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Victoria 3 - Dev Diary #11 - Employment and Qualifications

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Happy Thursday and welcome to another deep-dive into the guts of Victoria 3’s economic machinery. This week we will be talking about Pop Professions, specifically how and why Pops change Profession. While this is an automatic process, the mechanics of it is still crucial knowledge to keep in the back of your head when building your society. Perhaps you want to ensure the population in one of your states are able to take on Machinist jobs before embarking on a rapid industrialization project there, or perhaps you want to ensure you don’t accidentally enable too much social mobility in a country already prone to uprisings against their true and lawful King.

First, a quick recap. In the Pops dev diary we learned that all Pops have a Profession, which determines their social strata and influences a number of things like wages, political strength, and Interest Group affiliations. In the Buildings dev diary we learned that buildings need Pops of specific Professions to work there in order for them to produce their intended effects on the economy and society. Finally, in the Production Methods dev diary we learned that different Production Methods change the number of Profession positions available in a building. So how do Pops get assigned to these spots?

Our approach here differs a bit from previous games. Victoria 1 and 2 has the concept of a “Pop Type”, a fundamental property of Pops in those games that defines most aspects of their existence - what function they perform in society, what goods they need to survive vs. what goods they desire, what ideologies they espouse, etcetera. Pops in Victoria 2 autonomously change into other types over time depending on their finances and the various needs and aspects of the country. Providing access to luxury goods in your country permits Pops to promote more easily. Generally speaking, higher-tier Pops will provide better bonuses for your country as different Pop Types perform different functions. By manufacturing or importing special goods and educating your population you would turn your simple, backwards Pops into advanced, progressive types in ideal ratios, which maximizes these bonuses to increase your competitive advantage.

Pop Types from Victoria 2: Aristocrats, Artisans, Bureaucrats, Capitalists, Clergymen, Clerks, Craftsmen, Farmers, Laborers, Officers, Slaves, and Soldiers.
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Victoria 3 Pops instead have Professions. These are in some ways similar to “Pop Type”, but the ideal ratios and economic functions of those Professions differ based on the building they’re employed in and the Production Methods activated. The fundamental difference between these two approaches become clear when considering the Bureaucrat Pop Type/Profession in Victoria 2 and 3. In both games, Bureaucrats increase a country’s administrative ability. But in Victoria 2 Pops promote into Bureaucrats independently in relation to the amount of administrative spending the player sets, while in Victoria 3 Pops will only become Bureaucrats if there are available Bureaucrat jobs in Government buildings, usually as a result of the player actively expanding Government Administrations.

Professions in Victoria 3: Academics, Aristocrats, Bureaucrats, Capitalists, Clergymen (temporary icon; will be changed to be more universally applicable), Clerks, Engineers, Farmers, Laborers, Machinists, Officers, Peasants, Servicemen, Shopkeepers, and Slaves.
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The latter approach gives the player more control over where these job opportunities are created, and combined with Production Methods cause demographic shifts to have stronger, more localized effects that are easier to predict and understand. It’s also more flexible, permitting the same Profession to cause different effects in different Buildings given different Production Methods. So in Victoria 3 higher-paid Pops don’t by their very nature perform a more valuable societal function than lower-paid Pops - rather, each acts as a crucial part of a Production Method’s ‘recipe’. Each of these roles require the others to be effective - without enough Laborers to shovel coal the engines the Machinists maintain stay dormant, and without seamstresses to work the sewing machines the Shopkeepers don’t have any clothes to sell.

Buildings adjust their wages over time in order to achieve full employment with minimal wage costs. As employment increases, so does the Throughput - the degree by which the building consumes input goods and produces output goods. By the laws of supply and demand, this makes a building less profitable per capita the closer to full employment it gets, so at first blush it might appear irrational for a building to pay more wages just to reduce their margins. But since a “building” does not represent a single factory but rather a whole industrial sector across a large area, and we assume the individual businesses in that sector compete with each other rather than engage in cartel behavior to extort consumers, this adjustment of wages to maximize employment makes sense. However, buildings won’t increase wages due to labor competition if this would cause them to go into deficit, so there’s little point to expanding industries beyond the point where they’re profitable.

