The technology-driven world in which we live is not only filled with promise but also challenges. We have robot chefs that cook, cars that drive themselves, algorithms that respond to customer-service inquiries and machines that read X-rays are all manifestations of powerful new forms of automation. As these technologies increase productivity and improve our lives, their use will substitute for some work activities humans currently perform—a development that has sparked much public concern.
But when we look critically, over the past years, technology has created more jobs than it has displaced. It has improved people’s living standards and has had many people’s income rise.
Today, the world of work is evolving at a very rapid pace. Technology comes with a lot of disruptions especially in the labour market creating new business models, expanding job opportunities but we should not forget that there are two competing forces that shape labour markets and hence the future of work (Glaeser 2018). These are automation and innovation.
Automation shades jobs and tends to replace labour with machines in production. Innovation on the other hand creates opportunities, creates new jobs, and creates new tasks. If innovations outpace automation, we see more jobs created than displaced. This is what is happening in Europe where over 23 million jobs have been created across the continent. This doesn’t stop there. For the first time, we see the rapid spread of these technologies to low income countries where a country such as Kenya is leading in mobile payments. This is a positive feature of the current technological change.
So How Do We Prepare for Future Changes?
- Digital Technologies Changing how we do Business
Physical presence was a requirement in the past to run a business. Today, it is no longer like that because digital technologies allow new business models that go beyond physical presence and also allows for fast scaling. Recent technological advances accelerate the growth of firms. It took IKEA 70 years to reach annual sales of $42 billion while it took Alibaba just 15 years to reach annual sales of $700 billion! (WDR 2019 team, Based on Walmart annual reports: Statista.com; ikea.com; neatease.com)
- Changing Employee Arrangements
Digital technologies are moving more and more towards short term work contracts. Online platforms, freelancing work. This expands the opportunity to work. Flexible types of works that complement traditional employments. Workers can set their own hours. This flexibility allows for example women to participate in the labour force. These kinds of employment blur the line between formal and casual employment. And that is challenging our current social protection model that assumes that most people are in stable standard employer – employee contracts.
Although flexibility is a benefit, it can also increase income instability and also compromise worker protection. Therefore it is important that social protection elements such as pension, health insurance and paid leave be looked at.
- New Skills Requirement
There’s a change in demand for skills. There is a disruption for all the workers especially for routine based types of jobs. There are constant advances in technology that calls for new skills overnight! Even in low and middle income countries, people are employed in jobs that did not exist decades ago. India has 4 million app developers. Uganda has 400,000 international certified organic farmers and China has 100,000 data labellers. These jobs didn’t exist some years back! This means that adaptability is increasingly valued by the labour market and skill acquisition for the change in the nature of work must be a matter of lifelong learning.
Governments and organisations must be prepared to respond appropriately to these changing natures of work. So how can the Nigerian government respond to the changing nature of work and also support her workforce?
World Development Report (WDR) Recommendations
- Investing into Human Capital
Nigeria needs to embrace the concept of lifelong learning. There is need to start early and continue after secondary education.
- Social Protection and Labour Market Regulations
Majority of workers across the globe today are in informal jobs. This certainly is the case in Nigeria.
Two components of social protection that the government needs to embrace are; basic social assistance and social insurance. The figures for these indices in low income countries are very discouragingly. 2% are covered by social assistance and 18% are covered by social insurance as opposed to the upper – middle income countries which have 28% and 77% respectively.
The WDR looks at:
- Guaranteed minimum social assistance
- Expanded social insurance and
- Labour market regulation
The Nigerian government needs to look into these.
- Creating Fiscal Space
Low – income countries would pay more than lower – middle – income and upper – middle – income countries for selected elements of a renewed social contract. High – income countries collect a much larger share of their national output in taxes, especially direct taxes, than low – income countries.
Most of the required fiscal resources are likely to come from improved capacity in tax administration.
For low – income countries, the value added tax is a potential resource for financing social inclusion.
It is important that people are prepared for technological progress. We need to enable people to work along with new technologies. There is a rapid change in the demand for skills. The effects of technology will reach more people more quickly than ever before.
The most effective way to meet the skills demands in the labour market is to invest in people’s knowledge and skills and health.
The cost of inaction is too high. Public spending has to be more efficient and additional sources of revenues have to be identified to enhance social inclusion.