The coronavirus pandemic has brought the world economy to near shambles. Faltering industrial production and disruption of globalized supply chains has pushed the entire world to the brink of mass unemployment identical to (if not worse than) the Great Depression. While a permanent solution (like the development of a vaccine or treatments) is yet to be worked out, there is consensus that extreme large-scale containment measures like lockdowns have to be lifted. There is a need to save livelihoods, even in this public health crisis. Nevertheless, there is a need for a significant reduction in human contact and a ‘social vaccine’, especially in workplaces. The ‘social vaccine’ is adherence to disciplined physical distancing norms and using masks or face covers to limit the spread of the contagion.
Rethinking Workplaces, Schools and Lives
With a need to enforce physical distancing, the structure of factories and offices needs innovative transformation. To prevent the spread, technology solutions will play a crucial role as problem-solvers in the post-pandemic scenario. Most service sector enterprises, especially IT firms, would prefer (and has already started in making) use of virtual technology for communication and decision-making. Work-from-home is set to become a part of routine work culture shrinking the demand for commercial real estate.
Online schooling will dominate the formal education-scenario in the near future, and thus there is a need to upgrade the ICT (Information and Communication Technology) infrastructure. Unfortunately, the majority of the schools lack adequate digital infrastructure to provide a level playing field in education to the unprivileged. Although there is a need to digitise education in the long run, the issue of access to online education is the primary roadblock in the present. Access to most students does not just depend on access to the internet but also, the use of appropriate devices. Most students in India would have access through mobile phones with data packs which limit their ability to concentrate owing to the small size of the screen and pressure on (currently) limited economic resources with the family. Same are the concerns with public universities.
Factories across the world are almost certain to shift focus from labour-enabling technologies (that increase the participation of workers to use technology for higher productivity) to labour-replacing technologies (use of technology to replace the workers from the job or a part of it altogether). The reason is simple: lesser workers per factory means increased adherence to physical distancing norms and lesser spread of the coronavirus. In terms of jobs, while clear prediction is impossible, this translates into an increase in demand for technologically skilled workers and an increase in the flow of investments into AI technologies and robotics, but job losses for unskilled workers.
The Long-term vs The Short-term
Technology-enabled production, even labour-replacing ones, will increase the productivity of the industries and propel economic growth, in the long-run. However, the short-term adjustments required for this are not easy.
Technological influence over production has been increasing since the Industrial Revolution but there exists a sharp contrast between pre-Second World War mechanisation and the introduction of globalized automation after the 1970s. Mechanization improved labour productivity and output to make goods and services available to a larger part of the society, but automation, on the other hand, is a labour-saving development and not a labour-enabling one. Labour-saving technologies are brought to replace the need for low-skilled workers and ramp up production at lower costs. Lower production costs are undeniably good for the economy, but that is a long-term result.
The short-term adjustment costs need to be understood. Re-skilling of low-skilled workers may not be as easy as it is theoretically provided and thus put them in a secondary position to capital. Lower bargaining power of labour will lead to lower and stagnant wages and no improvement in their standard of living, leaving them at the mercy of government safety-nets. Besides the painful transition, the short-term adjustments have the potential to represent the lifetime of an entire generation of workers. The socio-political scenario will most certainly deteriorate in a harsh economic climate.
So, the concerns of ‘AI take-over’ in the minds of the ordinary people must be acknowledged and addressed by policymakers. These are not exaggerated or ignorant, but rather genuine and understandable. The bottom line is that people are worried about their jobs. The rise of automation is not authored by COVID-19, but it has been accelerated.
Inequality and the COVID Multiplier
The coronavirus pandemic has exposed the flaws of global economic strategies. A staggering response to the public health crisis is a testimony to what several politico-economic experts had and have been predicting, that is in a quite simple sense, the foundation of our socio-economic progress has weakened, to say the least. The world economy, even before the virus, was working on borrowed time. In the last 20 years, the model of economic growth has become less inclusive. Significant reduction in tax progressivity and lack of investments in the social sector has resulted in massive income and wealth inequality. Wage inequality has brought stark contrasts between the wages of a highly skilled and low skilled worker. Tech-driven capital has skewed investments in its favour, and further away from labour. Rising inequality and stagnation of wages has been one of the main reasons for socio-political divisiveness and extremism. Nationalistic protectionism and the rise of authoritarian populism are the political backlashes against freer international trade and globalization.
