Are we heading towards a jobless future?

From the wheel to the steam engine, from the car to ‘New Horizons’ — an inter-planetary space probe capable of transmitting high-resolution images of Pluto and its moons — from the abacus to exascale super-computers, we have come a long way in our tryst with technology. Innovations are driving rapid changes in technology today and we are living in a world of perpetual technological change.

In 1965, Gordon Moore — co-founder of Intel Corporation — hypothesized that the number of transistors on an integrated circuit will double every 18 to 24 months. This came to be known as Moore’s Law, the ramifications of which are hard to ignore in almost any aspect of our everyday lives. Information has become more accessible to people at lower costs. Today’s work force is globalized and there are few domains that are still untouched by technology.

Yet the very ubiquitous and rapidly evolving nature of information and communication technologies (ICTs) gives rise to fears of displacing more workers and potentially widening the economic gap between the rich and poor. Technological evolution and artificial intelligence are fast redefining the conventional structure of our society.

Jobs and automation
Areas where computers are taking over conventional jobs include, for example radiology, a field of medicine that requires several years of extensive study to master. Systems such as the ones made by BD FocalPoint can interpret medical images and look for abnormalities such as tumors with greater speed and accuracy than humans can.

Advances in natural language processing have led to the creation of intelligent Interactive Voice Response Systems that are replacing traditional call centers and manual agents, resulting in higher efficiency and lower costs of operation for corporations. IPSoft claims that its cognitive agent Amelia can work along with human call center agents, and is able to learn and understand like a human.

Manufacturing companies in China such as Foxconn have plans to replace 1.2 million workers with robots to stay competitive. Rising labor wages in countries like Vietnam and Indonesia are hurting profits of companies such as Nike, who are already looking at alternatives to substitute labor with capital.

The rise of autonomous cars is likely to have huge impacts on jobs and employment. A study puts the total estimate of job losses due to vehicle automation at 10 million jobs in the next 10-15 years. The repercussions of moving to driverless cars can have a domino effect on a range of ancillary industries such as the automobile insurance market, automotive finance market, parking industry, and the automotive aftermarket with a suppressed demand for these services.

While jobs are being lost to automation, proponents of a counter viewpoint believe that several new jobs are being created due to technological advances. Their belief is that productivity and cost gains realized through automation make their way back into the economy helping citizens realize services at lower costs, which in turn leads to an increase in consumer savings and consumer spending resulting in more opportunities for employment in the consumer goods market.

Technology and innovations have increased prosperity in several developing countries. The Philippines and India have become major global outsourcing hubs employing hundreds of thousands of people. Mobile payment systems such as M-PESA in Kenya have revolutionized banking for the common man, while messaging systems such as Reuters Market Light have improved agriculture productivity in India by providing farmers with market prices, weather and crop information.

Rising inequality in wages due to automation
Technology has contributed to rising productivity. The post-world war era heralded accelerated employment, increased salaries of workers and raised prosperity levels.

However, since the 1970s, a strange phenomenon has gripped the American labor market.

The average worker’s salary peaked in 1973 and has declined over subsequent decades (while adjusting for inflation). While labor productivity and salaries of ordinary private sector workers show a seemingly perfect correlation between 1948 and 1973, they move farther away from each other with every passing year after 1973 pointing to wealth accruing in the hands of business owners and investors as opposed to the average industry worker (illustrated in Figure 1, below).

Source: EPI analysis of data from Bureau of Labor Statistics (BLS)

Additionally, the share of US national income going to labor has plummeted since the 1970s (as shown in Figure 2, below).

Source: Fred, BEA, Qkuartz

Of the several theories that have been put forth to explain the above phenomena, the compelling role played by information technology and automation certainly cannot be ignored. In his book “Rise of the Robots: Technology and the Threat of a Jobless Future,” Martin Ford states that the advent of Information Technology has replaced workers instead of making them more valuable, leading to increasing income inequalities between workers who possess the skills to adapt to tectonic technological shifts and those who do not.

Robots have largely been seen as machines that can perform routine, repetitive, non-cognitive actions. However, machines are already replicating human capabilities.

A combination of artificial intelligence (AI), dexterity and three-dimensional machine vision (the origins of which may be traced back to the Nintendo Wii video game console), give robots manufactured by Industrial Perception, a Palo Alto based company (acquired by Google), the ability to recognize, move and arrange boxes in complex sequences — a human skill that had not previously been emulated. In 2012, Amazon acquired Kiva systems, a warehouse robotics company that produces autonomous robots to move materials in large warehouses. Amazon has also been testing drones for delivering shipments.

Whether we will face the threat of a jobless future or not, the future of jobs and skills undoubtedly faces new challenges in the age of disruptive technological innovation. These trend-lines call for urgent action by governments to match jobs with skills to ensure shared economic prosperity and equal opportunity for all.

This post first appeared on The World Bank’s Information and Communications for Development (IC4D) Blog. Publication does not imply endorsement of views by the World Economic Forum.

To keep up with Agenda subscribe to our weekly newsletter.

Author: Randeep Sudan is the Practice Manager for Information and Communication Technologies at the World Bank, based in Washington DC. Darshan Yadunath is a Masters of Public Policy Candidate at the McCourt School of Public Policy, Georgetown University.