A substantial amount of jobs in developing countries are at risk of automation.
At a time in which we as a society are making great strides with automation technology, one question looms: how will this affect jobs?
It’s important not to generalise too much about the effect automation will have, either directly or indirectly, as to do so would be failing to consider the unique factors in each population that will mediate these effects.
A 2016 report, published by the Oxford Martin School programme on technology and employment in conjunction with Citi, explains that countries such as Ethiopia (85pc), China (77pc), Thailand (72pc) and India (69pc) have the highest percentages of jobs at risk as a result of automation. This is significantly higher than the OECD average of 57pc.
Developed countries, such as the UK and US, are at significantly lower risk, with data ranking them at 35pc and 47pc, respectively.
The study pulled the data from a report published by the World Bank Group. This builds on 2013 research conducted by Dr Michael Osborne from Oxford University’s Department of Engineering Science and Dr Carl Benedikt Frey of the Oxford Martin School, which calculated how many jobs in the UK and the US could be automated.
The 2016 report examined the effects of automation on a global scale and found that there are huge disparities in how automation will affect developed and developing countries.
Global income inequality in the works since 1820
The Oxford report explains that global income inequality has “grown significantly” since the Industrial Revolution. While the average income in a western country was 1.9 times that in the non-western world in 1820, since then, the West experienced what the report deems “The Great Divergence”.
This divergence resulted in the per capita income climbing to 7.2 times that of the non-western world in 2000.
Adopting new technologies
While emerging economies have improved at adopting new technologies, the Oxford report says that “they are getting worse at putting them into widespread use”.
It is this “divergence in penetration rates”, or significant lag in developing countries diffusing newer technologies across their population, which the report concludes “can account for 82pc of the increase in the income gap since 1820”.
The report also states that countries with a higher share of their workforce “at risk” typically exhibit lower levels of GDP per capita.
Hollowing of the labour market
The World Bank Group report points out that, much like developed countries, developing countries are experiencing a “hollowing out” of the labour market.
There are more people employed in ‘high-skilled’ occupations than in previous years, and also more employed in ‘low-skilled’ occupations.
‘Middle-skilled’ occupations, which are defined as occupations that are “intensive in routine cognitive and manual skills”, are down in most developing countries.
These ‘middle-skilled’ occupations are often near the top of income distribution in low-income countries such as Africa.
One of the most crucial reasons that these developing countries are more susceptible to the possible deleterious effects of automation is because, as it stands, labour in these countries is so cheap that firms have no incentive to invest in newer technologies.
Automation is also exclusively applied to save labour and therefore save costs while increasing productivity.
The Oxford report, referring to a number of studies, points out that “labour-saving inventions may only be adapted if the access to cheap labour is scarce or prices of capital are relatively high”.
The report refers to a case study that best exemplifies this: mechanisation in 18th-century cotton production initially occurred in Britain because “wage levels were much higher relative to prices of capital than in other countries”.
As the World Bank Group report notes, many of the jobs at risk in countries such as Ethiopia “have already disappeared” in the developed world because labour is expensive enough in countries such as the UK to make automation economically feasible.
The history of automation
Though the history of automation indicates that technological advancement tends to increase productivity and does not lead to job loss, the level of “technological disruption” possible in these developing countries does pose a risk.
The solution, recommended by both the Oxford and World Bank reports, is that these countries prepare for this disruption (which probably will not come for a while due to the existing lag in technological development) by increasing social safety nets and putting mechanisms in place to allow workers to upskill.
Some technological advances could potentially be of great help in developing countries. Telemedicine, for example, could allow medical practitioners to access patients regardless of how remote or non-accessible they are, which is an especially pressing issue in less-developed countries with poor infrastructure.
What jobs are not at risk of automation?
The Oxford Martin School has named four skills that are extremely difficult to emulate with technology: originality, service orientation (“actively looking for ways to help people”), manual dexterity and gross body coordination.
The Oxford report generally concludes that creative work is one of the hardest to automate, largely because “replicating the kind of implicit reservoirs of knowledge and judgement drawn upon by human creators is extremely difficult”.