Coping with automation
A global transition to automation threatens huge job losses worldwide – citing large potential labour displacement for India
The final version of the World Development Report (WDR) 2019 of the World Bank released at the end of November 2018 landed like a bombshell. It was a powerful refutation of the World Bank's own 2016 WDR, which declared that the proportion of jobs threatened by automation was 69 per cent in India and 77 per cent in China. With such startling figures, the 2016 WDR figures stunned not only India but the entire world.
True, automation based on interrelated processes of robotics, artificial intelligence (AI), internet of things (IoT) – with some secondary processes like 3D printing in manufacturing and decentralised blockchain management of services thrown in – have led to claims that we are on the cusp of a Fourth Industrial Revolution that would dwarf the previous ones in terms of social and economic disruption. Still, the World Bank figures on potential labour displacement were mindboggling.
The World Bank's prediction triggered publication of a spate of similar reports. Between December 2017 and May 2018, McKinsey Global Institute (MGI) came out with more than half a dozen reports on the impact of automation and AI-based analytics and MGI's prediction was that about 800 million global workers would lose their jobs due to automation by 2030. However, World Economic Forum (WEF) came up with a more modest figure that automation would kill 7.1 million jobs. The International Federation of Robotics (IFR) predicted job losses worldwide due to the introduction of robots alone at 3.5 million. Such dire predictions were repeated by consultancies like PwC, Forrester, Gartner and Metra Martech.
Some of the countrywide or sectoral predictions were no less ominous. A paper by the Institute of Public Policy Research, UK, put job losses in the UK alone at 13.1 million. A 2013 Oxford study said 47 per cent of US jobs were at high risk of automation in the next few decades. A Forrester study, however, said that automation would replace 7 per cent of US jobs numbering 89 million by 2025 and an OECD study said that 9 per cent of jobs in the organisation's 21 member countries are automatable.
The widely diverging findings in these studies make it clear that there is no common acceptable scientific criterion to assess the impact of automation. So it is highly likely that they are just hyped-up projections.
Strangely enough, World Bank's 2019 WDR doesn't make a single reference to the WDR 2016 but asserts that "threat to jobs from technology is exaggerated!" More ironically, it concludes that as robots are also contributing to enhance workers' productivity and new technology is creating jobs in some sectors, "economic predictions of technology-induced job losses are basically useless!"
But even if we leave aside the exaggerated scary predictions, the problem is real and the job losses would be quite high to cause massive social upheavals. So what needs to be done? The WDR 2019 talks of managed transition. It proposes investments in human capital to cope with job losses. The report points to job polarisation – the expansion of high and low-skill jobs coupled with the decline of middle-skill jobs. Automation is also reshaping work and the skills required. This calls for a skill shift and re-skilling at the government's initiative. Comparing the disparity in payoffs between low-pay low-skill jobs and high-skilled jobs with higher wages and between informal and formal sectors, the report proposes measures to enable workers to move over to quality jobs. It also recommends universal social security through insurance coverage delinked from specific payroll in view of the massive expansion of work arrangements outside standard employment contracts like gig economy. It even proposes more focused tax credits to the salaried instead of generalised tax waivers or hiking the exemption limits. The report was even toying with the idea of Universal Basic Income (UBI) to cushion the impact of such massive job losses.
What about the automation and job loss scenario in India? A June 2018 ILO report titled Emerging Technologies and Future of Work in India says that the "automation potential in India ranges between 52 and 62 per cent based on task content of various occupations".
Quoting a leading Indian business daily, the ILO report says, "In the textile and apparel sectors, for example, the spinning, auto-comer and auto-splicer divisions have replaced the job of 20 workers with two workers. Leading textile house Raymond has announced that it will replace 10,000 of its 33,000 work-force with robots in the next three years".
The report says robots are being deployed mainly in the automobile sector. Nearly 550 robots were at work in the Ford plant, 400 at Hyundai, and another 4,200 in the factories of Honda and Suzuki in 2015. Thanks to this, in certain departments of production like weld shops and paint shops doing routine work, four people can do the work earlier done by 32 people. In the financial sector, while digital transactions are taking away the job of an ordinary teller, AI-based software is making even a risk analyst redundant. The impact of fintech on jobs in India in the next few years would be massive. Thanks to new technologies, the 4-million IT workforce in India is expected to decline by 14 per cent, according to the ILO report.
The ILO report also captures the trend of growing gig economy and platform work in India; "Of particular significance in India is the growth in "on demand" digital platforms targeted at service workers, many of whom fall under the purview of informal employment. In the last five years, 270 new home-based on-demand platforms have been set up in India. Babajobs, a job-posting platform, has 8.5 million registered users and over 500,000 customers; Urban Clap, a popular home services aggregator, has over 650,000 registered service providers; and Uber has 400,000 registered drivers.
In such a scenario, Indian policymakers have to hurry with measures similar to those proposed by WDR 2019. But till date, the Ministry of Labour and Employment has not uttered a word about the impending automation catastrophe or on providing safeguards to the gig workers. Indian labour policy bears absolutely no relation to the emerging Indian work realities.
(The views expressed are strictly personal)
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