“(W)e used BLS stats (US) to estimate the extent to which the
structure of the labour force is shifting towards the modern equivalent of ‘lumpenproletariat’ or more contingent and least-paid occupations. Our estimates indicate that its modern equivalent in the US could account for as much as 40%-45% of the labour force; around half of incremental growth and low productivity occupations constitute ~70% of employment.
The same trend is evident in most other developed economies. Indeed these estimates understate the real impact due to lower benefits attached to these occupations; inability to secure jobs in line with qualifications or erosion of job and income stability.
Investors might argue that this is just a reflection of an accelerated shift towards services and that new higher value jobs will eventually emerge. We agree but as societies in the 19th century discovered, eventually could be a very long time.
What are the investment implications? As discussed in our prior notes, we believe investors are entering a world where the pendulum is swinging rapidly in favour of the state, as a multiplier of demand, provider of capital and setter of prices. We also believe that we are entering the age of de-globalization.”
Macquarie Research, “What caught my eye” V. 61.
See also: Citibank’s Plutonomy Report (2005).