The case of the pharmaceutical industry in France and Belgium




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Bad jobs in the "knowledge based-economy":

The case of the pharmaceutical industry in France and Belgium.

Cédric Lomba

CRESPPA (CNRS-Paris 8 Université, France)

Cedric.lomba@csu.cnrs.fr


Since the 1990s, it has been generally agreed that to increase economic growth, reduce unemployment and solve environmental problems, companies and industrialized countries must foster innovation, and develop more widely a “knowledge-based economy” (Chandrasekhar, 2006)1. This view is shared by many academic researchers, especially by economists (Druker, 1993; Nelson, 1991; Nonakana, Takeushi, 1995; Christensen, Lundvall, 2004) and by institutions such as the OECD (OECD, 1996) and the World Bank (programme: "Education for the Knowledge Economy") or by the liberal policies of the United States (United States Council of Economic Advisers, 2001) and the European Union. The development of a knowledge society has become a major goal of the European Union since the Lisbon European Council in March 2000 ("Lisbon Strategy for Growth and Jobs"). This strategy includes the creation of a European research area, support for investment in R&D, the facilitation of transfers of ideas between public and private institutions, and the development of the famous “human capital” (through an increase in the general level of education and lifelong learning). In these analytical or programmatic texts, the knowledge-based economy is related to qualified employment in two different ways: first, skilled jobs are expected to drive economic growth and, secondly, innovative companies would increase the proportion of highly qualified workers in the new economy (Bassanini, Scarpetta, 2001). The labour market would then be transformed and polarized between the new elite of "knowledge workers" whose numbers are increasing (Brinkley, 2008) and the “losers” in these changes, the “generic workers” (Castells, 2000; Dunkerley, 1996).

In this paper, I will not evaluate the actual share of the knowledge industry in capitalist economies2, but I propose an analysis of a more specific point: who are the low-skilled workers in these high-tech sectors and what are their employment terms and conditions? Indeed, most surveys on technological sectors or companies focus on the most highly skilled workers, including managers and professionals, and they have extensively documented the working conditions and the career patterns of these white collar workers (Kunda, 2006; Nokan, Teece, 2001; Adams Demaiter, 2008). Some authors present them as a new class, the "knowledge workers", and as a symbol of graduated workers, autonomous and flexible (Reed, 1996; Castells, 2000). This optimistic scenario has been widely debated, other authors describing them as being under control and stressed (cf. Adams, Demaiter, 2008, p. 351-353), with some empirical analyses showing hybrid situations (Baldry, and al. 2007; Donnelly, 2009). However, low-qualified workers remain the hidden face of these high-tech sectors as they are usually forgotten by empirical researchers and by theoreticians.

In this communication, I will address the issue of the role and situation of workers of “low status” (at the basic level of the hierarchy of wage, power and prestige) in the knowledge industries. Indeed, the production of material or non-material goods is based on low status jobs to ensure the smooth functioning of the administration, the production, and the distribution of products. We will focus specifically on this population neglected by economists, but also by sociologists. For this study I will rely on the emblematic case of the pharmaceutical industry, whose growth pattern is deemed to be based on innovation (mass innovation with blockbusters or niche innovation with biotechnologies) (Gambardella, 1995; Bradley Weber, 2004; Ahrweiler, Gilbert and Pyka, 2005; Chandler, 2005). This sector has the characteristic of being very profitable, more than almost all other industrial sectors since the 1970s in Europe and the United States (OECD, 2002; Public Citizen, 2003), and has, unlike other industries, experienced great development since the 1970s. This sector has the reputation of mobilizing, with high wages, many highly skilled workers in the category of scientific professions (pharmacists, physicians, biologists, chemists...) and experts (engineers, statisticians...), in the field of R & D and quality control, and also many technicians in the area of research and production. The industry representatives also often stress that it is an industry of "skilled jobs". This is one reason, together with the necessity of the protection of public health, advanced by governments in Europe to support the development of this sector. However, the collective survey, mainly in France ("The Pharmaceutical Industry Under Observation") that I have conducted with nine colleagues, shows that this sector also employs many low-skilled workers and non-permanent workers (fixed-term contracts, temps), mainly women, in areas such as production, packaging and handling. This communication will underline the specific characteristics of this workforce, functioning between the constraints of profitability and public health. How can we explain the resilience of “dead-end jobs” in this high-tech sector? Do the workers at the bottom of the hierarchy take advantage of working in a knowledge-based sector which is regulated by the State?

