I was able to attend the last edition of “Chile Day”, held last week in London. One of the speakers, Christopher Pissarides, Professor of Economics at the London School of Economics, gave an interesting reflection on how new technologies and automation will affect employment and society … Will we have a future without a job?
According to Pissarides, in the not so distant future, it is expected that robots, artificial intelligence programs and other technologies will increasingly perform much of the work that humans do. The question is whether these technological advances will increase unemployment and inequality and what policies are needed to ensure that we are going to benefit and not to be harmed by this trend.
With respect to the impact that these new technologies and advances will have on productivity, that will be positive. Over the past 20 years, in advanced industrial cities, productivity growth has been driven by technological sectors, especially information and communication technologies. Also, countries that resist new technologies will lose competitiveness and will be left behind.
In addition, industrial countries have to conduct their own Research and Development (R & D) if they want to be competitive. In this matter, Chile is very behind occupying a position very back (penultimate place) as shown in the following chart:
On the other hand, these new technologies promote the saving of labor, especially in routine work that can be automated. Also, many low-skilled jobs have been and will continue to be displaced by the use of computers. For example, having software with accounting spreadsheets reduces the need to hire a bookkeeper.
In the future, it is a fact that working hours will decrease. There are many differences between countries at this time; Those with lower productivity work longer hours, with the exception of the United States and Korea. In the case of Chile, this is one of the countries that most need to increase their productivity and reduce their working hours:
But not only will working hours be reduced, but jobs will also be created in new areas; Service jobs to sectors that can not be automated. Typically, companies in these sectors are SMEs, which is why industrial automation needs to be accompanied by policies that support SMEs that are going to generate new jobs. These need support especially in financing but also with tax exemptions and administrative simplicity, that is, we must eliminate bureaucracy.
The main sectors that will benefit from the creation of new jobs are the intensive work services that the richest societies demand; Health and education, hospital industry, leisure, real estate, domestic services and personal services.
On the other hand, the new technologies will bring with them greater inequality and will be a few that will benefit economically unlike the work of service that is remunerated with a low salary. Therefore, an interventionist policy and changes in public perceptions regarding labor equality are required. People should be seen to see service work as a respectable and attractive job, leading to a better salary.
In conclusion, the automation of the industry will increase productivity, make society richer but it will destroy jobs, especially the routine ones and of low specialization. In many industries, such as health care, for example, human contact is a vital part of the experience and new jobs to be created. The work week will be shorter but what is most needed are policies to support SMEs and to distribute wealth and support those who have lagged behind. Our country is in debt both in terms of productivity and R & D and, if not take charge of these issues, it will be just one of those countries that unfortunately has fallen behind …
Juan Pablo Bórquez Yunge
BY I BórquezYunge Advisors