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Ian Miles CRIC & PREST, Manchester
Ian.Miles@man.ac.uk http://les.man.ac.uk/cric/Ian_Miles http://les.man.ac.uk/prest paper prepared for Luxembourg congress "New Jobs in the Information Society" March 2000
Knowledge Intensive Business Services have been the fastest growing component of business services, themselves the fastest growing share of the services sector and employment overall. These services play an important role in generating, processing, and delivering knowledge to users. The knowledge may take various forms - it may be about external regulatory or legal environments, about science and technologies, about markets and customers, about labour markets and company organisation, about competitors and the reliability of partners, and so on. It may be delivered as written text, verbal presentations, or in the form of software and decision support services; or it may be implemented in the form of a physical service like logistics or treatment of hazardous wastes. The extent to which the service promotes development of knowledge in its clients varies across these modes. For various reasons, the role of information and knowledge intermediaries of these sorts - some long-established, some so new that statistical categories to classify them are unimagined - has been growing as we enter the information society. These reasons include corporate strategy (the rise of strategic outsourcing) and the requirements for new sorts and fusions of knowledge as the new economy emerges. The paper will argue that, while new technology can be applied to reduce the need for some of these services, the dynamics of the system make it likely that there will continue to be growing demand for an everincreasing range of services. The knowledge intensive business services, not surprisingly, employ high shares of "knowledge workers" of many sorts. In some cases the principle role is collecting, collating, and translating knowledge resources from producers of knowledge elsewhere, and perhaps fusing these with knowledge of clients'
specific circumstances. In some cases they are more dynamic producers of new knowledge themselves, as in the case of services conducting R&D. In other cases they are applying knowledge like any other firm producing a good or service, but in such a way as to relieve their clients of the need to acquire and deploy such knowledge themselves. The paper considers several questions about the dynamics of growth of these firms: • where do their workforces come from? • what skills do they possess? • what skills do they acquire through their activity? what are the career trajectories that are encountered here? It will also address several wider issues for policy and strategy: • are there new emerging relations between public versus private knowledge systems? • what are the implications for international trade and the location of employment opportunities? • what is the future for expert labour? which knowledge intensive services and forms of expertise are likely to become more or less important?
The growth of the services sector(s) is one of the best-known trends in industrial societies. Indeed, it has been so prominent as to lead many people to talk about “the coming of post-industrial society” (in Daniel Bell’s memorable but misleading phrase). Figure 1 displays some recent data on the employment growth in services. And, as Eurostat reported in 1998: “On the verge of the 21st century the European economy has become to a large extent a service economy, sometimes also characterised as ‘postindustrial’….in 1970 market services represented 36% of Community GDP and 31% of those employed. Today they account for 50% of EU GDP – ranging from 40% in Finland to 55% in the Netherlands and 63% in Luxembourg… In employment terms, 45% is in market services. This ranges from 30% in Greece to 60% in the UK. And if non-market services are added, services account for 64% of GDP and 66% of employment.”1 Terms like “post-industrial” and “service” economy are in some respects misleading, since they may be taken to imply that manufacturing is somehow unimportant. It is probably more accurate to think of our economies as entering a stage of “hyperindustrialism” or “metaindustrialism” in which (a) services are themselves increasingly industrialised; (b) services are applied to governing the course of industrialisation (through new divisions of labour, etc.); and (c) all sectors of the economy are converging on new forms of industrialism involving these new divisions of labour, the use of Information technology (IT), the use of knowledge and expertise. However, as Giarini has pointed out,2 in one respect it is relevant to think of the “service economy” – it is increasingly common for managers in all sectors to frame their strategies in terms of services, whatever they are producing. Almost without exception, the managers I have spoken to over recent years report that they have to think of their products – be they molecules, machines, or meals – in terms of the service which the customer is deriving from them, and from the other services (aftersales, design, marketing, etc) which they need to manage alongside the physical production process.
