What does the new technological revolution mean?

We are at the beginning of a great information and communications revolution. Already the mobile phone has become almost ubiquitous, with seven out of 10 of the world’s poorest people owning one. The internet now reaches more than 3-billion people. Routine work is increasingly open to automation. And powerful new capacities for mass data analysis promise to transform all knowledge-based social and economic activity.

The full implications of such rapid technological changes are impossible to predict.

Human history has seen the relentless replacement of animal and then human labour by machines. The latest great waves of displacement saw agricultural labour decimated, and then manufacturing employment supplanted by service industries.

As in previous centuries, the most pervasive fears and hopes to which today’s new technologies have given rise concern their ramifications for employment.

One key difference today is that technology is starting to displace professionals and highly educated workers, as well as more ordinary folk. Writing under titles such as The Rise of the Robots: Technology and the Threat of Mass Unemployment, and What to Do When Machines Do Everything, a new generation of technology sceptics observe that the jobs of many industrial workers have already been lost. The positions of travel agents, truck drivers, paralegals, and taxi-drivers are imperiled. Soon the careers of doctors, lawyers, and computer programmers will also be on the line.

Advanced economies confront rising inequality and increased polarisation in their labour markets. The owners of businesses, and the possessors of non-routine higher-level skills, are likely to be the primary beneficiaries of change. Others, at least initially, will be clear losers.

 

Despite these fears, new technologies also hold great promise. As in the past, fresh techniques, and the efficiency gains they encourage, should generate the resources for education and training, and for social protection programmes to mitigate the strains of change. They will also create new and unexpected forms of work. There is already significant employment, for example, in fields such as social media, and the drone industry, that simply did not exist a decade ago.

The more fortunate citizens of technologically advanced countries, moreover, are increasingly becoming freed from many mundane and routine activities. They will enjoy progressively greater choice, convenience, and access to cultural and creative opportunities.

Both the potential gains and possible costs of the technological revolution are likely to be greatest in developing countries. As the World Bank’s 2016 World Development Report pointed out, there could be major dividends for developing countries from the spread of digital technologies.

New technologies can help businesses become more productive, lowering information and transaction costs and spurring innovation. Transaction-intensive tasks, in particular, can be accomplished significantly cheaper and faster.

Technology can also make economies more inclusive, by bringing goods and services into the reach of the poor. The cost of sending remittances from cities to rural families, for example, has plummeted as a result of digital payment systems. Some women enjoy unprecedented opportunities in business-process outsourcing and web-based commerce. The costs of job seeking have fallen dramatically.

Meanwhile, governments should be able to provide public services far more effectively. Digital ID systems make complex social grant programmes possible. Mass data can be used to target public health and social programmes more effectively.

While digital technologies have been spreading fast, however, these various “digital dividends” have so far been disappointing. One reason is that 60% of the world’s people do not have the reliable internet access that enables real participation in the digital economy. Countries such as SA continue to exhibit a variety of “digital divides”: gender, location, wealth and age significantly affect technological access and so skew access to benefits.

Equally important, the new technologies will not bring benefits in the absence of the traditional foundations of development: a flourishing and well-regulated business environment, a capable state, and effective education and training systems.

Businesses tend to be the prime beneficiaries of efficiency gains because the economics of the new technologies favour market concentration. Online platforms and internet intermediaries often secure dominant positions that they will exploit in the absence of strong regulators. Big firms, moreover, can use their power and wealth to limit the entry of competitors.

Second, the failure rate of e-government initiatives is extremely high almost everywhere, and their potential is often wasted. Digital technologies, for example, could be used to monitor teacher attendance and to improve learning outcomes in rural schools. However, these benefits will only accrue where appropriate accountability mechanisms are put in place.

Third, automation is in many countries already “hollowing out” labour markets and encouraging inequality. In a frightening prediction, World Bank president Jim Yong Kim suggested earlier that month that, “two-thirds of all jobs that currently exist in developing countries will be wiped out by automation … At the same time the internet, smartphones, and social media allow everyone to see exactly how everyone else lives, which is causing aspirations to rise all over the world”.

Far from promoting an inclusive economy, new technologies threaten to exacerbate economic exclusion. This means that the importance of education and training has redoubled, and that the skills that are imparted to the next generation of citizens must equip them not with particular skills that may soon become redundant but rather with the capacity to cope with a world of work that is undergoing dramatic change.

As the World Bank has observed, “policy-makers face a race between technology and education, and the winners will be those who encourage skill-upgrading so that all can benefit from digital opportunities”.

• Butler teaches public policy at the University of Cape Town

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