Employment in the age of automation: Preparing labour with future-ready skills is essential
Automation and the growth of technologies like artificial intelligence (AI) are resulting in a better, safer and more efficient world. Investments in automation are pouring in. McKinsey estimates that tech giants worldwide spent anywhere between $20-30 billion on AI in 2016.
Interestingly, one of the key drivers of these spends is the falling cost of capital. The unit cost of capital has dropped to less than 0.6 times the unit cost of labour. This amounts to a 16x drop from the unit cost of labour in the early 1980s. This imbalance is flooding research in AI and robotics with money. These technologies will rewrite global competition, wealth generation and employment.
Already the warning bells in job markets are ringing. By 2033, says one World Bank Development Report, automation will put 47% of current US jobs at risk. Corresponding figures for other nations are 77% for China, 69% for India and 65% for Argentina.
These estimates are for direct job loss. The real numbers will be several times larger. For example, autonomous cars will result in direct job losses for drivers of taxis, trucks and buses. But autonomous cars will be programmed to adhere to local laws, and the size of the traffic police force can shrink substantially.
It doesn’t take research to tell us that jobs that can be done by machines will see a fall in wages. But, it is interesting to note the intensity with which machines have an impact on wages. One study in the US found that the addition of one industrial robot per thousand workers results in a wage reduction of 0.5% across the economy. As wages drop, the demand for goods and services falls, leading to further job cuts – relentlessly pushing the economy towards recession. The only way to stem this trend is to increase employment and/ or wages.
What do you skill the unemployed for when 85% of the jobs that will exist in 2030 haven’t been invented as yet? The other problem, as the World Economic Forum (WEF) has pointed out, is that the number of new jobs created will not be the same as those lost. The forecast is worrisome. According to a 2016 WEF report titled, ‘The Future of Jobs: Employment, Skills and Workforce Strategy for the Fourth Industrial Revolution’, of the 7.1 million jobs that will be displaced by 2020, only 2.1 million will be created.
In India, we must brace for the impact of these trends. Amongst the most severely affected will be the IT industry. Nasscom predicted that automation would result in a 20%-25% reduction in IT jobs in three years. The impact will be serious across sectors from e-commerce to manufacturing, security services, banking and agriculture. Labour intensive industries will become the first targets of automation.
The solution lies in pressing the button on modernising the workforce and delivering skills for the future. A rudimentary first step is to ensure everyone becomes literate in the use of technology followed by systems that deliver continuous and lifelong learning while simultaneously encouraging a culture of being versatile and adaptable. In addition, the process of job destruction and new job creation will be stressful and chaotic making it essential to put in place the mechanisms that make job transitions smoother.
Tax structures can be altered to prevent the concentration of capital in the hands of corporations that save on employment costs. This tax can be channelled into employment creation or social security. It is also worth examining the idea of taxing robots that replace humans. Bill Gates had suggested that the tax could be used to fund certain types of employment such as those which take care of the elderly or those working with children.
We may see higher acceptance of a Universal Basic Income (UBI). UBI puts money – or what is called ‘guaranteed liveable income’ – into the hands of all citizens, no questions asked. The idea is to create an equitable world. If that happens, surely automation will have played its part in changing society. Meanwhile, a more practical approach is to set up effective strategies for skilling.
Source | Times of India | 3rd May 2018
Regards
Mr. Pralhad Jadhav
Master of Library & Information Science (NET Qualified)
Senior Manager @ Knowledge Repository
Khaitan & Co
Twitter Handle | @Pralhad161978
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