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The Future Of Work: How AI Will Hit The Developing World

Robotization, AI and other technological advances will change the nature of work in the coming decades. How will it play out in poorer parts of the world?

In Argentina these last two years, there has been a reduction in industrial jobs in city suburbs
In Argentina these last two years, there has been a reduction in industrial jobs in city suburbs
Eduardo Levy Yeyati

-Analysis-

BUENOS AIRES To bring the debate on the future of work to the reality of the developing world, one should distinguish between three dimensions of the debate that are sometimes confused.

The first has to do with the relationship between technology and labor displacement. The displacement of work comes before technological unemployment, in a transition between the past and the future. Here, traditional tasks and occupations are replaced by technology and new ones created, though without entirely compensating for the traditional positions that are eliminated. In principle, workers are not strictly tradable or recyclable, especially an adult worker with medium or low-level qualifications or those workers for whom relocating to seek work has significant costs.

This first dimension — the shift in competencies and positions — suggests that even if technology did not reduce total demand for work hours, it could create persistent pockets of unemployment, and if this were concentrated in less qualified workers wage inequalities are bound to deepen.

The second dimension emerges from the relationship between technology and labor practices. New technologies create greater segmentation in productive time and space, challenging the paradigm of the wage-earning employee working for eight hours in a factory or office. And since for historical reasons, most social benefits are tied to formal, full-time employment, the new work formats are left unprotected and bereft of social services. This inevitably increases the wealth and social divide between salaried employees and independent workers.

The third dimension is both the most feared and perhaps most imminent: it is the relation between technology and unemployment, and the risk that jobs (occupations/work hours) will not only be changed, but reduced. This is the world of technological unemployment, which techno-optimists like John Maynard Keynes speculated about almost 100 years ago, or more recently pessimists like the "futurist" Martin Ford. There are reasons for supposing that at the end of the road, total demand for employment (meaning paid work, rather than any work), will fall because of continued advances in automation.

So far, this is the debate on the future of work in advanced economies. But how does it apply to a developing country like Argentina?

Workers demonstrating in Buenos Aires — Photo: Claudio Santisteban/ZUMA

Firstly we have three disadvantages vis-à-vis advanced economies: less human capital (fewer educated workers and an education system that is less pertinent to job market demands), more informal work, and relatively low-quality public services.

If technology seems harsher with less qualified workers (because their tasks are more easily replaced and they find it more difficult to adapt and compete for remaining jobs), then we are less well-equipped to face this change. If technology replaces salaried workers, our bigger informal sector and a flawed social protection system place us at even more of a disadvantage.

The future will not build itself.

In Argentina these last two years, we have seen a reduction in industrial jobs in city suburbs, compensated in other parts of the country with an increase in independent or informal work opportunities. But our education system is a one-way road that takes you from kindergarten to university (though only a minority of students, mostly from better-off families, actually complete this trajectory), without any safety net offering intermediate training options for the great majority of youngsters left without enough fuel to complete this long trip.

We must include that debate around the future of work, at least from our particular perspective in the developing world, must go beyond simply weighing scientific advances on the job market.

The issues here range from reforming the education system in line with a changing work model (a permanent learning process consisting of shorter phases interspersed in time) to moves to protect independent work (like better access to credit or new forms of professional associations) the passage of tax reforms that reduce labor costs.

Lastly, there is the fundamental issue of how we should divide work if there is less of it. Or more generally, how can we guarantee an inclusive society that distributes the fruits of technological productivity? Can it be with better public services, or through universal minimum revenue allocations that compensate for a reduction of work hours?

The debate on the future of work is not a catharsis on the dystopia of oppressive machines and mass unemployment, but a debate on how to use technology to build a better future. This future will not build itself. The future of work as a central theme of the next G20 meeting in Argentina is a perfect opportunity to give the issue the attention it merits.

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