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Global Commission on

The impact

of technology on the quality and quantity of jobs Cluster 3: Technology for social, environmental and economic development

Prepared for the

2nd Meeting of the Global Commission on the Future of Work

15-17 February 2018

6 The establishment of the Global Commission on the Future of Work in August 2017 marked the start of the second phase of ILO's Future of Work Centenary initiative. The six thematic clusters provide a basis for further deliberations of the Global Commission. They focus on the main issues that need to be considered if the future of work is to be one that provides security, equality and prosperity. A series of Issue Briefs are prepared under each of the proposed clusters. These are intended to stimulate discussion on a select number of issues under the different themes. The thematic clusters are not necessarily related to the structure of the final report. Cluster 1: The role of work for individuals and society

Cluster 2:

Bringing an end to pervasive global women"s inequality in the workplace

Cluster 3:

Technology for social, environmental and economic development Cluster 4: Managing change during every phase of education Cluster 5: New approaches to growth and development

Cluster 6: The future governance of work

List of Issue Briefs

1

Technology and jobs

2

Sharing technological dividends

3 80
90
100
110
120
-2 -1 0 1 2 3 4 5 6

19841988199219962000 2004 20082012Computer storage costs fell dramatically...

...as did job destruction... ...but inequality increased!

Job destruction - Income inequality

(index, 2000=100)Storage costs: US$ per GB (logarithmic scale) Figure 1: Inequality increased as digitalization costs declined in line with job destruction rates Note: Job destruction rate is a weighted average of Australia, Belgium, Canada , Denmark, France,

Greece, Ireland, Italy, Japan,

Luxembourg, Netherlands, Sweden, United Kingdom and United States Source: ILO, Labour Flows database, 2013; OECD, Labour Force Statistics; Muehlha user, L. 2014.

Note: Job destruction rate is a weighted average of Australia, Belgium, Canada, Denmark, France, Greece, Ireland, Italy, Japan,

Luxembourg, Netherlands, Sweden, United Kingdom and United States. Sources: ILO, Labour Flows database, 2013; OECD, Labour Force Statistics; Muehlhauser, 2014. Our baseline projection suggests that there is a risk of further job polarization in the years to come (see -gure 2). As jobs are being destroyed in manufacturing and parts of services sectors, employment in both low- and high-skilled occupations has risen. Studies on robotization show that displacement is high for routine tasks (i.e. tasks that can easily be translated into software-driven robots), including in many services sectors where digitalization and arti-cial intelligence have come to play a bigger role. In the absence of effective transition policies, including adequate opportunities to acquire new relevant skills (see Issue Brief No. 8), many of those who are at risk of job loss may be forced to accept lower-skilled and lower-paying jobs, thus putting further pressure on wages in the low-wage sector (Dauth et al., 2017). Indeed, a majority of middle- skilled routine task jobs that were associated with standard employment contracts with regular working hours have been replaced by non-standard forms of employment in both non-routine cognitive and manual task jobs (OECD, 2015). 4

8-6-4-202468

Note: Change in employment shares, in percentage points; *: forecasts af ter 2016 Source: ILO Trends Econometric Models, November 2016

Change in employment shares

(in percentage points)

Level of economic development

Figure 2: Job polarization around the globe

High skilledMedium skilledLow skilledHigh skilledMedium skilledLow skilledHigh skilledMedium skilledLow skilledHigh skilledMedium skilledLow skilled

2013
21*
2000
13 Low incomeLow middle incomeUpper middle incomeHigh income Notes: Change in employment shares, in percentage points. * Forecasts after 2016. Source: ILO Trends Econometric Models, November 2016. Technological dividends are being unevenly distributed between firms. A small group of firms are taking advantage of new technology ("frontier firms"), while many others are being left behind. In addition, entrepreneurs and micro-, small and medium-sized enterprises (MSMEs) may face challenges with technology adoption. The gaps between frontier firms and the rest are large and growing in many countries (OECD, 2017). This phenomenon has been accompanied by the rise of highly concentrated product and services markets in which a very limited number of "superstar" firms tend to dominate, as mentioned earlier with respect to "big data" (Autor et al., 2017). Not surprisingly, the rise of such market power is associated with falling labour income share.

Potential for development

Sharing technological dividends is an issue of global scale. How can we ensure that all countries, both developed and developing, benefit from the current technological changes? There are three channels through which new technology may have an impact on the world of work in developing countries: (i) automation and robotization; (ii) connectivity; and (iii) innovation (see Christiaensen, 2017). The degree to which developing countries will be able to take advantage of and benefit from these channels remains an open question. The automation of production processes and the increased deployment of robots require significant investments. In countries with relatively low labour costs, such investments might still be unprofitable. However, with increasing income, the likelihood of adopting automating technologies and hence replacing humans by machines will increase. From a purely technological standpoint, about two-thirds of jobs could be automated in developing countries over the following decades (World Bank, 2016b). At the same 5 6

Labour market efficiency and inclusion

7 8

Robots and jobs: Evidence from US labor markets

False alarmism: Technological disruption and the U.S. labor market,

1850fi2015

Journal of Labor Economics

American Economic Review Papers and Proceedings

The great convergence: Information technology and the new globalization

The future of work: A literature review

Heteromation, and other stories of computing and capitalism

International Labour Review

Finance and Development

Automation and jobs: When technology boosts employment ASEAN in transformation: The future of jobs at risk of automation Can technology reshape the world of work for developing countries?

German robots: The impact of industrial robots

on workers

Labor market fluidity and economic performance

Reshoring: Myth or reality?

Technological Forecasting and Social Change

The rise and fall of American growth: The U.S. standard of living since the civil war Google, Facebook, Amazon, eBay: Is the internet driving competition or market monopolization? Inception Report for the Global Commission on the Future of Work

World Employment and Social Outlook: Trends 2018

World Economic Outlook: Gaining momentum?

9 The future of work in African agriculture: Trends and drivers of change ew automation technologies and job creation and destruction dynamics

Harvard Business Review

Internet matters: The net's sweeping impact on growth, jobs, and prosperity A labor market that works: Connecting talent with opportunity in the digital age Jobs lost, jobs gained: Workforce transitions in a time of automation

Desarrollo regional

productivo de Argentina en torno a la interconectividad de regiones y ciudades Exponential and non-exponential trends in information technology

Integration

and Trade Journal

Emerging

dystopias? Confronting the new technological revolution and the future of work

In It Together: Why less

inequality benefits all

Economic policy reforms: Going for growth 2017

OECDfiFAO Agricultural Outlook 2016fi2025

Platform revolution: How networked markets

are transforming the economy fi and how to make them work for you Smartphone ownership and Internet usage continues to climb in emerging economies

Economic Review

Trade and Development Report

2017: Beyond austerity: Towards a global new deal

Big data for development: A primer

Trouble in the making

World Development Report 2016: Digital dividends

The future of jobs

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