A case for and against job losses in the new labour market

20-10-21 USAf 0 comment

There are already around 2,7-million robots in operation, globally, with the overwhelming majority found in China. That number has grown by 13% per annum for the last seven years.

There is no question that the Fourth Industrial Revolution (4IR) is here to stay, Haroon Bhorat, Professor of Economics and Director at the University of Cape Town’s Development Policy Research Unit (DPRU), told delegates at Universities South Africa’s 2nd Higher Education Conference, recently.

Speaking to the topic Entrepreneurship and Modern Technologies in the Labour Market – Nexus between Theory and Practice, during the third and final breakaway session of USAf’s World of Work Strategy Group, Professor Bhorat said he was using his economist lens to provide an overview of how economists are thinking of modern technology and its impact on the main market. Jobs would be lost to technology, and new jobs would be created, jobs that could require a different skills set.

A Labour perspective

In the same session, Ms Hameeda Deedat, Acting Executive Director, National Labour and Education Development Institute (Naledi), said she had an opposing perspective and challenged the economic paradigm within which, she said, we are currently operating.

Placing herself firmly in the workers’ corner, she agreed that innovation meant there was the possibility for job creation, from a labour perspective “you can’t discuss 4IR without the future of work as two sides of the same coin.” Professor Bhorat, talking of these technologies being used in the world of work, ran through some uses that included computerised algorithms (that could run companies), cloud services that have become a standard purchasing item as part of capital for all companies across all sectors; the internet of things, big data analytics – being used across the board.

New hiring decisions

“Of course, your hiring decisions will be fundamentally different to the old style retailer. Artificial Intelligence (AI) feeds into how companies are doing business,” he said. Automation would result in lost employment in old sectors, but, he added: “We often forget that through innovation or automation driven innovation, there is going to be new employment in new sectors.”

Ms Deedat (right) was not convinced. She said that while many speakers on the topic had alluded to the fact that there was potential for job creation, from a labour perspective, it was challenging. “When you’re confronted with innovation, getting workers, and the unions to rethink the world of work is difficult. For us, the term 4IR is a euphemism for workplace restructuring. In many instances it would mean downsizing, innovation, creativity – but it would also mean major job losses.”

Job losses had to be remembered within the context of the current economic climate and the high levels of unemployment, particularly among the youth. “What CoViD-19 has illustrated is that we are not going to turn around with innovation and bring everybody on board in a very short space of time,” Deedat said. Professor Bhorat, using the transition around the coal industry as an example, said there would certainly be job losses, but also mass numbers of new jobs created in new technology sectors, “specifically in the sustainable development arena.” However, the new jobs would have new, different skills requirements. “It’s those kinds of tensions that we need to be thinking about from a labour market perspective.

Winners and Losers

“Where is some of the evidence coalescing? Around the winners and losers. “In the winners category is an increased demand for knowledge workers with high levels of technical ability, creative thinking, social intelligence (scientists, academics, IT programmers, professional managers etc). The losers, what I call “lousy” jobs (service level jobs in US), would have jobs that are not easily automated (hamburger flippers, domestic workers etc).”

In terms of occupational distribution, the winners – from technology – will be those at the top end as well as those at the bottom end of the labour market. “Why? Because the current level and pricing of technology makes it very hard to replace those bottom end jobs. So in essence, the losers will be those in the middle of the distribution.” At risk were mid-skill occupations performing routine tasks that could be easily replaced by machines – shop-floor widget packing workers who are being replaced by machines.

“So repetitive, routine tasks – we are now thinking tasks rather than occupations – are more easily replaced by a machine. These workers face massive replacement threat.” He told how non-routine, cognitive jobs (engineers, the creative arts, psychologists, professionals) had a low probability of automation. Occupations that are manual, routine and therefore highly predictable carried a high probability of automation (construction workers, mechanics).

The impact of technology on the SA labour market

Wages will go up for those in cognitive jobs where there is massive demand. At the bottom end, workers who are employed because they cannot be replaced by technology will see wages increase because of state protection in the form of minimum wages. The challenge, Professor Bhorat said, lies with the missing middle – where there is an erosion of real wages.

He listed the five classes of tasks as:

  • Information content
  • Automative jobs
  • Face to face
  • Onsight
  • Decision making

“Again, the problem lies in that missing middle where jobs have been lost and wages are declining as machines have taken over jobs.”

Deedat outlined the damage CoViD-19 has wreaked on education, saying that current analysis is that it will take children at least three years to recoup the time lost in the classroom. She said that this was over and above the existing major mismatch between students graduating from university vis-á-vis what the actual labour market needs, adding that that was the situation even before bringing in 4IR, digitisation or robots into the equation.

She said that from a labour perspective, with relation to skills, she liked some speakers’ focus on the potential of job creation within the context of 4IR. She particularly singled out Professor Dimo Dimov the University of Bath, UK, who had talked about entrepreneurship and technology. “Coming from a labour perspective – on the other side of the paradigm – workers can be entrepreneurs. So rather than investing in companies, it might be more worthwhile investing in the actual app, or investing in the robot itself, and thinking about how we do less labour time and actually appropriate the wealth.”

Some of the delegates who attended the third breakaway session of the World of Work Strategy Group that explored the topic: Entrepreneurship and Modern Technologies in the Labour Market – Nexus between Theory and Practice.

Deedat quoted two significant things emerging from innovation around 4IR:

  • “From a gender perspective, can you imagine if every government invested in a robot that did domestic work or an automated laundry system, where a lot of the social reproductive work is done by robots as opposed to women? Women could enter the labour market in ways that they otherwise would not have. It presents us with a creative and innovative way of really fundamentally transforming gender equity.
  • From a labour perspective, it would be wonderful if women and men could spend time with their families, doing courses they desire, really enhancing their quality of life rather than just doing the mundane. I want to pick up on the point that Professor Colin Thakur (a speaker in her session) made in relation to the value of a human being. When the President started his commission, and there was major discussion around 4IR, we engaged a company and I remember someone saying: ‘Oh My God, you’re actually engaging business.’ But they had an innovative approach and realised that you cannot have either or. One company has introduced automated technologies in their factory. But they also up-scaled and upgraded workers (who would otherwise be doing mundane shop-floor work); given them innovative skills and new job descriptions. Now the workers are running the automated systems.

We cannot automate human touch and interaction

Deedat was adamant: “We cannot underestimate social value: human beings and human touch. I mean we’ve all experienced CoViD. After a year and a half of not being able to go to conferences, if you ask people whether, given a safe environment, they would like to meet their friends and have a cup of coffee in person as opposed to doing it over zoom, I think every single person would say yes.

“When you talk about having a robot doing your hair, you can have the most innovative cuts in terms of hairstyles, but nobody can give you the social support, the free psychology and the social interaction you get from a hairdresser. So, I think the human connection and humanity as a commodity will never ever go off the market. We can have innovation, 4IR and several other revolutions that will restructure the world – but you will never be able to restructure humanity,” she concluded.

Charmain Naidoo is a contract writer for Universities South Africa.