Quoted from SERVICES NOW DOMINATE EU ECONOMY Memo 14/98 22 June 1998 (p1), drawing on Eurostat Statistics in focus, Distributive trade, services & transport, no 5/98, Services in Europe – Key figures. Luxembourg, Eurostat 2 Orio Giarini, ed, The Emerging Service Economy Pergamon Press, Oxford, 1987
Figure 1 Service Employment Growth in Three Economies
EU 1985-1990 EU 1990-1996
0 Industry -1 Services Industry and services
US 1985-1990 US 1990-1996
0 Industry -1 Services Industry and services
Japan 1980-1985 Japan 1985-1990
0 Industry Services Industry and services
“Industry” includes extractive and construction sectors (but not agriculture); “services” includes government.
Source: OECD, STI Outlook 1998, p. 43
Not all service sectors participate in this growth, however, and some grow at much faster rates than others. But for present papers, the structure of employment across services is as interesting as their scale. One useful source of comparative data over time and across countries is the OECD dataset3 that allows for comparison of employees in terms of two dichotomies: white- and bluecollar workers, and high and low skilled workers (the latter based on levels of educational attainment4). Occupations are thus aggregated into four main blocks of nine detailed groups: • Whitecollar highskill (WCHS): Legislators, senior officials and managers (Group 1), Professionals (Group 2), Technicians and associate professionals (Group 3). • Whitecollar lowskill (WCLS): Clerks, service workers (Group 4), shop & sales workers (Group 5). • Bluecollar highskill (BCHS): Skilled agricultural and fishery workers (Group 6), Craft & related trade workers (Group 7). • Bluecollar lowskill (BCLS): Plant & machine operators and assemblers (Group 8), Elementary occupations (Group 9). The OECD data set shows, as we would expect, that in manufacturing, BC workers account for the largest employment shares, and in services, WC workers account for the largest shares. The skill profile of total employment displays similar patterns in three groups of countries: the United States and Canada; Australia and New Zealand; and European countries. Let us consider the European data. Table 1 presents the OECD data for all UK service sectors represented in the study. Services are on average strikingly more white-collar-based than other sectors; overall they have a slightly lower level of high skills, but the level of white-collar high skilled workers is higher. However, the interesting variations appear within services. Table 2 presents the subsectors’ WC employment in more detail for three countries. (The data are ordered here according to the share of high skill whitecollar workers in their overall employment, in the UK data series.) The data show general similarities across the three countries examined, though there are some puzzling differences.
OECD, OECD Data on Skills: Employment by Industry and Occupation, STI Working Papers 1998/4, OECD, Paris, 1998. Thanks to OECD for making these data available on the Web! They can be located via http:\\oecd.org\dsti 4 Note that the OECD study concluded that, on the basis on analysis of within- and betweenindustry factors in changes in occupational levels, their measures of skill seem more comparable for manufacturing than for non-manufacturing. It is interesting to speculate that this may be hinting at the role of on-the-job training in the two grand sectors.
