A mistake made by some people (usually without a grounding in economics
) that the labour
market is assumed to be static
. For example, in country X there can only be 3,000,000 jobs available, and therefore reducing trade
barriers, increasing immigration
, relocating production offshore or adding labour-saving technology
to the production process will somehow stop locals from getting jobs. Stealing jobs
is a common expression, as if an employee-employer relationship is something tangible
What is forgotten is that the labour market is continually changing. New technology will displace some workers, but will create jobs elsewhere. Foreigners in developing countries performing the same jobs as what those in developed countries were doing ten years ago will demand imports. The profits gained by investors thanks to increased labour productivity could then be used for further investment.
In the 1950s some doomsday prophets feared mass-unemployment due to employers mechanising manufacturing. That hasn't happened.
The policy of the Loi Aubry in France (the 35 hour work week) was based on the Lump of Labour fallacy, and thus did not contribute to any sizeable rise in employment. It was hoped that by forcing employers to restrict their staff to working a limited number of hours a week, more staff would be required to be hired to make up the difference in labour requirements. Instead, as this represented an unwanted wage rise to employers, jobs were simply relocated offshore, automated or the existing staff were simply made to work harder within their allocated hours of employment.
What is of issue is the ability for workers in threatened industries to retrain themselves to make themselves employable for opportunities in emerging industries.