The Financial Express

Automation, avocation, or a future of both?

| Updated: September 06, 2018 21:58:37

Automation, avocation, or a future of both?

Missing the meaning of the 'Great Recession' (2008-12) may be more detrimental for businesses than going with stock-market, or short-term, spurts. Investopedia calls it 'great' since it went beyond the conventional interpretation of a recession (two consecutive quarters of Gross Domestic Product (GDP) decline, or 2.0 per cent unemployment growth in any year), without reaching the extreme of a depression (more than 10 per cent GDP decline or more than two years of a recession). At no other time since the 1929-39 Great Depression had the global economy faced as many disruptions and dislocations. Then the cause was automation in the farms (tractors) and factories (assembly-line). Today it is still automation, not just in farms (genetically modified food), and factories (robots), but also services (all forms of artificial intelligence, or AI). Whatever was local then was instantly globalised, a feature we must keep in mind while interpreting Atlantic-shore developments for far-flung countries, like Bangladesh: our opportunity windows will open or close depending on how sanguine our intervention, in turn what we learn from Atlantic dynamics.

This closing piece of the 'Business in Flux' series cannot touch every force behind that flux or all its consequences, but in that same sanguine spirit, it picks up on OECD (Organisation of Economic Cooperation and Development) economic growth-rates, employment, and AI contraptions constituting the greatest 'swing' factor, with all their global implications (as, for example, in non-members, like Bangladesh). Extraneous forces now entering the market, such as shadow-banking and money laundering cannot be addressed here, but their impacts, which have been noted in previous pieces of this series, seep into the discussions.

It might be one of the most optimistic publications in recent economically-constrained years along the Atlantic seaboard, but the OECD Employment Outlook 2018 (especially ch. 1, "Still out of pocket," 24-7), itself draws three sober conclusions from the patterns of its 34 member countries: labour earnings have gone up, albeit slightly; job-strain has declined; but labour market insecurity is far higher today than it was before the Great Recession began, say in 2006.

Behind these, it notes how hourly wage growth dropped from 4.8 per cent before the Great Recession to 2.1 per cent in 2017; hourly labour productivity has also followed suit, from 2.3 per cent to 2.1 per cent; and wages have also declined by 1.5-2.0 per cent, over the same period. Even though the average economic growth of 2.6 per cent in 2017 is cheerful news (in spite of the projected 2018 dip to 2.5 per cent), part-time work, particularly dubbed as the 'gig' economy, has ballooned, from a 10.7 per cent pre-Great Recession growth-rate to 15.8 per cent in 2015. In the world's largest economy, for instance, labour underutilisation is up by 3.2 per cent (across the United States).

AI impacts are clearly visible, but not all of it is gloom-filled for employment. Clearly, they are not as bad as Carl Frey and Michael Osborne had us believe in their 2013 paper (by Oxford University Press), that is, smack on the heels of the Great Recession, that 47 per cent of all jobs were vulnerable to automation. Estimates still vary, but we should not shutter our eyes to the windows opened, since that would tell us what kind of corporate jobs will be closing and what kinds will be demanding quick recruitment. Still, we must fasten our seat belt, since even the optimistic news requires much more of us for a job than we may be ready to supply in this seductively Internet age (one reason why the 'gig' market is growing).

The Frey/Osborne prediction was countered by Lori G. Kletzer's Harvard Business Review article in January 2018 in which she estimated only 14 per cent of OECD jobs were vulnerable (that is still 66 million jobs, 13 million alone in the United States). Before returning to her observations, some mid-stream predictions should help our analysis be better grounded. Forbes, for example, in the April 2018 issue, calculated the AI-triggered job-loss would be 20 per cent by 2030. That more digestible proportion is still four times higher than the optimist Kletzer's finding of only 5.0 per cent of today's jobs being threatened by automation (although she concedes almost two-thirds of the corporations can easily substitute 30 per cent of their workers for machines, should they so desire).

PricewaterCoopers (PwC) is also very optimistic. In its Business Insider report on Great Britain (July 17, 2018), it forecasted 38 per cent of all transportation jobs would be automated, as would 30 per cent in manufacturing plants, but plenty more jobs would be created, 34 per cent in healthcare, 33 per cent in professional and science-related jobs, 27 per cent in the ICT (information and communications technology) sector, 23 per cent in administrative jobs, 22 per cent in housing and food, and 17 per cent in education. It is important to note how the new jobs will be in either highly intellectually sophisticated cutting-edge software-related jobs, average-level physical training skills for healthcare services, or abysmally low-level administrative jobs. We must keep that in mind for Bangladesh.

Back to Kletzer, who reiterates the PwC observation that healthcare would be the new job frontier: she noted how 11 of the top-25 OECD occupations were in the health sector, ranging from fitness schools and programmes to pension houses and old-age nurseries. This is another area Bangladesh should keep in mind.

Turning to Bangladesh, some key implications must receive more attention. First, automating low-skilled industries, such as ready-made garments (RMGs) is set to make a comeback along the Atlantic seaboard, one reason why we should think of diversifying our economy more than we have. Already, the United States, which is not a big RMG market for us, is experimenting with this option, and if it works, an economically stressed Europe, our largest RMG market, would automatically follow. That it is a time-bound industry is something we have to show more sensitivity towards.

Second, the huge growth of the healthcare industry should motivate our labour sector. Many Atlantic seaboard countries have not hitherto paid enough to attract nurses, therapists, or other such service-aides, relying mostly on lower-paid immigrants. It is a market we could easily fill in if we cultivate nurses and similarly trained personnel effectively from now. This window might start shuttering soon, since compressed economic growth in the west would open many 'gig' jobs in these areas to absorb hard-pressed domestic workers. Our nurses, very much like Middle East migrants, might still out-bid them in earned salary to remain competitive.

In short, they could help push our migrant skill-level higher, from the unskilled blue-collar level it is at right now (mostly Middle East low-wage workers) to a medium-level white-collar level, including nurses and therapists. This climb and rooting at the mid-level is fundamental to eventually exporting intellectuals at the highest level, a theoretical possibility if nurtured from now.

Finally, and this is the crunch, since the future job-market will be increasingly more intellect-based, we might end up being importers rather than exporters in this area. Already more white-collar jobs are being given to foreigners than Bangladeshis, a trend likely to grow, unless we pay far more attention to secondary and post-graduate education. This is not a government responsibility as much as students who aspire: we desperately need more high-talented, cutting-edge type of students than we have produced if their own generation — and thereafter — is likely to take the country to its logical destination.

Dr. Imtiaz A. Hussain is Professor & Head of the newly-built Department of Global Studies & Governance at Independent University, Bangladesh.

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