[Market Economy Guide] The Value of Labor

“Labor, Too, Evolved from Manual Labor to Skilled Labor to Knowledge Work: Switzerland Became a Wealthy Country Through Labor Innovation”

Switzerland was once a land of poverty. But hope began to blossom there when a woman started making hats and vests adorned with beautiful lace. The lace products made by the Swiss spread not only throughout Switzerland but also to neighboring countries, where they sold like hotcakes. These lace products transformed a city of despair into a city of hope. As they made lace, the Swiss came to realize that “Swiss craftsmanship is the most exquisite in the world.”

Lace-Trimmed Hats and Vests

The Swiss city of La Chaux-de-Fonds is located at an altitude of 1,000 meters, where winters are especially long and snowfall is heavy. With little to do during the long winter, the villagers began making watches as a way to keep themselves occupied. Swiss craftsmanship proved itself in the watch industry as well.

As more and more watchmakers worked from their homes in the form of cottage industry, La Chaux-de-Fonds emerged as a center of watch manufacturing from the 1750s onward. Watchmaking gradually became more specialized and divided by task. Workers who had once made an entire watch from start to finish now developed expertise in manufacturing specific parts. After a fire in the early 19th century burned down the whole town, it was rebuilt as a city devoted solely to watchmaking. With the onset of industrialization, it became possible to manufacture watches by machine. Thanks to the technological revolution, the industry moved beyond handcrafting each watch one by one and began working through production facilities. By the early 1900s, La Chaux-de-Fonds had prospered to the point of accounting for 50% of the global watch industry.

But the Swiss watch industry was not without crisis. In the 1970s, the entire industry fell into a slump under the onslaught of cheap electronic watches from Japan and Hong Kong. It had missed the shift in the market paradigm. The number of workers in the Swiss watch industry plummeted from 90,000 to 30,000.

The Crisis in the Swiss Watch Industry and Its Response

At that point, Switzerland’s leading watch companies, ASUAG and SSIH, merged to create Swatch. Embracing the changes of the times, Swatch redefined the watch as a fashion item and pursued reform by adopting distinctive design as its strategy. It reduced the number of watch parts from 155 to 51, shortening the complex production process, and built an automated production line capable of producing 35,000 watches a day, dramatically increasing output. As the share of labor devoted to precision parts assembly declined, workers concentrated their efforts on design. This made it possible to produce newly designed watches in a short period of time and at low cost. Their innovation—shifting away from a labor structure centered mostly on parts assembly and instead recognizing watches as fashion products with a strength in design—proved successful.

When industry changes, labor changes too. In agrarian society, labor was simple manual work: driving oxen across the land and cultivating fields. After the Industrial Revolution, factory jobs took center stage. As technology advanced, machines replaced human hands and muscles. Human manual labor continued to decline.

Then, as society entered the knowledge age, knowledge and information, rather than capital, became the center of the economy. In response, a new labor paradigm began to emerge. What became important was the ability to interpret information and use it to create added value. Knowledge workers must possess the expertise to set their own goals and independently develop and manage projects.

The Age of “Nomadic” Work

Knowledge workers seek out the places where they can make the most effective use of their knowledge. They are a new type of “nomad” who works freely, unconstrained by time and place. Rather than remaining in one place, they move among different workplaces and regions depending on the job. They do not shy away from foreign countries. Borders, too, disappeared long ago for them. They move nimbly across the globe, putting their capabilities to work. Management scholar Peter Drucker said the following: “Successful careers are not planned out in advance; they are managed. And to manage our careers successfully, we must become our own CEOs.”

Labor is an important part of life. Human beings live by discovering what they do well and achieving fulfillment through doing their best. Labor has steadily become more flexible and freer in ways suited to each individual. Now anyone can brand and build a career in their own unique color.

■ Let’s Think About It

La Chaux-de-Fonds in Switzerland was a mecca of the watch industry. Watches that had once been made by hand were later made by machine to increase productivity. Then crisis struck. With the emergence of digital electronic watches, Swiss watchmaking labor had to change. In what direction did Swiss labor evolve?

Sung-no Choi, President of the Center for Free Enterprise (CFE)

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Original title: [시장경제 길라잡이] 노동의 가치

Author: Sung-no Choi

Date: 2018-12-03

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=15&idx=11329