Most Important Event
According to Tony Blair, a month or two back, the most important event taking place in the next 6 months would be the next round of the GATS negotiations aimed at freeing up world trade in Cancun in Mexico. This will take place under the auspices of the World Trading Organisation (WTO).
It appears, at national level, that this ‘˜tip‘ has been ignored and the concentration has been on the domestic Hutton enquiry, and whether Alistair Campbell ‘˜sexed up‘ the Iraqi WMD document.
However, IT reunion site NamesFacesPlaces has discovered, while all this has been going on, that the EU has made an offer to the 130 WTO members states as follows:-
‘Computer and Related Services
In Computer Services, a sector that is key to the development of the Information Society in Europe, the Commission proposes to offer full market access to foreign service providers, including to high-skilled self-employed computer experts. This should enable Europe to benefit from the best computer services at the lowest cost, with a view to reach the goal set in the ‘Lisbon Strategy’.’
If this offer is accepted as is, then that will mean devastation for the UK IT jobs industry, as UK workers cannot hope to compete with those from the developing countries’.
The shock news has had IT workers up in arms in the Comments section of NamesFacesPlaces and on the ContractorUK and Professional Contractors Group Forums.
This news came completely out of left field.
Indeed, the PCG Board of Directors went into immediate action and headed for London straight away for an extraordinary general meeting on the subject. They have yet to formulate a response, given that it came as a complete shock to everybody.
NamesFacesPlaces reported that, last autumn, Fast Track Visas were suspended and all IT skills were taken off the Skills Shortage list. As a result, the number of IT work permits issue dropped from 27,475 to 22,724 in the year to April 2003. In the first quarter of this year, they had fallen by 37% from the same period last year.
This was because there were only two remaining ways for IT skilled workers to come into the UK:-
1) If a UK company had advertised extensively for a particular skill, and weren‘t able to find someone in the UK with that skill, then they could take someone from outside the EU. The salary paid would have to be at least the market average for that skill
2) If, for example, an Indian company had sold a UK company a software package, and the UK company wanted someone with specific knowledge of that package, then that person could be transferred to the UK company under an Intra Company Transfer
As it would be difficult to see how nearly 23,000 could be given IT work permits, especially in the current climate, under these two scenarios, the Professional Contractors Group have flagged frequent abuses of the system to Work Permits (UK), but to no avail.
Also, recently, the Government appointed a representative from the Indian Business Group, the IBG to the UK IT Skills Panel, which looks at IT skills shortages in an advisory capacity’.
It didn‘t seem to add up that no one was being prosecuted despite flagrant abuses of the system, and it seemed bizarre that an Indian group would be appointed to a group that rules on whether there are IT skills shortages in the UK.
There was a missing factor though in our understanding.
It was a bit like if cannabis was to be legalised from a future date, then police officers would not spend too much time chasing and prosecuting those found with it in the interim period.
We didn‘t know that the current rules were going to be swept away and that the EU and UK governments were offering to completely free up the IT jobs market to skilled workers from any country that offered the EU and UK concessions over the first three Modes, which concerned the trade in goods and services.
In other words, IT jobs are to be traded at some global poker game for greater access to the markets of developing countries. The more access that the developing countries are prepared to give our major companies to their home markets, the more that they can have in terms of access to our IT jobs market for their companies and skilled workers.
According to the EU, similar offers have been made by the USA, Japan and Canada.
Big Poker Game
The big ‘˜global poker game‘ will be taking place in Cancun in Mexico on September 10th to 14th. However, more than 70 of the WTOs 130 members have said that they want to sign up to this offer.
It‘s still not known whether this offer will involve quotas, but that is all down to negotiation and how much the developing world is happy to give away.
As the statement from the EU said, the primary aim is ‘enable Europe to benefit from the best computer services at the lowest cost’.
The end point for the negotiations is January 2005, and the implementation of any agreements will come shortly afterwards. If this agreement is put in place as it stands, and if as many WTO countries take up the offer as it seems that there will, then there will be devastation across the industry.
IT unemployment, which has already risen by 88% in the past year, according to e-skills, from 25,000 to 47,000, will soar dramatically.
IT Unemployment Will Soar
If you work in IT, even if your job is not going to be shipped offshore, you will be competing with tens of thousands of skilled IT workers from the developing countries.
The Laws of Supply and Demand say that if you increase the Supply of a commodity (in this case IT labour) by greater than the Demand, then the price of that commodity will fall. This will definitely result in lower rates for contractors and higher unemployment.
Permanent IT employees‘ salaries have been protected during the downturn and have remained virtually the same now as when the downturn started.
However, the Laws of Supply and Demand state that if Supply is greater than Demand, but where prices are prevented from falling (by Government legislation), then this will result in unemployment.
This is likely to be the result if, as is likely, the EU and the other WTO countries strike a bargain on access to out IT labour markets.
This has really come out of left field and has been discovered by NamesFacesPlaces with only about a month before the next stage of negotiations.
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