I will present first an overview of the workforce in this sector in France, top producer of drugs in Europe, and the contrasted situation between production companies and pharmacies. In the second part, I will focus on the particular case of one segment in the distribution of drugs, wholesaling, to show how the industry mobilizes a workforce divided between “knowledge workers” (pharmacists) with good working conditions, and “low status workers” (switchboard operators, warehousewomen and delivery drivers) who experience bad employment conditions. Finally, we shall see how these manual workers are subjected to strong constraints in their daily work activity in order to comply with administrative regulations and to maintain the industry’s and pharmacists’ profits.


Methodology

The methodology brings together quantitative, historical and ethnographic approaches (Arborio and al., 2008). To vary the points of view, I have used national statistics (Labour Force Surveys, Census, Enterprise data Surveys, data from employers’ associations: National Order of the Pharmacists and Association of Pharmaceutical Enterprises), archives since 1960 (professional and trade union journals, pharmacists' PhD, internal documents of trade unions: archives of the pharmaceutical federation of CFDT and archives of the assistant pharmacists of FO), together with about twenty interviews (with company executives, trade union leaders and pharmacists), a monograph of a wholesaler (participant observation during a month as warehouseman, analysis of archives since 1962 of the Board of Directors, and interviews with pharmacists-Directors who created this company).

These data were collected in two European countries, France and Belgium. The organization of the sector and of the health system in these countries is quite similar. The survey in France mainly concerned the national organization of the sector and the wholesaling segment, whereas the monograph was produced in Belgium. In the text, if I am not precise about the country concerned, I evoke the case of France.

In addition, use will be made of the results by the other researchers of the collective survey "Pharmaceutical Industry Under Observation" (PIUO) who have made ethnographies of production plants (Fournier and al. 2010). When their unpublished results are used, the name of the researcher will be indicated, followed by the mention “PIUO".


1. Pharmaceutical production and pharmacy: two ways of managing skilled employment


First I will describe the characteristics of pharmaceutical workforce in order to measure the proportion of "knowledge workers". I will examine briefly the situation of production firms and pharmacies, leaving aside the wholesale segment (cf. part 2). In France, more notably than in other countries, the pharmaceutical sector has had continuous growth in sales since the 1970s3. France has become since the mid-1990s the largest European producer and the fourth largest producer of drugs in the world by taking advantage of export growth4 and price increases supported by the State5. This growing industry has other features such as being divided into separated "segments" (Strauss, 1982), with a limited field of activities for each. This division into segments is linked to several types of regulations: professional, administrative, industrial and government regulations (Gaudilliere, Hess, 2008; Lomba, 2009). In France, the State and the professions (doctors and pharmacists) intervened at the beginning of the nineteenth century to separate these segments and gave them the legal monopoly for prescribing and selling drugs. So, for example, every pharmacy belongs to a single graduated pharmacist and chains of pharmacies are forbidden.

In France, in 2009, there are at least five types of collective actors for reimbursed drugs6 (Figure 1)7:

- the health insurances: the National Health Insurance Fund with compulsory membership (under administrative control of the State) which covers 68% of the cost of drugs, as well as the optional private insurances which cover 18% of the cost;

- the professionals who prescribe drugs: 101,667 medical doctors and 107,476 specialist doctors (DREES, 2009);

- the producers of branded drugs or generic drugs: 337 producers. The top 10 groups generate 48% of the global turnover and the big companies (more than 1,000 employees) represent 71% of the workforce;

- the wholesalers: the short-liner and 11 full-liner wholesalers;

- the retailers: 22,500 pharmacies and 2,900 pharmacies situated in hospitals.


