Technology does not destroy jobs — it ends certain tasks in a job. Further, rising demand, in a fast-growing economy for instance, offsets and compensates the job losses arising due to automation. Together, technological change and rising demand create new occupations and industries. These theoretically-robust, but practically counter-intuitive, arguments come from the recently-released Asian Development Outlook 2018 that backs these postulates with the might of rigorous research.
Take the bank teller. The introduction and the subsequent mushrooming of ATMs have turned the bank teller virtually extinct. But the report also argues that not all tellers became jobless: technology transformed the nature of the job of bank tellers to one of customer relationship managers. It is the routine task of the bank teller’s job that has got automated, just as other routine tasks like soldering components onto a circuit board, have and will continue to.
But finally, it is the economics of business that will be the deciding factor between how an entrepreneur sees the capital-labour allocation.
The largest users of industrial robots in Asia, for instance, are electronics and auto makers, which accounted for 39% of all robot use but only 13.4% of manufacturing employment. On the other hand, while textiles, leather and food and beverages used 1.4% of robots, they accounted for 31.4% of jobs. “In 12 economies in developing Asia that account for 90% of employment in the region, an estimated 40% of manufacturing and service jobs entail mostly routine tasks, either manual or cognitive. However, many of these jobs are unlikely to be lost. Some will be restructured instead, and automating others will not be technically or economically feasible,” the report states.
In short, the authors of the report -- Elisabetta Gentile, Rana Hasan and Sameer Khatiwada-- make four key points. One, developing Asia has created 30 million jobs every year in the past 25 years. Two, this has been accompanied by improved productivity, rising earnings for workers, and large reductions in poverty. Three, the jobs challenge is not over. In the 30 years from 2015 to 2010, the region is likely to see its labour force rise by 11 million a year. And four, future technologies that are already here — artificial intelligence, internet of things, robotics, 3D printing — will create new jobs and industries but will also impose hardships on labour, as they try and reskill themselves.
Historically, for job creators — entrepreneurs and businesses — it all boils down to productivity gains. These gains have come from four industrial revolutions, the report states. The productivity gains from the first industrial revolution (1760-1900) that lasted 140 years came from the use of steam and mechanically-driven production facilities. The second industrial revolution (1900-1970) and reigned for seven decades was driven by electricity and based on division of labour that catalysed mass production. The third industrial revolution (1970-present), now in its fourth decade, brought a proliferation of information technology and automation resulting in high-productivity environments. Now, in the fourth industrial revolution, smart applications are integrating virtual and physical production systems. This revolution has six key tools — artificial intelligence, quantum computers, biotechnology, blockchain technology, 3D printing, and new generation robotics. Given the time compressions around these revolutions, it is an open question as to how long the fourth industrial revolution will last before the fifth replaces it.
Every revolution helped raise the productivity. And here, India, along with several other developing economies, is in a good place — all four industrial revolutions are playing out simultaneously, all of which have the potential to increase productivity.
Agriculture will gain through mechanisation and electricity, routine industry through electricity and information technology, high-end industry through information technology and robotics. The low-hanging fruits in the tree of jobs is agriculture — the possibility of increasing returns on jobs if productivity gains in agriculture are harnessed are huge, given that India’s most labour-intensive activity is on its farms. The government’s aspiration of doubling farmers’ incomes, could stand simply on these gains. Of course, delivering them is easier said.
The bigger question is how politics will address this human-economic problem. For leaders across the world, jobs has become a four-letter word that ties the economic tension between individual aspirations and aggregate ones — for every anecdote of job loss there are statistics that show otherwise. It is likely to remain the No. 1 challenge for politics in the near future.
And unlike routine challenges such as ideological positionings, vote-gathering adversaries or a multi-designated great leader, this force of technology has no preferences.
It will impact democracies and autocracies alike. Harnessing this force, managing it and directing it towards a greater economic fulfilment on one side and preventing a societal implosion on the other will be the big challenge over the next quarter century for leaders of all nations, developed and developing, North and South, rich and poor.
Parts of this force are already in action. The automation of public transport using artificial intelligence in Uber, for instance, is creating political demands from incumbents in France, Hong Kong and India, even as citizens are gaining from Uber’s operational and financial efficiencies. Robots are entering factories and replacing humans not merely in the US and Germany but in India’s Haryana as well. Once 3D printing devices become widespread, it will throw up another string of challenges for the informal labour in small and medium enterprises, the largest creators of jobs. Given that apart from job losses, this can and will lead to income and wealth inequalities, what is the policy action? A universal basic income through increased taxation is one way out. But if taxation is excessive, companies can cross borders, evading all policies.
India’s fractured and diverse polity will need to tackle this problem using a principles-based approach — not a power-driven one. That is, political parties will need to decide whether or not they are going to go with the flow of technology, irrespective of being in power or not.
Having one position while in power and another as the Opposition will neither help the country nor the party. But this ideal state is unlikely to fructify, as competitive politics seeks power even through contradictory stances. The dramatically-opposite and interchanged positions of the BJP and the Congress on the introduction of the goods and services tax (GST) is a recent case in point.
Making matters worse would be existing workers, who stand to lose in any change. As rooted economic agents, they will do what they can, legally and politically for the most part and violently and criminally for a tiny sliver (remember, the murder in Maruti Suzuki factory in Manesar in 2012) to ensure the jobs entitlements continue to flow, protected as they are by a mesh of laws belonging to the past century. The political decision then would be to handhold these incumbents through skilling while lending a hand to the millions aspiring to enter the workforce. Politics itself will need new skills to negotiate this jobs disruption ahead. We have time — the breaking point is about a decade and a half away. The question is: do our leaders have the will?
The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.
Gautam Chikermane is a Vice President at ORF. His areas of research are economics, politics and foreign policy. A Jefferson Fellow (Fall 2001) at the East-West ...
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