World Development Report 2019: The changing nature of work

The World Bank has just published the World Development Report 2019: The changing nature of work in which analyses the impact of robots and automation in the world of work, the future views and the impact of technology in the way of working. In this sense, the report remarks that the changing nature of work disrupts markets. Automation shortens global value chains, obviating jobs in the process.

At the same time, improved digital infrastructure extend the market for services—creating the gig economy. Reshoring (due to automation) along with the renegotiation of multilateral trade agreements create concerns about rising anti-globalization sentiment. However, emerging new leaders such as the BRIC countries (Brazil, Russian Federation, India, China) push integration forward.

In the changing nature of work, the forces of supply and demand collide. In some developing countries, particularly in Africa and South Asia, tens of millions of young people join the labor market looking for jobs. But those workers face uncertain demand. Large formal private firms are still too few. Their growth is often stunted due to trade barriers, domestic bias towards state-owned or politically connected firms, or stifling regulation.

Key points

These are some of the conclusions of the report:

– The countdown to the time when artificial intelligence matches human intelligence is coming. In some sectors robots are indeed replacing workers. But technology absorption rates in many parts of the world are slow. In many sectors, robots enhance worker productivity. Technology also creates new opportunities for workers. At the same time, technology changes the relative demand for skills, placing greater emphasis on those that cannot be replicated by technology. The concern is not mass employment, but potentially rising inequality. Retooling workers for the future world of work is expensive. Meanwhile, tax avoidance by large firms constricts public budgets.

– The study’s main finding is that the threat to jobs from technology is exaggerated. History repeatedly teaches us this lesson. Doomsday scenarios on robots impoverishing workers will continue to strike a societal nerve. The creators of such scenarios are so far sighted that few of their predictions have yet come true.

-The bigger concern is the rising income inequality in some developing countries like Togo or Cameroon, or even in middle-income countries like Hungary (figure 0.3). Perceptions of rising inequality abound even in countries where the income data suggest no change, for example France. Addressing inequality, often ascribed to technological advances, is the focus of politicians.

– Technology can enhance the productivity of workers, individuals can seek flexible job arrangements, social discrimination can be alleviated, and consumers enjoy more product choice at lower prices. In addition, firms can use new technologies to improve capital utilization, overcome information barriers, outsource, and innovate.

– Although a range of workers will be replaced, the overall impact of technology on employment is unlikely to be as large as many fear. This is because of measurement issues, historical trends, pace in technology absorption, and creation of new jobs.

Click here to access the report.