There has been enough talk about the economic impact of the virus but let us assess who it hits the hardest. The economic downturn would push about 100 million people into extreme poverty (42 million in just South Asia and 39 million in Sub-Saharan Africa). The people being pushed into extreme poverty here were uplifted only marginally (in most cases) into milder forms of poverty, just short of destitution. According to the International Labour Organisation, another 400 million Indian workers may sink into poverty (although not extreme poverty). Decades of efforts to end poverty might be undone with just one unfortunate and mismanaged crisis. The coronavirus is reinforcing the vicious cycle of poverty at an alarming magnitude. Undoubtedly, it is going to affect countless non-poor, but that is not an excuse to ignore the magnitude and the seriousness of the crisis for the impoverished. The virus disproportionately affects the weaker sections of the society.
When it comes to access to technology, economic inequality plays a huge role. While the affluent and ultra-rich of this generation can afford and utilize the benefits of automation, a large part will be left out in the process, if we follow the current model. Without government intervention, the vast majority of workers (low-skilled) are left at the mercy of the firms and market for reskilling and education and it is almost certain to produce devastating results. There is hardly any incentive for the firms to invest resources into massive reskilling of workers, as the same money when put into tech-driven capital is almost sure to produce higher returns to the enterprise.
The Need for an Inclusive Digital Age
We have entered the era of the 4th Industrial Revolution, which is characterised by globalization and cooperation. However, a lot has changed with the coronavirus pandemic. Globalization has already fallen prey to competing national interests, and inequality has restricted access to education and technology. Geopolitical tensions in economically relevant regions such as the Pacific and South Asia have reduced cooperation from global to ideological. However, the push for technology has only increased.
With the advent of the coronavirus pandemic, we can deduce 2 things: firstly, technology can not only save the uncountable lives from this public health crisis but also increase incomes like never before, and secondly, the story of the development of technology till 2020 has been extremely lopsided. When it comes to online schools or automation in factories and offices, there is a huge gap that needs to be addressed. The government needs to step in and better policies need to be worked out.
As we move into an AI-based economy, we need to ensure that the post-2020 growth story of the world changes to an inclusive one. A completely smooth transition may seem (and even be) impossible but this is where policymakers need to kick in. Development of technology requires enhanced general education and better staff training to develop the skills of the new workers and reskill the existing workers. Shifts in the labour markets are inevitable, and they always have been, but better outcomes are possible. Labour needs to be redeployed into new issues like the creation of an environment-friendly economy, development of a better public healthcare system, and infrastructure to provide for training and reskilling of workers.
Technological innovation is set to create a miracle by long-term gains in efficiency and productivity. We have every reason to be optimistic, but at the same time, the agenda of this new technological revolution should be people-centric. There is no point in building futuristic hi-tech metropolises if the vast majority is unable to reap the benefits of it. While the COVID-19 is a dreadful disease, there is every reason to be optimistic and treat it as an opportunity for crucial changes to fix our tech-driven future. To build a wealthy society, people must be empowered and educated, not exploited. Equal opportunities lie central to all these ideas. In the end, no one should be left behind.
References:
Subramanian, K. (January 9, 2012). Role of technology in emerging economies. The Hindu. https://www.thehindu.com/books/role-of-technology-in-emerging-economies/article2788470.ece
Nair, H.K. (June 13, 2020). In sync with technology. The Hindu. https://www.thehindu.com/education/in-sync-with-technology/article31821805.ece
Wakabayashi, D. & Nicas & J. Lohr, S. & Isaac, M. (March 23, 2020). Big Tech Could Emerge From Coronavirus Crisis Stronger Than Ever. The New York Times. nytimes.com/2020/03/23/technology/coronavirus-facebook-amazon-youtube.html
SEKHSARIA, P. & THAYYIL, N. (2019). Technology Vision 2035 Visions, Technologies, Democracy and the Citizen in India Economic and Political Weekly, 54(34). https://www.epw.in/journal/2019/34/technology-and-society/technology-vision-2035.html
Kennedy, L. The Technology Trap: Capital, Labour and Power in the Age of Automation – Book Review. London School of Economics and Political Science Blogs. https://blogs.lse.ac.uk/businessreview/2019/09/15/the-technology-trap-capital-labour-and-power-in-the-age-of-automation-book-review/
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