In Davos earlier this year, the World Economic Forum projected that labor market disruptions, chief among them automation, would wipe out over 5 million jobs in 15 leading economies within the next five years. While the “fourth industrial revolution” of robotics and AI stands to have a major impact on the entire world, it’s particularly concerning to Asian economies like China and India, which have leveraged their large populations and low labor costs into a bonanza of growth in recent years. As labor costs rise in China’s manufacturing economy, Chinese manufacturers are investing in automation while international manufacturers either automate their operations or “reshore” them to high-tech factories closer to home. India’s business process outsourcing companies will also have to adapt in an environment where once-outsourced activities are increasingly performed by machines—one of the rationales behind Prime Minister Narendra Modi’s effort to goose India’s output in high-skill manufacturing.
In a talk on extreme poverty at the Brookings Institution on Tuesday, World Bank president Jim Yong Kim warned that automation could have a devastating effect on the job market in India, China, and other developing economies. Quartz’s Suneera Tandon passes along the news:
Referring to research based on World Bank data, Kim said 69% of all jobs in India could be at risk because of automation. In China, this figure is expected to be around 77%. Although Kim did not give any details on when the switch to more automated jobs would take place, he indicated that the consequences would be dire.
“Now, if this is true, and if these countries are going to lose these many jobs, we then have to understand what paths to economic growth will be available for these countries and then adapt our approach to infrastructure accordingly,” he said.
For India, she adds, these dire predictions compound the challenges India’s manufacturing pivot already faces:
Kim’s comments add to the challenges faced by the ruling Narendra Modi government in India, which has been actively promoting its “Make in India” program to attract investment and subsequently boost jobs, in labour-intensive manufacturing sectors. But these sectors are particularly prone to infiltration by automation with hi-tech robots potentially replacing laborers on the work-floor. … Modi’s Bharatiya Janata Party came to power in 2014 promising more employment but hasn’t really achieved much success so far. Between January and December 2015, only 135,000 new jobs were added in eight labour-intensive sectors—the lowest in six years. Automation could make things worse.
Perhaps the most distressing news, however, is for other developing countries that have not enjoyed periods of rapid growth as China and India have. In Ethiopia, for example, Kim said the proportion of jobs at risk from automation was as high as 85 percent. In these economies, observers fear that robots may take all the good jobs before human workers have had a chance to benefit from them.