The real picture of technological unemployment
The advancement of technology and the restructuring of human lives around technology has been one of the constant drivers of change across history. But it wasn’t until the Industrial Revolution (the first of its kind according to many) that the concept of jobs found its roots and since then has become a relevant part of the modern-day societies. However, today, jobs are increasingly becoming dependent on technology, and this technological impact on jobs has many speculating on what the future holds.
Much like the Luddite movement which took over parts of Britain in the 19th century—a revolt against the increased mechanization of cotton mills and the fear of mass job loss—the current global workforce faces similar dilemmas, although without the violent disposition. But the threat to jobs is not completely unfounded. A recent World Economic Forum report1 highlighted the concern that leading up to 2025, almost half of the current jobs will be replaced by machines, with Saadia Zahidi, the head of the WEF’s Center for the New Economy and Society, adding that companies had "a moral and economic imperative" to invest in retraining and continuing education of their employees. Reports have projected major job displacement and restructuring of the labor markets across many of the developed economies across North America and Europe. Even in nations with a large workforce like India and China, albeit different in terms of labor market structures and education levels, are all projected to undergo similar transitions. Even other regional blocks like the Eastern European countries and ASEAN face significant rates of labor displacement across key sectors like manufacturing.
But as it is with many of human endeavors, predicting the future comes with its own uncertainty.
However, short-run phenomena often are marked with fluctuations that affect the course of long-term projections. A similar short-term trend was noticed by the World Bank in a report2 on automation and the changing nature work. It noted that many of the fear regarding jobs being taken away by robots were currently “unfounded.” Technology has certainly reformed traditional job structures and skill preferences are adapting to such changes quite rapidly. But will it all lead to the point where eventually human talent is replaced across portfolios? The World Bank report in return is less of a direct challenge to many such projections but rather attempts to paint a much clearer picture.
How are job markets evolving?
The rise in technologies like AI and automation have undoubtedly reshaped and even taken away certain jobs. Developed regions in the West are experiencing a rapid change in employment patterns and with the advent of the gig economy, many have begun questioning this sweeping impact of technology. The report highlights that although some developed and developing economies that have witnessed the loss of jobs due to automation have managed to create more jobs, technological advent has helped in the creation of more jobs across other competency areas. For example, while parts of the developed world have seen a 10 percent fall in the overall share of industrial employment, the reverse has been true elsewhere. In Vietnam, for example, industrial jobs accounted for around 9 percent of employment in 1991 but had grown to 25 percent by 2017, in recent times. A deeper look into the report’s findings reveal that instead of it being a case of one-sided jobs depletion, the impact of technology has been region-specific and often the extent of automation’s effect will differ from region to region and from country to country.
Technology has not only impacted the number of jobs but has also tweaked the nature of jobs being created. The rise of digital platforms is one such recent example. Today with the help of digital platforms, companies are able to reach more people faster than ever before. More and more companies are slowly beginning to realize the importance of being digitally connected and as a result of a spurt of digital platforms across sectors like e-commerce, healthcare etc. are creating jobs. But this kind of job creation doesn’t necessarily improve the labor market situation. Many of such employees face unregulated territories with job quality and guarantee that is still a big area of challenge.
The World Economic Forum in its analysis of the report adds that “even in advanced economies, short-term work, often found through online platforms, pose challenges similar to those faced by the world’s informal workers.”
This brings into light the fact that maintaining the balance between the rates at which jobs are being replaced and created is not the only aim for future policymakers and labor market experts. This is because technology is also actively reshaping the skills that employers seek. Digital technology is also changing how people work and the terms on which they work. This also highlights how the negative impact is not only restricted to jobs being replaced by machines but also the larger changes it brings within the labor markets, which has led many to argue that how skills are built and the institutional support offered for building skills are larger concerns.
Preparing for a better tomorrow
As noted earlier, one of the prime concerns that the report raises is how effectively the governments and economies are responding to such challenges. The World Bank report notes that in today’s world, workers are in need of three key qualities which would go on to define their employability — to be better at complex problem-solving, teamwork, and probably the most important of them all, adaptability. Building these skills requires strong human capital foundation and creating a mechanism for lifelong learning. In many developing countries, most workers remain in low-productivity employment, often in the informal sector with little access to technology. Lack of quality private sector jobs leaves talented young people with few pathways to wage employment. High-skill university graduates currently make up almost 30 percent of the unemployed pool of labor in the Middle East and North Africa. Better adult learning opportunities enable those who have left school to reskill according to changing labor market demands.
Improvements in infrastructure and policy reforms are also needed. This includes improving physical access to technologies like affordable access to the Internet for people in developing countries who remain unconnected. In addition, the report highlights that the need to adjust to the next wave of jobs requires social protection. According to the report today right in ten people in developing countries receive no social assistance, and six in ten work informally without insurance.
Social protection and Universal Basic Income are important policy measures that need to be considered as ways to safeguard modern workforce against the perils of tech domination.
Although most such measures remain relatively new and untested in emerging economies, the higher share of low skilled jobs puts them in danger of losing such jobs to machines. Therefore reskilling, in addition to enhanced social assistance and insurance systems would reduce the burden of risk management on labor regulation. As people become better protected through such systems, labor regulations could help create a more balanced way to facilitate movement between jobs and enable job seekers to reskill and find relevant jobs rather than be stuck in professions which are currently staring at the end of the barrel.