Labour productivity gains or offshoring? Implications for post-growth proposals on the future of work

Two visions prevail about the future of work in sustainable post-growth economies. According to the first, labour productivity gains resulting from technological development will enable to work less. The second contends instead that such gains are not always desirable and could be constrained by a shift towards less polluting production, potentially resulting in more work. Yet, conventional measures of labour productivity on which these proposals are based can conceal a displacement of labour requirements abroad. In this paper, we conduct a case study on Germany in 1995–2020 to assess whether and to which extent labour productivity gains result from offshoring, and implications for post-growth proposals on the future of work. We first retrieve global labour requirements of German production across upstream supply chains. We then decompose conventional labour productivity gains to evaluate whether they result from a reduction in global labour requirements or of their increased displacement towards upstream sectors. Finally, we examine possible impacts on labour offshoring of shifting production to sectors with low productivity gains. We use a socially extended Multi-Regional Input-Output model based on OECD data. Our results show that a quarter of the global labour requirements for German production is provided abroad. This share increased until 2007 before it stabilized or decreased. We identify some potential for working time reduction without increases in labour offshoring. Shifting to service sectors could furthermore reduce labour offshoring relative to production. Yet critically, German production may cover only a fraction of domestic consumption. Related implications for post-growth proposals require further attention. Highlights • Labour productivity gains can conceal a displacement of work requirements abroad. • We examine this possibility with an empirical study of Germany in 1995–2020. • Labour offshoring increased until 2007 before it stabilized or decreased. • Labour offshoring has played a limited role in driving labour productivity gains. • Our results have key implications for post-growth proposals on the future of work.