FRIDAY, March 29, 2024
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Here come the robots; your job could be at risk

Here come the robots; your job could be at risk

The new automation revolution is going to disrupt both industry and services, and developing countries need to rethink their development strategies.

A news item recently caught my eye: Uber has obtained permission in California to test two driverless cars, with human drivers inside to make corrections in case something goes wrong. Presumably, if the tests go well, Uber will roll out a fleet of cars without drivers in that state. It is already doing that in other states in America.
Is it a matter of time before Uber, taxis and personal vehicles will all be smart enough to bring us from A to B without our having to do anything ourselves?
But in this application of “artificial intelligence”, in which machines can have human cognitive functions built into them, what will happen to the taxi drivers? The owners of taxis and Uber may make more money but their drivers will most likely lose their jobs.
The driverless car is just one example of the technological revolution taking place that is going to drastically transform the world of work and living.

Dislocation
There is concern that the march of automation tied with digital technology will cause dislocation in many factories and offices, and eventually lead to mass unemployment.
This concern is becoming so pervasive that none other than Bill Gates recently proposed that companies using robots should have to pay taxes on the incomes attributed to the use of robotics, similar to the income tax that employees have to pay.
That proposal has caused an uproar, with mainstream economists like Lawrence Summers, a former United States treasury secretary, condemning it for putting brakes on technological advancement. One of them suggested that the first company to pay taxes for causing automation should be Microsoft.
Recent studies are showing that deepening use of automation will cause widespread disruption in many sectors and even whole economies. Worse, it is the developing countries that are estimated to lose the most, and this will exacerbate the already great global inequalities.
The risks of job automation to developing countries is estimated to range from 55 to 85 per cent, according to a pioneering study in 2016 by Oxford University’s Martin School and Citi. Major emerging economies will be at high risk, including China (77 per cent) and India (69 per cent). Developed countries’ risk is only 57 per cent.
From the Oxford-Citi report titled “The future is not what it used to be”, one gathers there are at least three reasons why the automation revolution will be particularly disruptive in developing countries. First, there is “premature deindustrialisation” taking place as manufacturing is becoming less labour-intensive and many developing countries have reached the peak of their manufacturing jobs.
Second, recent developments in robotics and additive manufacturing will enable and could thus lead to relocation of foreign firms back to their home countries. About 70 per cent of clients surveyed believe automation and 3D printing developments will encourage international companies to move their manufacturing close to home. China, Asean and Latin America have the most to lose.
Thirdly, the impact of automation may be more disruptive for developing countries due to lower levels of consumer demand and limited social safety nets. The report warns that developing countries may even have to rethink their overall development models as the old ones that were successful in generating growth in the past will not work anymore.
Instead of export-led growth, developing countries will need to search for new growth models, said the report.
Which jobs are most susceptible? A McKinsey Global Institute study lists accommodations and food services as the most vulnerable sector in the US, followed by manufacturing and retail business.
In accommodations and food, 73 per cent of activities workers perform can be automated, including preparing, cooking or serving food, cleaning food-preparation areas and collecting dirty dishes.
In manufacturing, 59 per cent of all activities can be automated, including packaging, loading, welding and maintaining equipment.
A technology specialist writer and consultant, Shelly Palmer, has also listed elite white-collar jobs that are at risk from robotic technologies. These include middle managers, commodity salespeople, report writers, journalists, authors and announcers, accountants and bookkeepers, and doctors.
Certainly, the technological trend will improve productivity per worker that remains, and increase the profitability of companies that survive. But there are adverse effects including loss of jobs and incomes for those who are replaced by the new technologies.
What can be done to slow down automation or at least to cope with its adverse effects?
The Gates tax proposal is one of the most radical. The tax could slow down technological changes and the funds generated by the tax could be used to mitigate the social effects. Other proposals include training students and present employees to have the new skills needed to work in the new environment.
Overall, however, there is likely to be a significant net loss of employment, and great potential for social discontent.

Martin Khor is executive director of the South Centre. The views expressed here are his own.

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