Impact of automation on developing countries puts up to 85% of jobs at risk
01 Feb 2016
A new report from Citi and the Oxford Martin School explores the varying impact that automation of jobs will have on countries and cities around the world, in the near future and the coming decades.
Technology at Work v2.0: The Future Is Not What It Used to Be builds on 2013 research by INET Oxford, Senior Research Fellow Carl Benedikt Frey, and Michael Osborne which found that 47 per cent of US jobs were at risk of automation over the next two decades, and on the first Technology at Work report, published in 2015.
The Future is Not What is Used to Be provides in-depth analysis of the vulnerabilities of countries and cities to job automation, explores what automation will mean for traditional models of economic growth, and considers how governments can prepare for the potentially disruptive impacts of job automation on society.
Key areas of analysis in the report include:
- Harnessing new World Bank data that builds on Frey and Osborne’s original methodology, the authors consider the risks of job automation to developing countries, estimated to range from 55% in Uzbekistan to 85% in Ethiopia, with a substantial share of jobs being at high risk of automation in major emerging economies including China and India (77% and 69% respectively).
- While manufacturing productivity has traditionally enabled developing countries to close the gap with richer countries, automation is likely to impact negatively on their ability to do this, and new growth models will be required.
- The impact of automation may be more disruptive for developing countries, due to lower levels of consumer demand and limited social safety nets. With automation and developments in 3D printing likely to drive companies to move manufacturing closer to home, developing countries risk ‘premature de-industrialisation’.
- Even within countries, the impact of automation will not be a ‘one size fits all’ issue, leading to the divergence of the fortunes of different cities. While a number of cities may have been affected by, for example, offshoring of manufacturing in the past, the expanding scope of automation now means that even low-end service jobs are at risk, making a different set of cities vulnerable.
- Analysis of cities in the US found that those most at risk included Fresno and Las Vegas, with those least at risk including Boston, Washington DC and New York. In relatively skilled cities, such as Boston, only 38% of jobs are susceptible to automation. In Fresno, by contrast, the equivalent figure is 54%. The computing revolution has been closely linked to the fortunes of US cities, with cities that became centres of information technology gaining a comparative advantage in new job creation that has persisted since. The tendency of skilled jobs to cluster in initially skilled cities has, since the computer revolution of the 1980s, contributed to increased income disparities between cities.
- Digital industries have not created many new jobs. Since 2000, just 0.5% of the US workforce has shifted into new technology industries, most of which are directly associated with digital technologies.
- The largest number of job openings in the coming decades is projected to be in the health sector, which is expected to add more than 4 million new jobs in the US from 2012 to 2022.
Responding to a survey of investors by Citi, the majority feel automation poses a major challenge to societies and policymakers but are optimistic that automation and technology will help to boost productivity over time, and believe that investment in education will be the most effective policy response to the potential negative impacts of automation.
Dr Frey, Co-Director of the Oxford Martin Programme on Technology and Employment, and Oxford Martin Citi Fellow, said: “Our research shows that countries and cities alike will experience very different impacts – both negative and positive - from increasing automation.
“When it comes to cities, the risk is clear: those that specialise in skills that are easily automatable stand to lose, while the ones that manage the industrial renewal process, particularly by creating new industries, stand to gain.”
“Due to an increase in automation in manufacturing, low income countries will not achieve rapid growth by shifting workers from agriculture to factory jobs. The tendency towards ‘premature de-industrialisation’ requires today’s developing economies to find new growth models.”
Kathleen Boyle, Citi GPS Managing Editor, acknowledges that mindsets need to change, saying: “A key challenge of the 21st century will be recognizing that accelerating technological change is going to affect both employment and society.
“The magnitude of the challenge ahead needs to be recognized and an agenda set for policy to address issues such as educational needs, to minimize the negative affect of automation on workers. And it is crucial that this conversation starts now.”
Read the full article here.