The industrial revolution is not new, neither is job transformation. The human race has been in a constant pursuit of technological development to transform jobs so that these can be done at lower costs while producing higher quality outputs. If it has been happening since the beginning of our civilisation, then why should we be concerned about it? So far, past waves of technological advancement and demographic changes have led to increased prosperity, productivity and job creation. This does not mean, however, that these transitions were free-of-risk and inequality. Often, those revolutions contributed to disproportionate opportunity creation, leaving many fellow human beings, even countries behind. Anticipating and preparing for the current transition is therefore critical. It's time to predict and prepare with the right capacity for leveraging continuously unfolding opportunities. Otherwise, we run the risk of being marginalised further.
According to the World Economic Forum, 65 per cent of children entering primary school today will ultimately end up working in completely new job types that don't yet exist. Which jobs will disappear, and which will be created, are worth speculation. Similarly, the competence required to perform new jobs is also not known at the moment and can only be anticipated. Most importantly, it's also the time to create new jobs by leveraging new technology. In such a rapidly evolving employment landscape, the ability to anticipate and prepare for future skills requirements, job content and the aggregate effect on employment is increasingly critical for businesses, governments and individuals.
Many of us may argue that there has been little evidence, over the long term, of technological unemployment. After all, the numbers suggest that average employment and unemployment rates today in the Western countries are similar to those in the 18th century. And during the third industrial revolution, many developing countries were blessed with industrial jobs, through technology-powered globalisation. But along the way, economic prosperity gap between individuals and also countries kept widening. Moreover, during the transition, due to lack of prediction and preparation, many were left behind, maybe temporarily, causing unemployment and suffering.
Every technology-led transformation has more than one effect on jobs. The impact of technological change on employment and wages can be depicted as the sum of three major effects: 1. Destruction, 2. Productivity and 3. Creation. In the past, there have been many predictions about destruction of jobs, and even industries as there were fear that many existing skills will become redundant in the future. For example, according to an international consultancy report, 100 million global knowledge workers could be affected by 2025. Similarly, researches at the Oxford School of Economics predicted that 47 per cent of America's jobs could become automated. Research also suggests that unlike the past, more than 50 per cent of manual jobs being performed in developing countries could be subject to automation within a foreseeable future. On the other hand, it's being predicted that Bangladesh's ready-made garments sector may lose as high as 60 per cent of jobs to automation within 2030.
The same set of technologies which is going to destroy human jobs in performing works by offering better alternatives is also going to make those works more productive, in time boosting wages and increasing the returns to those who own capital. For example, research suggests that the fourth industrial revolution is going to fuel an additional global economic output of $13 trillion by 2030, boosting GDP by about 1.2 per cent a year. The positive effects on aggregate demand of new technologies, known as productivity effect is often misunderstood though. But, unfortunately, not all countries will equally benefit from this additional output. The fourth industrial revolution will depend on competence development to respond to the anticipated change.
Like the past revolutions, in the fourth industrial revolution (4IR), technological progress will lead to the creation of new means for engaging labour. This will lead to the creation of new tasks for labour. When combined with the productivity effect, this ultimately will counterbalance the displacement effects of technology, boosting productivity and wages while leaving employment unaffected. And all these effects will have varying effects across countries. But that does not necessarily mean that regulatory measures will make a uniform distribution of those effects making every country and every profession equally better off. Moreover, the scale, scope and speed of transformation in the age of 4IR will be far greater than the past, leaving very little room for catch-ups. As a result, followers failing to predict and prepare will likely suffer more than ever before. And deep suffering of a large number of people over a prolonged period may lead to social crisis, risking stability.
The destruction of existing jobs and the creation of new jobs require skill upgrades along multiple dimensions. The focus for factory floor skill development should change from knowing existing technologies in performing repetitive tasks to adopting a culture of rapid adaptation with change. It's not only required to know 4IR technology stack to use them efficiently and innovate solutions around them, but it is also necessary to acquire the capacity to adapt with a constant flux of 4IR technology-led transformation. The focus should be on developing cognitive skill for analysing data and cooperate in harnessing the cognitive capability in creating wealth, by properly using 4IR technology stack.
The focus of education should change from memorising to building capabilities of active listening, creativity, linking education to reality, self-learning, teamwork, analytical capability and empathy. The outcome of education and skill development should change from producing graduates to succeed as lead users of 4IR innovations in industry, government, farming, education, healthcare, and all other sectors to drive higher productivity and growth. To leverage the creative potential of 4IR, education should lead to research, innovation and start-ups for innovating better solutions to existing jobs and also opening new opportunities for wealth creation. This journey of innovation should capitalise on the local market as the springboard to create success in the global space for building an innovation economy.
If education and skill development are unable to keep pace with the changing demand for skills, those who already have the skills to use new technologies will earn even higher premiums. Job polarisation will increase the supply of labour competing for lower-skilled jobs. Greater global interconnectedness will reinforce these dynamics. In the transition, what economists euphemistically call frictions can lead to depressed labour markets, boosting inequality across individuals, firms and countries.
M Rokonuzzaman Ph.D is academic and researcher on technology, innovation and policy.