The Future of Work: new study analyses impact of Fourth Industrial Revolution on world labour markets
Rapid technological progress provides a significant opportunity for emerging and developing economies to grow faster and attain higher levels of prosperity. However, some disruptive technologies could displace human labour, widen income inequality and contribute to greater informality in the workforce. Tapping new technologies in a way that maximises benefits, mitigates adverse effects and shares opportunities among all citizens will require public-private cooperation and smart public policy.
That is one of the main conclusions of a new study: The Future of Work: Regional Perspectives, released today by four regional multilateral development banks (MDBs): the African Development Bank (AfDB), the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD) and the Inter-American Development Bank (IDB).
The study, which was presented at a seminar hosted on 19 April at the IDB in Washington, D.C., explores the potential impact of technology in global labour markets and identifies concrete actions countries can take to prepare for the changing nature of jobs and leverage the benefits of emerging technologies.
The Future of Work: Regional Perspectives analyses the challenges and opportunities presented by artificial intelligence, machine learning and robotics in what is known as the Fourth Industrial Revolution. Potential challenges include increased inequality and the elimination of jobs, as well as the high degree of uncertainty brought about by technological change and automation. The greatest opportunities come from gains in economic growth that can result from increased productivity, efficiency, and lower operating costs.
The study includes chapters focusing on how new technological developments are already affecting labour markets in each region.
For the EBRD countries of operations – spread across three continents -- the study notes that the future of work will be influenced significantly by the interplay of technology and demographics. Two broad patterns are discernible:
- Emerging Europe has ageing populations, coupled with significant emigration and brain drain. As the labour force thus shrinks and labour costs rise, the incentives to automate jobs will become stronger than in other emerging markets. Emerging Europe is also relatively advanced technologically, which will facilitate the process of automation.
- In the southern and eastern Mediterranean and parts of Central Asia, the demographic picture is different, with high birth rates and growing populations. At the same time, automation and technology-led re-shoring of jobs to developed countries could mean decreasing employment opportunities for these young, fast-growing populations. This interplay of technology and demography presents a formidable challenge of dealing with the so called “youth bulge”: that is, creating the right quantity and quality of jobs for a large number of new entrants into the labour market every year.
“The way the future of work will play out in the EBRD countries of operations will depend to a large extent on the quality of the policy responses in areas such as education, social safety nets, fiscal policy, and government efficiency and transparency. Leveraging private sector resources to deliver such public goods will be crucial. The EBRD and other MDBs have a role to play in policy coordination and can help design and implement pioneering projects that promote innovative technologies with strong demonstration effects,” says Alexia Latortue, Managing Director, Corporate Strategy at the EBRD. “The need for multilateral support in these areas will be particularly strong in countries where governance capacity is limited. Rapid technological change also presents unique opportunities for us at the MDBs, to lead by example and optimise the ways we work and manage our own resources.”
The publication was launched at the IDB’s headquarters in Washington, D.C., with a panel discussion featuring IDB President Luis Alberto Moreno, AfDB Vice President Charles O. Boamah, ADB President Takehiko Nakao, and EBRD President Suma Chakrabarti. They were joined by Susan Lund, Lead of the McKinsey Global Institute, and Carmen Pagés, one of the co-authors.