Table I Occupations in UK Services, 1991, OECD dataset Shares of Total Employment Sector:
Wholesale / retail trade, hotels, restaurants Wholesale trade Retail trade Hotels & restaurants Transport, storage and communications Transport & storage Communications Finance, insurance, real estate, business services Finance Insurance Real estate & business services Community, social & personal services Public administration & defence Sanitary & similar services Social & related community services Recreational & cultural services Personal & household services International services Total services Total economy by occupation
White collars Blue collars HSWC High skill Low skill
86% 66% 88% 97% 54% 43% 77% 95% 98% 99% 93% 90% 92% 81% 96% 83% 67% 93% 87% 71%
14% 34% 12% 3% 46% 57% 23% 5% 2% 1% 7% 10% 8% 19% 4% 17% 33% 7% 13% 29%
30% 33% 31% 25% 21% 22% 21% 53% 49% 49% 56% 48% 45% 16% 60% 47% 18% 64% 41% 36%
36% 42% 37% 27% 33% 30% 40% 56% 49% 50% 60% 54% 49% 19% 61% 59% 41% 67% 47% 52%
64% 58% 63% 73% 67% 70% 60% 44% 51% 50% 40% 46% 51% 81% 39% 41% 59% 33% 53% 48%
Source: OECD dataset
Three broad groups of services can be identified in terms of the skill levels displayed in these data.5 (The benchmark case in the analysis is UK data, and variations across the three countries are noted in italics). • Low Skills. The first group consists of services involved with personal and domestic services and sanitation. Many of these are physical services cleaning up after household and to some extent industrial activity (though there are also activities like hairdressing here). They have low shares of HSWC, though personal services do have a good share of HS workers more generally (still lower than the services average). The “sanitary services” sector appears to have many more HSWC workers in France and Germany, as does German personal/household services. • Low/Moderate Skills The second group consists largely of services which are involved in moving and storing artefacts – trade, horeca, communications, transport - and their share of HSWC also falls below the average for the economy, though is higher than for the first group. (Within this group there are exceptional subclasses that do not fit the description above – communications is a case in point; indeed, in transport, storage, and communications services, BCLS jobs actually predominate across the set of countries studied by the OECD.) The UK and France are very similar, but there are fewer HS and HSWC workers in Germany. • High Skills The third group, in contrast, has extremely high levels of HSWC, and comprises symbol-processing services such as FIRE, and social, community, and cultural services, which combine symbolprocessing with interpersonal and human operations. These groups appear to have outstanding volumes of intangible investment in terms of “knowledge workers”. (But the details vary: FIRE and business services have many HSWC, while in many OECD countries the social services group’s jobs are more equally shared between HSWC and LSWC ones.) UK social and community services emerge as higher skilled than in the other countries, whereas German FIRE sectors are generally extremely high in HSWC shares.
Michael Peneder of WIFO has used cluster analysis techniques on the OECD data for manufacturing sectors, (unlike us, he combined results from different countries), but like us he identified three main clusters: low skill industries (low shares in white-collar high skills and mean to low shares in blue collar high skills); medium skill industries (sometimes differentiated between blue- and white-collar industries); high-skill industries. See Part 2, chapter 2 (“Intangible investment and structural patterns of European manufacturing industry”) in European Commission, 1999, The Competitiveness of European Industry: 1999 Report, Luxembourg, EC, for a convenient and nontechnical account. Our classification differs from Peneder’s, of course, largely because of the low presence of blue-collar workers in the service sectors.
Table 2 Three Countries’ Data on the Share of High Skilled Employees in the Workforce of Service Sectors UK 1991 SIC industry
9200 9500 7200 7100 6300 6200 6100 9100 9400 8100 8200 8300 9300 9600 TOTS TOT
France 1990 Germany 1990 HS HSWC HS HSWC HS
77.89% 48.21% 19.00% 13.96% 34.92% 25.86% 26.50%
sanitary & similar services personal & household services communications transport & storage retail trade wholesale trade
15.74% 19.48% 49.57% 51.59% 73.47% 18.23% 41.47% 11.25% 38.25% 32.35% 3.32% 5.53% 6.17%
20.94% 40.40% 39.91% 45.40% 21.63% 30.27% 20.51% 30.27%
hotels & restaurants 25.48% 26.89% 34.19% 35.77%
30.61% 36.93% 38.98% 48.64% 12.96% 32.82% 41.97% 43.66% 50.37% 17.15%
public administration 45.05% 48.84% 52.66% 59.72% 27.72% 40.33% & defence Recreational & cultural services finance insurance real estate & business services
46.69% 58.58% 63.55% 72.29% 68.83% 48.63% 49.49% 43.59% 44.10% 81.96% 49.25% 50.11% 52.86% 53.61% 76.12% 73.27% 82.66% 77.28% 61.15%
55.58% 59.91% 53.93% 59.48% 56.43%
59.53% 61.41% 28.54% 33.86% 38.44% 41.18% social & related community services
international services total services total economy by occupation
64.44% 67.37% 52.00% 54.14% 47.24% 41.47% 47.37% 42.43% 49.95% 34.05% 35.68% 51.86% 33.73% 53.98% 26.69%
57.85% 45.26% 52.25%
Source: OECD dataset. Data ordered in terms of HSWC-intensity in UK cases.