Employees are hired into available jobs from the pool of Pops that already exist in the state, but unless they’re unemployed these Pops will already have a job somewhere doing something else. Pops can be hired under two conditions: first, they must be offered a measurably higher wage than the wage they’re currently getting from their current employment. Second, unless they already work as the required Profession in another building, they must also meet the Qualifications of that Profession to change into it.

These Steel Mills don’t pay as well as the Arms Industries, but they do seem to offer better terms than the Textile Mills and resource industries in the same state - with the notable exception of Fishing Wharves, who also need Machinists to service their trawlers.
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Wages are set by individual buildings in response to market conditions. A building that is losing money will decrease wages until it’s back in the black. A building that has open jobs it can’t seem to fill will raise wages until it either fills the necessary positions or runs out of excess profits. As a result, different buildings in the same state will compete for the available workforce. What this means in practice is that a large population with the necessary Qualifications to perform all the jobs being created in the state will keep wages depressed and profits high. Only when industries are large or advanced enough that they need to compete with each other for a limited pool of qualified workers are wages forced to rise. This rise in wages also comes with increased consumption, which increases demand for goods and services that some of the same buildings may profit from in the end.

A Pop’s Qualifications measure how many of its workforce qualify for certain Professions, and updates monthly depending on how well their current properties match up to the expectations of the Profession in question. For example, at least a basic education level is required to become a Machinist while a much higher one is required to become an Engineer. Conversely, the ability to become an Aristocrat is less about education and more about social class and wealth. Buildings won’t hire Pops who don’t meet the Qualifications for the Profession in question.

These 981 Machinists qualify to become Engineers at a rate of 4.08 per month. Their Literacy is nothing to write home about but they at least meet the cut-off of 20%, aren’t starving to death, and benefit substantially from already working in an adjacent field. All factors and numbers are work-in-progress.
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If some Paper Mills required more Engineers and this Pop was being considered, only the amount of qualified Engineers they’ve accumulated so far could be hired. Currently that is only 85 (not shown). If those 85 were all hired, this Pop would then end up with only 896 members left in the workforce of which 0 now qualify to become Engineers. Since all recently hired Engineers used to be Machinists, all 85 retain their Machinist Qualifications. Furthermore, if 512 members of this Pop qualified to be Farmers before the hire (52%), of the 85 of them who were newly promoted to Engineers, 44 of these new Engineers are also qualified to become Farmers.

To be considered for a “job” as Aristocrat a Pop must have at least moderate Wealth, and the more Wealth they have the faster they will develop this potential. Unlike many other jobs Literacy is not a requirement for being accepted into the aristocracy, but an education does make it easier. Bureaucrats and Officers have an easier time becoming Aristocrats than other members of society, while Pops who suffer discrimination on account of their culture have a much harder time. Finally, if a Pop does not meet the minimum Wealth requirement, they actually devolve any prior potential for becoming Aristocrats. This means that down-and-out former nobles robbed of their land and forced to go unemployed or (perish the thought) become a wage laborer will - over time - lose their ability to return to their former social class. All factors and numbers are work-in-progress.
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Like all Pop attributes, Qualifications follow the Pops as they split, merge, move between buildings, migrate, and die. If you had previously developed a lot of potential Bureaucrats in your country but ran into budgetary problems and had to shut down your schools, over time those Pops who have already developed the Qualifications to become Bureaucrats will die off and not be replaced by newly educated ones. If your Capitalists in a given state had been underpaying their local discriminated employees to the degree that nobody gained the Qualifications to take over for them, and then some of those Capitalists move away to operate a newly opened Iron Mine in the next state over, rather than promoting some of the local discriminated Laborers to the newly opened jobs they will simply leave the spots open (and the mines underproducing) until some qualified Capitalists move in from elsewhere to take over.

