MANAGING PEOPLE IN THE KNOWLEDGE ECONOMY While no one knows whether knowledge-based industries will permanently boost GDP growth in the rich countries, they are replacing manufacturing as the most important businesses. Management guru Peter Drucker believes that knowledge will soon become the key resource in the developed world. With an aging but healthy population, rich countries will expect people to work an extra ten years, into their seventies, he says.

Not everyone will be a winner, even amongst knowledge workers themselves. While some people may prosper as independent consultants or on short-term contracts, others are likely to find the expected move away from full-time, job-for-life employment difficult. "Knowledge technicians", highly educated workers in areas such as IT,medical laboratories, and engineering, may not be particularly well paid. They are predicted to become the fastest growing group, replacing the skilled manual workers of today in numbers and, possibly, negotiating power.

This has important implications for human resource management. Howwill companies keep their knowledge workers? Recently in the US the trend has been to offer stock options and earnings-related bonuses. Drucker claims that this "always fails" and suggests that a better way will be: » to allow greater autonomy in making decisions;
» to take an inclusive approach to company goals and strategy;
» to ensure that people are given appropriate tasks; and
» to provide continuous training

EUROPE

As the world's largest trading bloc, with 40% of world trade, the European Union cannot be ignored. It represents a substantially different form of capitalism to the US model and although stock market capitalism has helped to galvanize many EU firms, a complete adoption of the "Anglo-Saxon" business norm is unlikely.

The EU's reason for existence is primarily strategic, to provide security and prosperity both within its own borders and in the countries to the east. Plans for enlargement have aroused little opposition in the rest of the world, perhaps, some say, because the EU is unlikely to become united enough to project political power as a single entity, but is seen as a positive force for prosperity and growth. Protectionist policies are common within the EU, between member states (despite regulations to the contrary) as well as with the outside world. EU firms are trying to streamline themselves, but tough labor protection laws are likely to hamper efficiency. US-style peremptory firing of staff is unacceptable.

The diversity of Europe's members means that different countries want different things out of the union. For example, some countries like Britain and Denmark have so far stayed out of the single currency. Enlargement will add to the pressures against tighter federalization. One solution that may emerge is that the EU becomes a collection of overlapping deals between member states, where some choose to co-operate together closely on certain issues while opting out of others. Markets may continue to become freer in Europe, but they are unlikely ever to approach a pure state of laissez-faire, even internally.