Interpreting the cross-national variations is not easy. There may well be substantial differences in industry structure and occupational composition across the three countries. But caution is required in using these data – the variations may reflect classification issues, despite considerable effort to obtain comparable NACE and ISCO classifications.6 The pattern of growth across these groups is a mixed one, and roughly follows the three groups. Thus, FIRE and business services typically display the most rapid growth of employment – and in occupational terms this is mainly a matter of HSWC workers (though the OECD study points out that in the USA the growth is more a matter of LSWC). The social, community, and cultural services group displays the next most rapid pattern of growth in recent years (except in Japan) – despite efforts by governments to limit growth in public service employment. This growth involves both HSWC and LSWC. Sectors featuring in our second group then follow: retail trade (especially due to an increase in LSWC jobs - sales and service personnel) and transport, storage, and communications services. The sectoral shifts to services are thus compounded by occupational shifts within the fastest-growing services. And these shifts are paralleled by occupational shifts within manufacturing, involving what we can view as a growing share of service workers and a declining share of material production workers in manufacturing. As the OECD study summarises trends: “the white collar high-skilled grouping … has tended to show the fastest growth, followed by the white collar low-skilled group. … Broadly speaking, two main trends can be observed throughout all countries: a constant increase in the share of professional employees, especially within services; and a general decrease in the share of blue collar workers in both manufacturing and services…. In the services sector, professional employees… accounted in the early 1990s for over one fifth of total employment in Finance, Insurance, Real estate & Business services (FIRB), and over one third in Community, Social and Personal Services (CSPS). FIRB has traditionally been a high-technology sector with large shares of high skilled jobs, while employment in CSPS has only recently begun to shift from clerical (Australia, Italy, Netherlands), service (Germany, Sweden) and elementary (Denmark, New Zealand) jobs, towards high skilled occupations. In manufacturing, professional occupations have gained relative weight in high technology industries, reaching a share of over 10 per cent in most countries. The decrease in blue collar shares in both manufacturing and services suggests restructuring within industries, independently of the structural transformation towards higher employment in services… In manufacturing, the overall trend (more evident in the high-technology sectors) is towards increasing shares of employment for white-collar high-skilled workers, and decreasing ones for bluecollar low-skilled workers.… The two service sectors which have recently
The sectoral classification derives from ISIC rev 2. It may actually be more problematic than the ISCO88 occupational classification. There is a tendency for Germany to record smaller shares of HSWC, though more HS in general. This corresponds to a common view of German industry as being less inclined to deskill BC workers in favour of management than countries like the UK.
contributed most to employment growth (FIRB and CSPS) have experienced two similar trends in almost every country: a rapid increase in professional jobs; and constant increase in managerial jobs. In the case of FIRB, clerical positions have tended to lose employment shares, while in CSPS the trend is mixed…”7 So, services as a whole have grown more rapidly than manufacturing, and business services8 have grown more rapidly than services in general. Business services achieved 5.5% annual growth rates in employment and 5.4% in valueadded over 1980-94, as compared to 0.4% and 1.5% for manufacturing and services combined in the EU, and for the 1984-93 period the growth rate of exports and imports were 8.7% and 10.2% respectively, as compared to 5.1% and 5.2%.9 A recent OECD study discusses “strategic business services” - computer software and information processing services;10 research and development and technical services; marketing services; business organisation services; and human resource development services. Examining data for a large sample of OECD countries, it comments: “the growth of these business services … has been robust in general and spectacular … in the recent years, including those years when overall economic growth was slow or absent. For example, in Finland, official data report that value added for the broad business services group grew by 9 per cent annually during the period 1985-95. Similarly, in the United Kingdom, official estimates for a somewhat broader group of business services, states that these are some of the fastest growing activities in the UK economy, with real growth rates in output being double those of the entire economy in the past decade. Value added in France for the strategic business services expanded by 19 per cent between 1993-95 and 20 per cent in 1995-96. Other measures, such as turnover, illustrate the expanding role of such services in other economies. For example, in the United States, growth in turnover for these activities totalled 50 per cent between 1990 and 1995 … while in Japan turnover increased by 31 per cent between 1989 and 1994.”11
