Patrick Cooney's Weblog

Pay

2006-10-16

Great article in the FT on the weekend (Profits of doom, Richard Tomkins) that talks about the paradox of relatively flat wage growth and record corporate profits seen in rich western countries over the last few years.

"Cheap labour, plus the opportunity to exploit new global markets, has brought a profit bonanza to western companies. But it has not been reflected in higher wages for employees at home because companies are no longer in thrall to employees at home. Instead, the gains have been split between capitalists, who have enjoyed higher returns; executives, whose emoluments go up with profits; and poor workers in the developing world, who have gained from the growth in jobs and rising wages that would once have gone to the west."*

Software engineering is the canonical offshoring story, but the impact of the tech recovery over the last few years counterbalances (and probably overwhelms, depending on your perspective) the trend described here. It may also be that demand for technology workers remains stronger than expected given the difficulty of reliably churning out good programmers.

* Extra points if you know what emoluments means... I certainly had to look it up.

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