Most of the discussion about the future of work focuses on how many jobs robots will take from humans. But this is just a (small) part of the change to come. As we explained in our previous blog, technology is reshaping the world of work not only by automating production but also by facilitating connectivity and innovation. The changes that digital technology is introducing in the price of capital versus labor, the costs of transacting, the economies of scale, and the speed of innovation bring significant effects in three dimensions: the quantity, the quality, and the distribution of jobs. Let’s see them in detail.
Will there be jobs?
Perhaps the most talked about effect today, especially in developed countries, is the displacement of labor, with technology substituting for human effort in some or most tasks, as the capital/labor price ratio drops. The starker of the predictions suggest that many occupations will be automated away, and job losses will be significant. The more nuanced indicate that some occupations might be entirely susceptible to automation, but that more might be transformed as only some share of tasks (not full jobs) are automated or traded (9 percent of jobs and 25 percent of tasks according to a recent OECD analysis).
But technology can also have a positive effect on job creation . A study by Deloitte using UK’s census data for 150 years concluded that technology was a “great job-creating machine”. Access to markets and resources, due to improved connectivity, helps firms grow and create jobs, or attract work to new markets that are more competitive. Furthermore, product innovations, created and distributed using various technologies, give rise to new industries, firms, and jobs. According to the Economic Strategy Institute, Cloud computing, Big Data, and the Internet of Things will employ millions of people in new types of jobs , both in these industries themselves, but especially to produce and provide the new products and services that they bring about. But will these be better or worse jobs?
Will there be good jobs?
Technology not only expands or reduces the number of jobs, but it also changes labor conditions. Among the positive effects on the quality of jobs, automation can lead to increases in wages and improvements in working conditions, because it increases productivity and workers’ capabilities. But it is also true that workers bear more risk because wages can stagnate or fall as technology allows employers to automate or trade more tasks.
Furthermore, digital technologies are also disrupting the traditional employer-worker relationships , since they bring new forms of work that delink workers from employers. Think of the ‘gig economy’, characterized by the prevalence of freelance arrangements and temporary positions. The short-term engagement of independent workers means more flexibility (both for the employee and the employer), but it can also mean that workers lose many social benefits and protections usually linked to traditional employment arrangements.
In the developing world, where informality is prevalent, there is likely less of a concern about workers losing full-time formal jobs and the attendant social protections. In fact, the digital technologies that enable the ‘gig economy’ could also foster transparency in the labor market (e.g. about demand and wages), and have at times even empowered informal workers in India and improved their ability to get wage raises.
Who will get them?
Finally, technology also impacts the distribution of jobs because it alters the types of skills that employers demand, and the trade flows between countries. Richer countries, and the better skilled and better connected population groups within countries, stand to benefit most. But developing countries, and especially the poorer segments of the population within them, often do not have proper access to digital technology, nor the skills or enabling environment to benefit from it, while at the same time bearing the brunt of the risks.
When these barriers are removed, new opportunities ‑‑also appear for the poorest. Take as an example the Women in Online Work (WoW) program in Kosovo, which creates new job options -with higher earnings- for women by providing training on technical (IT) and soft skills. Or the opportunities presented by the Internet and ICT for the full participation of persons with disabilities. Conversely, if these technology gaps continue, there is a major danger that inequality will deepen, across and within countries, undermining the prospect of globally shared prosperity itself. Much of that prospect will depend on what will happen to the patterns of employment and whether developing countries will be able to harness and share the job opportunities and benefits technologies present.
In conclusion, all the effects of technology on jobs can be positive or negative depending on the context, the extent of technology diffusion, the demographic composition, the enabling business environment (skill mix, supportive infrastructure and institutions), the reigning labor market regulations, and the trading environment. As a result, these effects will differ between developed and developing countries, and between the skilled and connected and the unskilled, poorer, and excluded populations within these countries.
As we will present in the next post, to reach the twin goals of eradicating extreme poverty by 2030 and fostering globally shared prosperity, developing countries will need to vigorously address bottlenecks in technology access, and invest in building the skills and enabling the business environments to take maximum advantage of the opportunities technology offers. This must happen while ensuring that the poorer and vulnerable groups—the bottom 40 of the income distribution—are not excluded from the process.
This post is part of a series in preparation of the G20 Leaders’ Summit, featuring four topics: the future of work, employment for women, integration of migrants in the labor market, and ensuring decent work in supply chains. You can read other posts here and here.
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