A. Colecchia and G. Papaconstantinou (1996) The Evolution of Skills in OECD Countries and the Role of Technology, DSTI Working Paper OCDE/GD(96)183, pp 9-10 8 Eurostat notes that: ” the EU has some two million business services enterprises. In most Member States the number has doubled in a decade”. 9 Data cited in Annexe 2 of The Contribution of Business Services to Economic Performance: towards a common policy framework Brussels, European Commission COM 1998 534 final 10 The largest of these, followed by business organisation services. 11 G Vickery and M Murphy, An International Study Of Selected Business Services OECD Paris 1998
Knowledge-Intensive Business Services
The last decades have seen a dramatic growth of what are variously known as strategic business services, advanced producer services, or, as we shall call them here, Knowledge-Intensive Business Services (KIBS). KIBS exemplify, and foster, the knowledge-intensification of industrial economies. Their growth reflects increased demands for knowledge in the economy, and also an ongoing division of labour leads to specialised services emerging and playing prominent roles in knowledge accumulation and transfer. KIBS can be defined12 as services that: • Rely heavily upon professional knowledge. Thus, their employment structures are heavily weighted towards scientists, engineers, and experts of all types. Many are practitioners of technology and technical change. Whatever their technological or professional specialism, they will also tend to be leading users of Information Technology to support their activities. • Either supply products which are themselves primarily sources of information and knowledge to their users (e.g. measurements, reports, training, consultancy); • Or use their knowledge to produce services which are intermediate inputs to their clients' own knowledge generating and information processing activities (e.g. communication and computer services). These client activities may be for internal use or supplied to yet other users in turn. • Have as their main clients other businesses (including public services and the selfemployed). Indeed, knowledge-intensive activities will frequently tend to be business-related, since as labour-intensive activities they will be relatively costly. (Educational and medical services demonstrate that delivery to final consumers often has to be mediated through collective service organisation.)
A further distinction can be made between new technology-based KIBS, who are key repositories of S&T knowledge and workers, and more traditional professional services, whose knowledge concerns administrations, laws, and the like. (For example, the contrast between software and telematics services versus accountancy and legal services; environmental and engineering services versus staff counselling and public relations services, etc. Some activities that are social science based – like market research and survey analysis, are closer to the technology-based services than the traditional professional ones.) The traditional professional services are often intensive and advanced users of new IT. There is some crossover from traditional professional services to KIBS, reflecting the general process of knowledge-intensification. “Spin-offs” and new
I Miles, N Kastrinos, K Flanagan, et al. Knowledge-intensive business services: users, carriers and sources of innovation DG13 SPRINT-EIMS publication No. 15, EC, Luxembourg (1995)
firm formation occur where KIBS emerge from traditional professional services. For example, professionals with experience of new technology - in particular IT establish vertical niche markets promoting the application of technology into their old specialisms (or sometimes to their old clients). They often generate new applications, combinations, etc. of basic technologies. (Examples include: accountancy firms selling financial software to clients; specialised training companies heavily utilising computer-assisted training; firms selling software and database applications to building service companies.) The spin-off from professional services into technology-based KIBS is largely similar to the spin-off from other sectors into KIBS. A common route for KIBS formation is via the specialised services provided to a company by, say, its IT or test engineering departments, being gradually “marketised”. Thus, first