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A changing work force will impact employee benefits.

A Changing Work Force Will Impact Employee Benefits

The characteristics that have been at the root of America's economic strength in the past, are also responsible for many of its current weaknesses. According to Ray Marshall, senior advisor for Shearson Asset Management, U.S. economic principles are still mired in the "old order" that believes abundant natural resources are the basis for a rich economy. "That's no longer true," he said. "As a nation, we're using less labor, land and physical capital than in 1925, but our output is better because our overall knowledge and information is more sophisticated." Mr. Marshall added that "The most competitive centers, like Japan and Scandinavia, are ones with physical resources. They've developed their people."

Mr. Marshall said that in addition to natural resources, mass production made America great. But it is no longer viable as a system because it depends too much on a large internal American market. "Markets are now international in scope," he said. "American producers don't have a monopoly and our passive strategy has allowed other centers to gain economies of scale while our own has suffered."

Mass production was a producer-driven system, according to Mr. Marshall, new systems have to be consumer-driven. It's the only way to compete. "We can either lower our standard of living, which we've done in this country, or we can compete. There are no other alternatives. As it stands, we are now tied with Italy at 11th in the world in comparable wages," he said.

To successfully compete in an international arena, Mr. Marshall believes that U.S. management systems must be improved. "American workers aren't the problem; the system is," he said. "The bureaucracy that shuffles papers should give way to machines that can do it better." Mr. Marshall said an elementary assumption should be made concerning management and that is, employees who actually do the work, will do the best job at managing it.

According to Mr. Marshall, the development of new age technology, by itself, isn't important. What is important are the ideas, skills and knowledge that drive the technology. "The best option for the future is high technology wedded to highly skilled workers who are constantly trained and retrained," he said.

In addition to certain clear-cut technological imperatives, the United States will face a demographic upheaval during the next century that will make competing in world markets more difficult. In the 21st century the U.S. will have an older population and a highly polarized work force with women and minorities constituting over 90 percent; a large chunk of industry will be foreign-owned and government employment will increase.

How will all these events impact pension trustees and funds? According to Mr. Marshall:

* The budget deficit will drive the taxing of pension funds.

* There will be pressure to reduce the short-run orientation of the funds.

* There will be pressure on benefits because of demographic changes and the question of equity for women.

* Because of the equity issue, more ESOPS will be used.

* With more temporary employees in the work force, a national health care system will be developed by the year 2010.

* There will be increased attention to education and training.

* Ownership and control of funds will be hotly contested in the next few decades with joint beneficiary control resulting.
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Author:Johnson, Tom
Publication:Risk Management
Date:Jan 1, 1990
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