Qualifications are entirely moddable by simply providing the computational factors that should go into determining how the value develops each month. If you want to make a mod to split up the Clergymen Profession into individual variants for each Religion in the game, you could make the Imam Profession dependent on the Pop being Sunni or Shi’ite. If you wanted Aristocrat Qualification development to be highly dependent on the amount of unproductive Arable Land in the state the Pop lives in, you could do that. An event option or Decision that makes it faster and easier to educate Engineers but harder to educate Officers for the next 10 years? Absolutely.

A breakdown of all Pops in Lower Egypt that qualify to become Engineers. Of course, any openings will be offered to existing Engineers first, and not all of the remaining qualified Pops would actually be interested in the job - though if it was lucrative enough, perhaps some Aristocrats on a failing Subsistence Farm would consider a career change.
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The intent of Qualifications is to signal to a player what capacity for employment they have available among any subset of their population. They cannot, for example, conquer a state filled with under-educated people they also legally discriminate against and expect to immediately build up a cutting-edge manufacturing- and trade center there. These efforts will be throttled by their inability to employ the locals into highly qualified positions, meaning they have to wait for members of their already qualified workforce to migrate there from the old country to take on any high-status positions created for them. But by building out their education system, paying Bureaucracy to extend their administrative reach to the new state through incorporation, and changing their Laws to extend citizenship to these new residents, they can start to build this capacity also in the locals.

In summary, Qualifications is the mechanism by which access to education and your stance on discrimination - in addition to many other factors - impact your ability to expand different parts of your society. It is also the mechanism that sorts Pops logically into the economic (and thereby political) niches you carve out as you expand, ensuring your laws and economic conditions inform the social mobility of Pops based on who they are. It’s quite subtle, and you might not even notice it’s there - until you run into the challenges caused by rapid industrialization, mass migration, conquests, colonization, and other drastic population shifts.

That is all for this week! Next Thursday we will finally get into how all this economic activity translates into revenue streams for you, when Martin presents the mechanics governing the Treasury and national debt.
 
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There's a limit to how many Pops can be hired by a building each week. In week 1, workplace 1 will gain hiring precedence and will recruit the "best" workers until it's reached its limit. If there are more qualifying workers after that, workplace 2 will recruit them, up to their limit. If the building manages to hire it won't increase wages. Now, in week 2, workplace 1 has now increased their throughput and their net profit as a result has decreased somewhat, and it won't try to increase wages since it's been successful in recruiting new workers. This makes it comparatively less desirable than workplace 2, which might have increased its wages and as such might get precedence over 1 this time around.

Over time, the most productive / profitable building will be able to hire more workers than the less productive building, but they'll both get opportunities to increase their throughput and for as long as they have profit to spare and job opportunities to fill they will continue to compete on wages to steal workers from each other.

As for owner wages, they're distinct from dividends - these are the excess profits paid out to shareholders (=owners) after Cash Reserve deposits have been made. So owners take their "fixed" share of the wages alongside everyone else in the building, but then get paid a weekly bonus depending on how well the building is doing.
This is actually great to hear, and considering this does the demand of richer pops continue to increase as their wealth increases?
 
In the 19th century, the occupations in some non industrialized countries were solidified or even hereditary, and these occupations could not flow normally. For example, most bureaucrats in Confucian countries can only be produced through the imperial examination. The samurai in Japan and the Eight Banners in China are hereditary. It is difficult for other professionals to transfer to these.
 
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This seems to be touched upon by previous questions about subsidies, but I don't see it asked specifically here:
Will there be any kind of wage control laws/decrees possible? I.e. setting a minimum/maximum(!) wage? Will this be modeled only through government subsidies?

Like others here I'm concerned about the ability to model even a moderately socialist or social democrat government, if wages are always market determined.

May be answered in a previous DD, my apologies if so.