they are asked to charge other parts of the firm a market rate for their services, then they are allowed to sell the services more widely, finally they become a stand-alone operation. This picture is extremely simplified, and the precise patterns of development are highly variable, but the dynamics are apparent. Another source of KIBS formation, especially for micro-businesses, is the creation of new consultancy and similar firms by professionals who have been displaced by companies intent on “downsizing” their workforce. Others spin out of University departments and government laboratories (and in some countries there has been a tendency to privatise these public facilities, resulting in the creation of new KIBS – if they survive.) The technology-based KIBS (T-KIBS) are important agents in the development of new technologies. This especially applies to the development of applications of these technologies to the specialised requirements of particular businesses or groups of businesses. These KIBS assist in the widening of this technical knowledge, as their interaction with clients leads to greater client understanding of the technical choices and solutions they may undertake. This contributes to an amassing of technological capabilities in the economy. We shall focus especially on T-KIBS in the following discussion. Knowledge is often described as organised information13, but is more helpful to see knowledge itself as an active process involving the ability to organise information. It is not just the results of applying that ability. It is more of a practice, than a thing. Knowledge is a matter of learning. It may be developed in a variety of ways - through learning by doing and by experimentation, communication, formal training etc. Because of their role in interactive learning14, T-KIBS typically require more supplier-user interaction than more standardised “symbol-processing” services
Thus there is a familiar hierarchy: data – information – knowledge – wisdom (and perhaps extending to enlightenment or transcendence?). each is supposed to involve a higher level of organisation. 14 The term used by B-Å Lundvall in his analyses of innovation systems and the knowledge economy. Cf B-Å Lundvall ed., 1992, National systems of innovation, London: Pinter.
(such as packaged software, broadcasting, telephony, standardised financial services). KIBS thus fit the stereotype of services as involving high levels of interaction relatively closely. Their roles may focus on, or combine: • adding innovative knowledge originating from the KIBS itself (KIBS as a source of innovation), • originating innovative knowledge from another source to the client firm (KIBS as carrier of innovation) • helping out a client in implementing new knowledge mostly developed in house (KIBS as a facilitator of innovation). One way of summarising this is to see them as playing catalytic roles, or as acting as interfaces in innovation systems. Often what is involved is a coproduction of knowledge with a client or network of collaborators. At one extreme this may be little more than a pooling of the knowledge resources of each party – the service supplier provides generic knowledge that is combined with the user’s specific problem-related knowledge. In other cases there is more active joint production of new knowledge. That involves sharing work on the problems and solutions. It is not uncommon for commentators to be very sceptical about the role of KIBS (especially consultants – where there has emerged a profession of consultants who help companies reduce their dependence on consultants!). But there is strong evidence that the use of KIBS can benefit clients. At macro-levels, several studies confirm from input-output analysis that use of KIBS is correlated with better growth, and that KIBS can effectively be treated as a factor of production alongside capital and labour.15 And at the micro-level, analysis of innovation surveys shows that, alongside such familiar “determinants” as the proportion of the workforce that are QSEs, workers, collaborations with KIBS and other knowledge generating institutions such as universities have significant impacts on the innovative performance of firms as assessed by innovation surveys.16 The transfer of knowledge or generation of new knowledge through such transactions and collaborations boosts innovativeness – actual transfer of personnel need take place for useful knowledge to be gained.
Cf chapters by Antonelli, Tomlinson, and Tsounis in I Miles and M Boden (eds) 2000 forthcoming Services, Innovation and the Knowledge Economy London, Cassel, and the review by L Rubalcaaba-Bennejo in his wide-ranging 1999 study, Business Services in European Industry Luxembourg, EC (DG III ISBN 92-828-6697-1). 16 M Tomlinson & I Miles, 1999, “The career trajectories of knowledge workers” paper presented at the OECD workshop on S&T labour markets, Paris 17th May 1999, available in OECD proceedings.
