By Ibu Sanjeeb Garg
The advent of the 21st century has shifted the focus from the manufacturing industry to the tertiary sector. The first industrial revolution in the eighteenth century started with the advent of steam power. It pulled away people from agriculture to factory floors. The second used electrical power for mass production. The third utilised electronics and information technology to automate the production process. And now the world is on the brink of the fourth industrial revolution – the digital revolution. This new revolution is taking away people from factory floors and putting them in cubicles. The fourth industrial revolution, in its scope and impact, is unlike anything that mankind has ever seen. A unique feature however accompanies this industrial revolution. While the first industrial revolution created jobs, the fourth industrial revolution seems to be taking jobs away. Machines are replacing men.
Since times immemorial, people have commented on how technological advancements deprive people of their livelihoods. These arguments have always found takers not only among Cassandra prophets but also among Luddites and left wingers. Even economists like Keynes propounded theories of “technological unemployment” which centred on the concept of how technology is a harbinger of unemployment. In 2011 Andrew McAfee and Erik Brynjolfsson published their book “Race against Time”. In it the authors discuss the great decoupling concept. The authors concluded that, historically, technological employment driven productivity and employment have tended to behave in a similar manner. However, since the 2000s, there has been a perceptible gap in these two curves, and over the past two decades it has risen considerably. Thus crucial evidence seems to point to the fact that finally the gap between technology and employment generation has become unassailable.
Yet history has never been on the side of the doomsayers. The gap we are witnessing today is perhaps the starting phase of a new era of global economy. The fourth industrial revolution has opened up a new era of possibilities. Cloud computing, big data have emerged as new domains where economic and employment opportunities seem endless. Idea and Data seem to be twin edifices on which the fourth industrial revolution and the economic order are parked. An idea is worth brilliant dollars today. Who would have thought that an Instagram star would take up professional modelling because she is popular and companies would cajole the star to display products; or the Internet would create singing sensations. Organisations like Khan Academy globally and UnAcademy in India explore options in education through information technology. Today newspapers and TV media earn a significant amount of revenue from online operations and advertisements. Technology has given rise to gig economy, a setting in which temporary positions are common. One needs look no further than the taxi hailing App Uber when one tries to quantify the success of the gig economy and the use of automation in its interface.
A study of census results in England and Wales since 1871 throws up interesting results. The study carried out by Deloitte plots historical labour numbers. While dangerous, dull and hard jobs have declined, jobs in new sectors like caring have increased. In 1871, 6.6% of the workforce of England and Wales were classified as agricultural labourers. Today that has fallen to 0.2%, a 95% decline in numbers. Between 1992 and 2014, there was a 909% rise in number of jobs for nursing and auxiliary care assistants. There was 580% increase in teaching and education support assistants, 183% increase in housing and other welfare assistants. On the other hand, the two decades witnessed a 79 % drop in weavers and knitters, 57% drop in typists and 50% drop in company secretaries. In the end, the study concluded that the advent of technology has not affected the number of jobs. It has only shifted employment opportunities and in some places actually created more jobs.
Economists Ian Hathaway and Enrico Moretti have found that every high end professional indirectly creates 4-5 ancillary jobs. While the establishment of internet kiosks in villages would render the postman useless, it would create jobs of fibre maintenance guys, internet operators among others. As the Wales and England data would prove, the numbers are a far cry from the situation the Luddites had imagined when they were on a machine breaking mission at the onset of the Industrial Revolution.
Employment would eventually catch up with technological advances, however, the fourth industrial revolution does bring in some challenges. Perhaps it is not so much in quantifiable numbers as much as in terms of what the nature of that employment would actually be. Gig economy for instance is a short term contract and is only slated to grow over time. But what protection will these workers have when they stick to a particular trade for long? Will they be adequately compensated if they are terminated?
The biggest question would, however be the issue of digital inequality and polarisation. The rise of the fourth industrial revolution has created a powerful digital asymmetry. The power of data and information lies in the hands of the few. Those who are at the top of the hierarchy would decide how the data would flow and how the economy would operate. An interesting example today would be (Internet Corporation for Assigned Names and Numbers) ICANN. Very few have an idea of how it operates although most people are clear on the structural formation of ICANN. What is interesting is that very few realise that the group ICANN essentially controls the internet. In a global order of emerging new economics, such asymmetrical polarisations would create inequality and hamper the growth of economies. Those at the top of the digital order can also effectively use this platform to launder money, shift profit and evade taxes.
It is in these areas that governments have to work towards restoring balance and ensuring parity in the global order. Digital inequality can be bridged through investments in digital architecture as well as skill development and skill training. The skill development programs need to be embedded with information technology at some point. The target should not be limited to creating skilled workers alone. Rather the target should be towards creating digitally enabled skilled workers. The larger challenge however lies in preventing those at the top of the digital order from manipulating the system. Economists Larry Summers has advocated a number of measures to combat this polarisation. These steps include vigorous enforcement of anti monopoly laws, reduction in aggressive protection of “intellectual property rights”, improvements in corporate governance among others.
Ultimately while a gap exists, the question is not of automation itself or of machines replacing humans. Instead it is the opening up of new possibilities in forms of new areas like big data, cloud computing and new challenges. The gap that is being witnessed between productivity and employment is rather the result of our inability to respond to these challenges. Once we start closing in these challenges, the gap between automation and jobs would automatically disappear. As Andrew McAfee and Erik Brynjolfsson themselves say, “the key to winning the race is not to compete against machines but to compete with machines.”
(Views expressed by the author are personal)