I would be *very* surprised if there were no minimum wage laws to be passed, if only because the previous installment of the game had it and it ties in very much with what I feel a lot of people consider core to Victoria experience (some level of balancing politics during our rapid industrialization).
 
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In the 19th century, the occupations in some non industrialized countries were solidified or even hereditary, and these occupations could not flow normally. For example, most bureaucrats in Confucian countries can only be produced through the imperial examination. The samurai in Japan and the Eight Banners in China are hereditary. It is difficult for other professionals to transfer to these.

I admit to being pretty blind to a lot of history outside of Europe/NA, but this would be pretty neat to model I feel! So seconded.
 
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I am unsure whether I understood this idea that increased production decreases (marginal) profits. Is this solely due to the fact that increased supply in a market with constant demand decreases the product price? If so, the production change we talk about here would have to be significant compared to the market size.

And on the other hand, increased production should increase the total profit of the business, as each produced unit still has a specific profit. The marginal profit is then not really an issue. If I can double my throughput and the marginal profit goes down by 10%, that seems like a damn good deal: I will make more money. Why would this mean I have to lower wages?

On top, even if the added unit has negative variable profit, it could still cover some fixed costs, increasing overall profitability. Or are there no fixed costs?

So in conclusion: why does increased production reduces the profit and thus the wages for all workers? Seems also like something the Betriebsrat would take offense in :).

Or is it more abstract, representing a balance of wages workers are going to accept in the long term and not so much a company's production planning rational? In this case, I may be able to understand it, as you need both upwards and downwards pressure on wages from somewhere to create dynamics.
 
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I am unsure whether I understood this idea that increased production decreases (marginal) profits. Is this solely due to the fact that increased supply in a market with constant demand decreases the product price? If so, the production change we talk about here would have to be significant compared to the market size.

And on the other hand, increased production should increase the total profit of the business, as each produced unit still has a specific profit. The marginal profit is then not really an issue. If I can double my throughput and the marginal profit goes down by 10%, that seems like a damn good deal: I will make more money. Why would this mean I have to lower wages?

On top, even if the added unit has negative variable profit, it could still cover some fixed costs, increasing overall profitability. Or are there no fixed costs?

So in conclusion: why does increased production reduces the profit and thus the wages for all workers? Seems also like something the Betriebsrat would take offense in :).

Or is it more abstract, representing a balance of wages workers are going to accept in the long term and not so much a company's production planning rational? In this case, I may be able to understand it, as you need both upwards and downwards pressure on wages from somewhere to create dynamics.
I think the part you're overlooking is that a doubled Throughput resulting from a doubling of total employees will also require double the wages? As an example, let's say I employ 5000 employees and make 2000 in profit, due to my wages costing me 1000, input goods cost being 4000, and sale of output goods yielding 7000. Under these conditions, if I doubled my employment and thereby my Throughput and we assumed zero or negligible change in goods prices due to supply and demand (no loss of marginal profit) then my now 10,000 employees will generate 4000 in profit due to wage expenses of 2000, input goods expenses of 8000, and sale of output goods yielding 14,000. Yes, this is a higher absolute profit but since the number of shareholders (owner) have also doubled, wages + dividends paid out per employee will remain the same.

This means that any decrease in marginal profit, whether 1% or 50%, as a result of proportionally increasing employment will always result in less net profits generated per employee. This would be different if a building had fixed costs no matter its size (they do not) and is to some degree counteracted by a small Economy of Scale bonus that some buildings have, where Throughput gains a small boost in larger buildings independent of workforce size, but the core principle remains.
 
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This means that any decrease in marginal profit, whether 1% or 50%, as a result of proportionally increasing employment will always result in less net profits generated per employee. This would be different if a building had fixed costs no matter its size (they do not) and is to some degree counteracted by a small Economy of Scale bonus that some buildings have, where Throughput gains a small boost in larger buildings independent of workforce size, but the core principle remains.
Do you plan to add an MBA course in the Recommended PC Specs? :cool:
 
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Do you plan to add an MBA course in the Recommended PC Specs? :cool:
Most people successfully participated in 10th grade maths lol.


