The decoupling of manufacturing employment and manufacturing output

These means there is no direct relationship between changes in manufacturing employment and manufacturing output. This can occur because
1. Increase in the productivity of labour.
Labour productivity can increase because of training and education which improves the skill. Meanwhile, a change in factor combination, ie by increasing the capital per worker through mechanization and automation can also increase the prodtcivity of each worker. Either way, it means output can increase without an increase in labour input. In many instances there could even be a decrease in labour input because of rationalization.

2. Reclassification of jobs and outsourcing.
Certain jobs traditionally classified as manufacturing like design and research are been reclassified as service. As such they contribute to service employment while leading to a fall in the employment in manufacturing. A more direct impact occurs when manufacturing firms close down research and design departments and subcontract or outsource these services to specialized firms. Thus there will be a fall in manufacturing employment while more jobs are created in the service sector.