KIBS: Work, Employment, and Skills
It comes as no surprise that the employment structures of KIBS are heavily weighted towards white-collar, skilled workers. This is apparent from the OECD skills dataset – even though KIBS are hidden away within a category of “real estate and business services”, the extremely high share of such workers is apparent. The size structure of KIBS, like many other services, is very skewed. A few international firms typically coexist with a huge tail of small and microbusinesses. This is less so in some of the more hardware-intensive and network-intensive sectors like telecommunications, which in many respects resembles the traditional utilities of energy and water distribution (though it is much more innovative), or the very large firms in retail and banking and insurance. But these are exceptions: most service sectors have an extreme J-curve size structure. Software exemplifies this. A recent Eurostat report17, presents data on a survey of software and computer services in 5 EU countries. The vast majority of firms in the sector have fewer than ten employees, though such firms contribute a disproportionately small share of the sector’s total turnover.18 The majority of workers here are young – between 25-39. (But relatively few are younger than 25 – the likelihood is they have been undertaking studies before this age and are thus highly qualified.) These firms display a characteristic common of many TKIBS: unlike many other service fields, they are heavily male-dominated. (An exception for software in this Eurostat study was Italy) Perhaps surprisingly, work in the sector is overwhelmingly permanent and full-time; and the muchtouted home-based teleworking is most uncommon at present. My colleague Mark Tomlinson has been exploring data that tell us more about the processes of learning and skilling involved in KIBS.19 Using UK data on individual careers, he has studied the accumulation of human resources through on-the-job training, technology use, and lifelong learning. He finds that “knowledge workers” and staff in KIBS are particularly prone to report having learned new things, received training, worked with computers, moved between different types of work, and so on. Rather provocatively, given the general policy emphasis on promoting labour mobility, he finds that (for the UK data) the workers who enjoy more internal job mobility appear to have significantly greater access to training, are increasing flexible and use technology (computers) more
Eurostat, Statistics in Focus 1998, 9 Business Services Statistics, Software and Computer Services. 18 A similar picture, though less pronounced, emerges for engineering services in studies by Statistics Canada. (cf D Hamdami 1998, Innovation and labour skills: the consulting engineering industry, paper presented at workshop, ‘Conceptualising and measuring service innovation’ CRIC, University of Manchester, 20-21 May.). 19 See M Tomlinson & I Miles, 1999, “The career trajectories of knowledge workers” paper presented at the OECD workshop on S&T labour markets, Paris 17th May 1999, available in OECD proceedings.
often than workers who have external mobility (i.e. across firms). Tomlinson’s analysis shows flows of professionally skilled staff out of manufacturing into KIBS, and a particularly strong concentration of learning in these sectors. Many knowledge workers in UK manufacturing shifted into services during the 1980s. However, knowledge workers in services themselves were highly stable with regard to occupation and sectoral position throughout this period. Thus, the embodied knowledge generated within the service sector has tended to remain within it. (Though KIBS do contribute their knowledge to their clients.) People in skilled manual and lesser skilled non-technical occupations had very little opportunity to move into the more dynamic KIBS sectors during the restructuring of the 1980s. (This is in agreement with the more general polarisation that is evident between skilled and unskilled workers in the OECD studies.)20 Nordic studies also suggest that the business service sector both recruits and supplies skilled manpower from a much wider range of other sectors than do other industries. (Stock data also shows that the educational level in business services is on par with the public sector, and the researchers suggest that this is evidence for KIBS forming a second knowledge-infrastructure.)21 Thus, it looks as if the growth of the knowledge economy does involve an increase in requirements for higher skills, but workers with skills no longer required find it very difficult to acquire new ones, at least in the UK. KIBS sectors in particular have been very difficult to break into for many workers, especially non-professionals from manufacturing. Direct social relationships with staff, partners, suppliers and clients are very important in protecting knowledge in KIBS, not least because the sorts of knowledge with which they deal are hard to protect through IPR arrangements like copyright. The sorts of control attempted may involve informal relationships, or be formally governed by employee law, or by contractual arrangements between collaborating or trading firms. Some data on this is provided by an exploratory survey22 in the UK, which contrasted a case of T- KIBS (environmental engineers) with professional KIBS (accountants); architects formed a third and intermediate case. Internal working
It is hard to reconcile what we know from this and other sources with the evidence from labour Force Survey data reported by G Coomans & J Beucher, 1998 Regional Labour Force Differences among Women aged 25-54 within the EU 1993-97, European Commission – DG XVI ERDF 98 / 00 / 27 / 173 where the statistics seem to indicate an extremely high absolute and relative level of training being received by the UK workforce compared to the rest of the EU. 21 S O Nås et al., 1998, Formal competencies in the innovation systems of the Nordic countries: An analysis based on register data (Final report from the focus group on skills and mobility. OECD work on National Innovation Systems phase II STEP report) ISSN 0804-8185 STEP, Oslo. The sectoral disaggregation possible in the UK data is much more limited by the sample size, even if the questions about work experiences are more revealing.
