to financial, such as auditors;
• from professional applied science, such as urban planner, to applied science technicians, such as construction inspector;
• from professional health occupations, such as optometrist, to health technicians, such as pathologist's assistant;
• from social science, government, education and religion, such as teacher and lawyer, to para-professionals, such as legal assistant and early childhood educator;
• from professions in art and culture, such as editor and dancer, to technicians, such as photographer and coach; and
• from skilled sales and service, such as insurance agent and baker, to elemental sales and service, such as cashier and security guard.

One point that emerges from all the studies on employment in service industries is that these jobs tend to be either high or low skilled. Unlike the goods sector, service industries have less middle-level skill requirements, and they tend to be more labour intensive in general.

The Home-Based Business Trend The growth of the service industry has also encouraged home-based businesses. Technological advances make it easy to work at home. At the same time, telecommuting reduces staff turnover and saves on office rental. The biggest area is in consulting. In spite of the disadvantage of isolation, home-based business is a trend likely to continue as new service needs emerge and job security continues to decline.

Over the last decade, the trend for growth in service-producing industries to outpace the goods-producing industries continued. Industry Canada (1999) reported that almost all the service industries had stronger than average growth in gross domestic product especially business services, communications and wholesale trade. By 1999, services accounted for about three quarters of total employment. Of all the self-employed people in Canada, more than two thirds work in the service sector, notably in business services.

Employment Growth in the Service Sector From 1988 to 1998, two groups in the service sector had employment growth rates more than 50% higher than the growth rate for all employment: business services; and personal and miscellaneous services. Three groups experienced growth rates that were 25 to 50% higher than the rate for total employment for the same period: communications, transportation and storage; wholesale trade; and accommodation, food and beverage. From 1976 to 1997 there was a net gain of 4.5 million jobs in the service sector. Source: Industry Canada, 1999.

The report goes on to say that producer services are growing at a much faster rate than consumer and non-market services, probably connected to the fact that communications, financial services and technical business services are among the most innovative industries in Canada. "These industries have been undergoing rapid transformation driven by innovative products, advanced technologies and increased competition" (Industry Canada, 1999).

Innovation in services is being driven by information and communications technologies (ICTs). The increased use of ICTs over the last decade accompanied by a need for knowledge and managerial expertise has been key to an increase in trade and commerce for these industries (Lavoie and Roy, 1998).

One technology innovation that has elementally changed the way service-producing industries do business is electronic commerce. E-commerce is leading the way to instantaneous feedback loops between client and company to provide the customized, immediate gratification consumers expect due to technology. The use of technological innovations has fuelled the shift from an information-based economy served by total quality management to a knowledge-based economy managed in real time.

Implications for Career Decision Making

• The service sector leads the way in the knowledge-based economy in Canada; therefore, knowledge workers will have a better chance of finding work in the service sector.
• Due to technological innovations, there is an increase in the level of skills and knowledge required to provide the kind of service needed to compete. This has decreased the demand for unskilled and low skilled labour.
• Job seekers should consider work in a growing industry because firms in these industries require secretaries, accountants, shipping and warehouse personnel as well as specialist workers. Reading the business section of the local newspaper to see which companies are expanding and what new businesses are starting up will point to those industries that are part of the new economy in a community. The local Chamber of Commerce will also have information.
• Because jobs or work roles can change dramatically (to the point of actually disappearing), it can pay off to be on the alert for skill sets that will keep a worker mobile within an industry. This may entail searching out and finding the appropriate upgrading or training.
• The prevalence of self-employment increases with age, possibly because of the experience, resources and skills older workers have to build on, combined with the increasing number of older workers and the pressure for early retirement and corporate downsizing. Older workers may benefit from training in entrepreneurship and small business management.
• Career counselling/coaching is a service industry and, therefore, subject to the same consumer expectations of immediate and customized service. It is driven by technological advances, reliance on knowledge more than information and the increasing use of personal computers. It is open to innovations such as e-commerce and developing services on-line.
• Since producer services (which include business services) are growing much faster than other services, practitioners may want to consider the benefits of developing career practitioner skills for a business milieu (human resources and employee career planning).