Offshoring and Employment

Trends and Impacts

image of Offshoring and Employment

Offshoring—the transfer of an industrial activity abroad—has become a fact of life for business. But it is also perceived as a threat by a large segment of the general public. And much of the public concern centers on employment, especially the potential loss of domestic jobs. This groundbreaking report provides new insights into the phenomenon of offshoring. First, the report defines offshoring in detail, allowing readers to see the many ways that industrial activity—both in manufacturing and in services—can be transferred abroad. The report then describes the wide-ranging effects that offshoring can have on domestic employment—the positive, as well as the negative. Finally, this ground-breaking report outlines the public policy implications of offshoring. It suggests ways to limit the downside of offshoring while helping to build trust between the various stakeholders working to address this issue.

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The foregoing analysis has demonstrated the complexity of the phenomenon of offshoring while illustrating the difficulties involved in measuring its impact on employment. In this regard, to evaluate offshoring’s positive and negative effects on employment, three difficulties can be distinguished. The first of these involves the lack of regular, official surveys in most of the OECD countries. The data needed for these evaluations cannot be taken from other existing data, either because those data are confidential and thus not accessible, or because the data are not collected by a large number of countries (e.g. intra-firm trade). Even when confidential data by firm or by establishment can be accessed, it is very difficult to gauge the indirect employment effects that offshoring firms may have on their competitors that do not engage in offshoring, as well as on their own subcontractors.

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