Figure 1: The medical distribution flow in France, 2009



Hospital pharmacies

67,1%

Wholesalers

(full-liners)

(11)


(11)

Pharmacies

(22,561)

Producers

(337)

14.3%

0.4%

18,6%





66.7%

%




Source: CSRP (French federation of pharmaceutical wholesalers), 2009.

Should be read as follows: in 2009, the producers deliver directly to the retailers 32.9% of drugs (14.3%+18.6%), and use full-line wholesalers for the rest.


The sector is characterized by a significant increase of its workforce (for the production segment: 79,650 persons in 1990 compared to 108,407 in 2008)8, whereas most of the other industrial sectors experienced a decline of their workforce numbers during the same period, in a process of de-industrialisation9. In terms of composition of the workforce, the pharmaceutical industry is, as asserts the pharmaceutical employers' federations, a sector with a more qualified and more graduated workforce than other industry sector (cf. Tables 1 and 2): in 1999, in the production segment, around two-thirds of employees were technicians, foremen, supervisors, managers or professionals and a third made up the rest of the industry’s workforce. 61% had at least an upper secondary school diploma (“baccalauréat”10) versus 29% for the rest of the industry. In the context of the general rise in education attainment, the growth of diplomas becomes more marked (in 1999, three-quarters of under 35 year olds gained at least the “baccalauréat”). In the production segment, we can explain the high level of employees qualification in several ways. First of all, it is because the productive specificities of this sector are tightly regulated by health and safety norms, and also because, universally, competition based on innovation is predominant (Hamdouche, Depret, on 2001). The important contribution of R&D in the pharmaceutical industry (Ballance and al., on 1992) is the primary explanation for the recruitment of skilled employees (Chart 1). These include experts (engineers, statisticians, etc.), scientists (doctors, biologists, chemists, etc.), and also technicians in chemistry and biology11. For the rest, a consequence of the implementation of quality standards in the plants has been the presence of a great number of quality controllers, with a higher proportion of graduates than in other sectors. It is especially the case for managers with pharmacist diplomas (2,475 people in 1999) whose presence was made compulsory from 1941 at each production site (Muller, 2009-PIUO). The presence of qualified employees also arises through organizational choices such as that of a massive recruitment of pharmaceutical sales representatives, comprising more graduates than the representatives of other sectors. An implicit reason is the commercial use of the desire for proximity of social class origin with doctors (Jérome Greffion-PIUO). Empirical researches, conducted in several plants, observed recruitments of young manual workers with “baccalauréat”, but also massive re-qualification program of manual workers into technicians, after a new pharmaceutical collective agreement in 1994 (with the individualization of career development), greater automation of the production process and the development of job rotation and multi-skilling (Dilip Subramanian, Quentin Ravelli-PIUO). All these transformations involved higher salaries for all categories of employees than in the other industrial sectors (from 13% to 28% in 2007), and this has been made possible by the high and continuous profits associated with this industry12.


Table 1: Distribution of the workforce in the pharmaceutical sector by occupations, 1999




Industry

Wholesale trade

Retail trade

Pharmaceutical sector*

Others sectors

Pharmaceutical sector**

Other sectors

Pharmacies***

Other sectors

Retailers and employers1

1%

5%

2%

8%

0%

26%

Managers, Professionals2

21%

11%

23%

13%

41%

13%

Supervisors, Foremen, Technicians3

45%

22%

33%

31%

35%

15%

Clerical or sales workers4

8%

9%

16%

19%

19%

44%

Manual workers5

26%

53%

27%

29%

6%

13%

TOTAL

100

100

100

100

100

110

Number

90,951




36,849




127,709




Women (%)

53%

29%

50%

32%

79%

56%
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