But since we have EoS, do buildings have fixed costs to simulate another area of EoS @lachek in addition it'd be nice if profits for the owners is a little bit increased with number of employees ( to abstract both a small part of EoS and a booming industry, and the fact that the owners will redirect efficiency gains to their own pockets to a greater degree than to others ).
 
Do you plan to add an MBA course in the Recommended PC Specs? :cool:

I really like the way the devs seem to be approaching it - accessible but very deep (and by the look of it, lots of scope for modding interesting things) - it's super-cool :cool:

Maybe the game could provide a printable honorary economics certificate or something for players that succeed in bringing Russias economy into the modern world without a revolution, or similar? :)
 
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Pops need certain goods to promote? Did I read this right?
Pops don't need goods to gain the qualification for a job. However, in order to actually change to that job, there needs to be a demand for it. No goods = no demand for jobs using those goods, like factory workers or owners = no one changing to those jobs. But pops can still gain qualifications to take those jobs if they open up in the future.
 
Maybe the game could provide a printable honorary economics certificate or something for players that succeed in bringing Russias economy into the modern world without a revolution, or similar?

Sound like an achievement proposal to me :) .
 
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Pops don't need goods to gain the qualification for a job. However, in order to actually change to that job, there needs to be a demand for it. No goods = no demand for jobs using those goods, like factory workers or owners = no one changing to those jobs. But pops can still gain qualifications to take those jobs if they open up in the future.
"By [...] importing special goods and educating your population you would turn your simple, backwards Pops into advanced, progressive types"
 
It's an interesting thought, but I think it might clash with the price mechanism in the game. The internal price of goods won't change unless the supply/demand balance changes. So if you forced everyone to take a pay cut, then every building would become more profitable, but the price of goods within the economy wouldn't drop. So a car factory would be a bit more competitive because of the labour cost reduction, but you wouldn't have this cascading price decrease throughout the economy. So I think the effect would be limited.

The other thing is that subsidies seem to guarantee a wage floor for the subsidised industry, but some industries could still pay more than that.
I see this as a feature, not a problem. You're impoverishing the workers for the benefit of the industries and their owners. I don't know of any 19th century examples of this, but that was the basis of Japan, China, and the USSR's economic explosions - they suppressed worker wages and rights to build an export economy and pour the profits straight back into the industry.
 
I see this as a feature, not a problem. You're impoverishing the workers for the benefit of the industries and their owners. I don't know of any 19th century examples of this, but that was the basis of Japan, China, and the USSR's economic explosions - they suppressed worker wages and rights to build an export economy and pour the profits straight back into the industry.
Certainly, keeping wages low and businesses profitable will be key to rapidly growing your investment pool and therefore rapidly expanding industry. Though you might run into problems with demand if your pops are too poor.

I was responding to the idea that forcing wages lower across the economy will make you exports more competitive. I think that will only happen to a limited extent since the internal price of goods (inputs to your export factories) won't adjust based simply in lower labor costs. Though impoverished pops could lose wealth and start buying fewer goods- which will drop internal prices that way.
 
Sorry if this has already been asked.

If slavery is outlawed, what do slaves become? Subsistence farmers?
I'm guessing jobs would open up as you lose jobs that were previously slave jobs. ie: Plantation goes from having 2,000 slave jobs to 2,000 farmer jobs.
Also, is that change on a 1 for 1 basis or are say, where 3,000 slaves were needed only 2,000 farmers are now needed instead?

I'm thinking that maybe if you have a lot of slaves, but also have high unemployment in your pops that outlawing slavery could free up say laborer jobs or farming jobs for those unemployed people, where freed slaves would now be marginalized pops and so non-marginalized pops would get preference for jobs over them. Basically resulting in your previously unemployed non-marginalized pops getting jobs and your slaves who are now freed slaves being unemployed and marginalized.
Is that an accurate depiction?