Each industrial revolution has brought its own socio-economic consequences. With the use of artificial intelligence and other high tech, the fourth industrial revolution heralds yet another age of uncertainty. Traditional forms of employment across industries are becoming increasingly scarce. This poses complexities not just for jobs but also the wider network of social contracts. In the fourth industrial revolution, the question therefore is one of the future of work and society, whether technological advances, automation and digitalisation will destroy livelihoods at a faster pace than they will create them.
There is much room for debate on this theme as experts and big thinkers appear equally split on the issue of whether these advances will make a significant number of jobs obsolete over the next few decades.
Automation and other accelerating technological developments have been eroding the cost advantage of overseas labour in some industries, leading production in those sectors to start to re-locate back to their former geographical centres. This trend is further accelerated by the move for localization of production in certain sectors. Will this trend accentuate the risk of premature de-industrialization, where economies leap-frog into service-based economies without first developing a manufacturing base? What does it mean for employment and wages? To what degree can structural conditions in enterprises and economies rein in the transition?
The societal and economic challenges are enormous.
Asia faces the challenge of tackling poverty, a task made harder at the onset of automation. Several countries in the region lack a strong productive workforce, where millions battle for day-to-day survival while lacking adequate nutrition and access to healthcare and education. Can the economic model of organization, based on manufacturing-led development, that worked for China, South Korea and Japan still work for others? With several millions getting left behind, is there an increased risk of civil unrest? What will be the impact on the political economy of development? These questions must all be addressed as part of the ongoing debate on automation and a digital transformation of the economy that should leave no one behind.
"The real challenge for us, then, is to democratize new technologies, nurture human capital, and provide the skills so that a new middle class can be allowed to emerge using these new technologies"
Furthermore, a key driving force of a country’s economic growth is also its creative class—the bearers of innovation, new ideas, and high-tech growth. Research (link in English) indicates that these people are not only responsible for economic growth but are also associated with the development of stable democracies and its values (such as liberty, government effectiveness and rule of law). With the erosion of cost advantages and premature de-industrialization, there is a risk that the creative class may flee the country to look for better opportunities abroad. How can this challenge be tackled?
Historically, the first movers in each industrial revolution become the winners from the process, as is the likely case in the digital age. The real challenge for us, then, is to democratize new technologies, nurture human capital, and provide the skills so that a new middle class can be allowed to emerge using these new technologies. Discussions on digital transformation must therefore address the “inclusiveness challenge” at the same time as economic growth challenges.
Can emerging Asian countries respond to the dual challenge of new sources of competition and the social tensions arising out of inequalities? Any discussion centred around the future of work and employment in times of digital transformation must ultimately address questions pertaining to its impact on social, societal, and economic factors.
Sehaj Malik is programme advisor of the Economy of Tomorrow project at the Friedrich-Ebert-Stiftung India office in New Delhi. For more information on the work by FES India on socio-economic transformation and other activities visit the country website.
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