Technology and the future of work in developing economies

2018 has been a year for critical debates on the impact of emerging technology on jobs and the imminent threats and challenges of automation. Although the prospects of development and fast-approaching opportunities are advocated by many tech optimists, they have often been eclipsed by gloomier forecasts, such as “The robots are coming”, “Underestimating AI could be our worst mistake ever”, and Elon Musks’s worst case scenario, in which technology will threaten all human jobs and artificial intelligence (AI) could even spark a war (Dow Jones, 2017).

More recently, Yuval Noah Harari’s new book reflects on the incredible speed of technological development and how AI outperforms humans in more and more tasks. According to the world-renowned historian, the future is happening now and most jobs that exist today might disappear within decades.

On the 6 November 2018, the International Growth Centre (IGC) hosted a public lecture titled: How will technology impact the future of work in developing economies?. The event focused on the implications of the changing nature of work and economic growth in developing countries and discussed the policies needed to expand the opportunities that technology brings to populations working in insecure, irregular, and low-paid jobs.

The main findings:

1. We need to focus on skills

A recent International Labour Organisation (ILO) report (2018) indicates that Northern Africa is home to the highest unemployment rate globally, on account of youth and women being considerably over-represented among the 8.7 million unemployed. In Sub-Saharan Africa, more than one in three workers is living in conditions of extreme poverty, while almost three out of four workers are in vulnerable employment.

On a more positive note, the number of employed persons in the Asia-Pacific region is projected to grow by some 23 million between 2017 and 2019 (Ibid.). As the data suggests, unemployment and decent work deficits will stay at high levels in many parts of the world and structural shifts and ageing will add further pressures on the labour market.

In an age of automation and machine learning, the need for addressing the increasing skills gap and locational mismatch in labour demand is crucial. Or, as Robin Burgess (IGC Director and Professor of Economics at the London School of Economics and Politics/LSE) puts it, technology and vocational trainings should play a pivotal role even in the smallest villages around the world.

An IGC evaluation (2015) found that job choices available to the most vulnerable groups in poor rural villages, mostly women and youth, are limited and related to poverty levels. BRAC’s Targeting the Ultra-Poor (TUP) programme pioneered a “big push” approach in Bangladesh, which combined large-scale asset transfers and skills training, and resulted in increased earnings of 37% and access to self-employment for the ultra-poor. The programme has been replicated in 20 other countries and longer-term evaluations (four and seven years later) suggest long-run impacts may be even larger than the two-year effects.

Reflecting on Kenya’s example, Nyambura Kariuki, Research and Policy Advisor at the Information, Communications and Technology (ICT) Ministry in Kenya, referred to fundamental challenges that the young population is faced with. In order to succeed in securing a job, Kenyan youth need more educational opportunities to equip them with soft and digital skills.

Kenya’s internet penetration rate is 89.4%, however access to technology and internet is still a big constraint in many areas of the country. Creating a local informal ecosystem and generating online jobs eases the pressure from competing for jobs on the global market, where there are other worldwide gig workers that are already better trained and have the required skillset.

To address these pressing issues, Kenya has started the Ajira Digital Programme, a government initiative driven by the ICT Ministry, to empower over one million young people to access digital job opportunities. The digital training programme and the opening of 50 community innovation hubs is part of the country’s ambition for more youngsters to turn to the gig economy and earn an income fully from online activities.

2. The gig economy is the present and the future of work in developing countries

Bangladesh supplies 16% of the world’s online freelance labour – second only to India (Oxford Internet Institute, 2017).  Reflecting on the impact of the gig economy on the nature of work, Zulquar Quazi Islam (Country Lead at Uber Bangladesh) highlighted the importance of developing entrepreneurial skills suited for new business models, such as micro-entrepreneurship.

Uber launched in Bangladesh two years ago and transitioned from being declared illegal the day after the launch to working closely with the Government on ensuring workers’ rights are protected. In just under 24 months, the percentage of Uber driver-partners in Bangladesh, who own or lease their car, has risen from 10% to 50%. The fast pace of the ‘Uberisation’ of the economy indicates that the shared economy can benefit both businesses and employees, however, the wider implications should be addressed jointly by the government and the private sector.

Although broadly controversial in developed countries, the gig economy holds the promise of digitising the informal economy in developing countries and therefore, improving the conditions of informal workers (Ng’weno, 2018). As more individuals turn to freelancing, global conversations and key policies are needed to ensure that the gig economy works for everyone and overcomes digital divides associated with gender, age, ethnicity and geographic location.

3. Innovation and technological change can solve key development challenges, but not without raising inevitable concerns

Technology adoption and innovation in low-income countries are already shaping how countries will grow and develop in the future: computer animation has created 80,000 jobs in India, drone technology helps deliver blood to remote hospitals in Rwanda, and 3D printing will help provide spare parts on demand where demand volumes are small and access is difficult (Christiaensen, 2017). Mobile money is processing $1bn a day and it will continue to play a huge role across African economies and in how business operates.

Necessity leads to innovation. Tamara Giltsoff (former Head of Innovation at the United Kingdom/UK Department for International Development/Dfid) believes that we will witness more pioneering innovation emerge from developing markets and start-up communities will play a significant role in fuelling inclusive growth.

At the same time, technological innovation raises global concerns on cyber-security, widening inequality within and across countries, and labour demand shifts. Although there is a considerable divide between optimists, who see potential and opportunity in how technological change will drive growth, and pessimists, who associate automation with the loss of jobs, our panel positioned themselves on the optimistic side of the spectrum. Where do you stand?

References:

Balboni, C., Bandiera, O., Burgess, R. and Kaul, U. (2015). Transforming the economic lives of the ultra-poor, International Growth Centre/IGC Growth Brief. Accessible: https://www.theigc.org/reader/transforming-the-economic-lives-of-the-ultra-poor/job-choices-available-to-women-in-poor-rural-villages-are-limited-and-related-to-poverty-levels/

Christiaensen, L. and Esteve Sala, S. R. (2017). Can technology reshape the world of work for developing countries?, Jobs and Development Blog, the World Bank. Accessible: https://blogs.worldbank.org/jobs/impactevaluations/can-technology-reshape-world-work-developing-countries

International Labour Organisation/ILO (2018). ILO: Unemployment and decent work deficits to remain high in 2018, World Employment and Social Outlook – Trends 2018. Accessible: https://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_615590/lang--en/index.htm

Oxford Internet Institute (2017). Where are online workers located? The international division of digital gig work. Accessible: https://www.oii.ox.ac.uk/blog/where-are-online-workers-located-the-international-division-of-digital-gig-work/

Ng’weno, A. and Porteous, D. (2018). Let’s Be Real: The Informal Sector and the Gig Economy are the Future, and the Present, of Work in Africa, Centre for Global Development. Accessible: https://www.cgdev.org/publication/lets-be-real-informal-sector-and-gig-economy-are-future-and-present-work-africa