Some thoughts on employment in 2010

This is unfortunate, because Romania was just getting used to the previous new economic reality that appeared after the “crisis” of 1989. This can probably account for Romanians’ hesitation or failure to act during the last year. A significant life crisis is harder for an 18-year-old to deal with than for a mature adult (e.g. – the Western economies which are middle-aged if you see their last “crisis” as the end of WWII).

So what does this have to do with employment? At the risk of becoming overly academic, the concept of “employment” is a result of an industrialized economy’s desire for efficiency and specialization of talent. For example, at one time, instead of everyone who owned a horse learning how to make horseshoes, one person in the village became a specialist. This freed the other villagers to specialize in what they did best. Once there were more horses to be shoed than one blacksmith could handle, he hired another specialist. Now there was the first employee!

I would like to take this example in two different directions, both of which are relevant for the job market in 2010.

Horseshoe Scenario 1: A second blacksmith decides that there are enough potential customers on the market to take the risk of opening a new shop. He offers the exact same quality at the exact same price, but he is on the other side of town. So we can assume that he takes half of the clients from the first blacksmith. The first blacksmith now sees that he can cover the work of his remaining clients by himself, so he tells his employee that his services are no longer needed. Our first employee is now our first redundancy!

What did the employee do wrong? Whose fault is it that he is now unemployed? Well, the employee did not do anything wrong. He was just a victim of the market situation. In regards to who is at fault; this depends on your point of view, your life philosophy and/or your political leanings. One point of view is that the second blacksmith is at fault for upsetting the market equilibrium. Another point of view is that the first blacksmith is at fault for not better defending his market and retaining his clients. Yet another point of view is that the employee is at fault for not developing himself and putting himself in the position to BE the second blacksmith instead of being the victim of the second blacksmith.

Horseshoe Scenario 2: The village’s cart maker invents a steam-powered motor for his carts. Within a year, half of the villagers are using engines to power their carts instead of horses. Now, once again, the first blacksmith sees that he can cover the work of his remaining clients by himself, so he tells his employee that his services are no longer needed. In this scenario, our first employee is again made redundant!

So let’s ask the same questions again.All the answers are the same as in the first scenario. However, unlike in the first scenario, the employee could not have anticipated this market change (unlike Scenario 1) and is, thus, even more blameless.

In both of these ‘micro case studies’, the employee is looking for a new job at the end of the day. Also, in both cases, the first blacksmith is now worse off than at the very beginning of the story… at least in the short run.

In my opinion, the new economic reality in which we find ourselves in 2010 is a combination of both scenarios, but leaning more towards scenario 2. The most important part of these examples is that in both scenarios the score is Business Owner – 2; Employee – 0. However, this holds true only in the short run. In Scenario 1, eventually the blacksmiths will start differentiating themselves and one of them could find themselves out of business or an employee of the other. In Scenario 2, eventually all the blacksmith’s clients will disappear and he will have to find a way to react to the new economic reality of their time.

In today’s environment, businesspeople do not have the luxury of considering themselves ‘employees’; otherwise they will find themselves awaiting the same outcome as the employee in these stories. Instead, all stakeholders in a business must maintain an awareness of the market, not just of their employer or industry. It is the responsibility of employees to be aware of market trends, developments, changes and opportunities. Too many of today’s businesspeople consider it the responsibility of the employer to protect them from such changes.

In Scenario 1, the employee should have seen that there would have been a potential market if he decided to set-out on his own. In Scenario 2, the employee should have been keeping up-to-date regarding market developments in his industry and started learning how to forge pistons instead of horseshoes. (Of course, we have to take into account that not all employees have the same talents, intelligence and capabilities to follow these two proposed paths. But I think that we can assume that if you are reading this article then you are more likely to belong to the first type than to the second type of employee.)

Employees need to be entre-/intrapreneurial throughout their careers. Perhaps they won’t all be in the position to start their own businesses, but they at least need to be in control of their own career. If a job cannot be found, then they should spend some time looking at the needs of the market, looking at their own skills (adjusting if needed) and consider setting-out on their own to provide a service or product that someone is willing to pay for. This is basic economics and a basic (although over-simplified) foundation for the new economic reality in 2010.

Oliver Olson, Program Director, Maastricht School of Management Romania

Oliver has been working for the CEU Business School for the last 5 years and has been the Country Manager for their Romanian branch since 2008. In 2010, he is introducing the Executive MBA program of the Maastricht School of Management to the Romanian market.

Oliver has been active in Romania since 1991, married his Romanian wife in 1996 and has 11-year-old identical twin sons.