See I Miles, B Andersen, M Boden & J Howells forthcoming, Services Processes and Property, International Journal of Technology Management. The sample was of fifty firms in each sector.
practices are very widely cited as important means of protection, especially by larger firms. The threat of losing knowledge embodied in key members of staff becomes increasingly important, and increasingly the focus of management effort, in larger bodies – and it is among the most common methods used by smaller environmental engineering firms too. For firms in all KIBS, staff recruitment was one of the main means of acquiring external knowledge, but the emphasis varied: for accountants this was used to acquire routine knowledge, for the environmental engineers specific knowledge. Departure of personnel was thought to be a major source of threat of losing competitive knowledge for the latter group, and least so for the architects: apparently the S&T workforce’s knowledge is particularly valuable. Statistical analysis does not find significant relationships between emphasis on S&T knowledge and on internal working practices, at the firm level; but it does reveal strong relations between the latter and knowledge of policies and regulations, and knowledge of markets and aftersales support systems. Though the results may reflect the specific choice of sectors studied here, there is an interesting implication. This is that what is valued in employees is not just their generic technical knowledge (which presumably can be obtained as “paper qualifications”) but their having been ability to contextualise this in the world of problems which clients confront.
The study of employment in KIBS has been rather neglected, and we can see that this neglect leaves us with limited hard evidence about a sector that is important both quantitatively and qualitatively.23 What we can say is that employment in KIBS and T-KIBS in particular is liable to continue to grow; that it is skill- and knowledge-intensive; that some more technology-oriented jobs tend to be male-dominated. There appear to be country variations in terms of flexibility, gender structures, part-time work and the like. These are jobs that are liable to be important future sources of quality employment and self-employment. KIBS are also vital for fostering connections between firms that can promote efficient networks for the diffusion of information and knowledge.
What of European competitiveness in these services? A recent Eurostat study24 concluded that total EU services transactions, (including trade between Member States) doubled over the decade to 1995 (reaching 821.4 bn ECU in 1995). But this growth was import led. The services’ balance of trade worsened - from some 30 bn ECU in ’86 to nearly 2.2 bn in ’95 (this was a big drop from 1994’s figure of 11.8 bn). The biggest falls were not only in transport, but also in miscellaneous
Again L Rubalcaaba-Bennejo 1999, Business Services in European Industry Luxembourg, EC (DG III ISBN 92-828-6697-1) provides a valuable overview 24 Eurostat, 1998, Statistics in focus, Economy and finance, no 2/98, Dynamism of trade in services: The growth of international trade in services.
business, professional and technical services. Both of these declined dramatically between 1994 and 1995. Most of this decline involved trade with the USA, declining from a balance of 6.3 bn in ’94 to 4 bn. Other Eurostat data indicates a growing and in some branches strong overseas presence in EU services. This is particularly marked in KIBS, with the technology-based services and more social and organisational ones appearing side by side. This may just reflect the process of globalisation that is occurring in many dynamic sectors. The opportunities from learning from overseas KIBS should be welcomed.25 International trade and foreign presence should be welcome spurs to innovation and improved competitiveness. But the data may also relate to the negative balance of trade trends in KIBS. These are sectors that are evidently of growing importance in the emerging knowledge economy, sources of employment and competitiveness. Will it be possible to formulate policies that can enhance both?
Cautiously, given that in the past some KIBS have imported inappropriate organisational models based on US experience; and the possibility that KIBS might preferentially recommend other suppliers from their home countries.
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