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November 2018

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The future of jobs—What’s at stake in the G20 Summit 2018?

We need leadership, not more talk

By Professor Arturo BrisArturo Bris

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Since 2008, it’s hard to remember any concrete, material and implementable solutions for the world’s worst problems as a result of the meeting of some of the world’s most powerful leaders that is the G20 Summit.

The talks in recent years have been plagued with general discussions on trade –  a subject suffering near paralysis among the world’s nations – inclusive growth, fiscal stimulus and innovation; None of these have been boldly moved forward by G20 leaders.

This time seems no different. In the coming days world leaders are meeting in Buenos Aires with three main priorities: the future for work; infrastructure for development; and a sustainable food future.

Future of work

I’d like to touch upon the first of these subjects. Two issues make it imperative to consider the job market of the future immediately: low productivity and automation. Both are interrelated. The insignificant increases in labor productivity in recent years can be attributed to the substitution of manufacturing jobs with employment in the (less-productive) services sector. At the same time the automation of many jobs that have been historically manual is going to create massive unemployment.

The G20 members state in their declaration of intentions that: “We need to create the conditions for more and better jobs. We need to provide tools and skills to those people looking for a job and those whose jobs are at risk of being replaced by automation.”

This is definitely a relevant task, but I don’t think it is a choice that politicians can make without considering a broader set of economic conditions. At the end of the day, job creation depends not only on which sectors we favor via policy, but primarily on building economies that grow, and grow enough. As usual, the G20 members prioritize issues that economists have already discussed extensively: “We will seek to pin down the impact that technological change is having on productivity, growth, jobs, and inequality.” And it worries me a lot that they also state that “Following a diagnostics phase, we will also explore the policies needed to embrace the opportunities and address the challenges presented by technology.” To me, the only possible policy solution to the challenges presented by technology is to reduce the impact of technology in our lives, and therefore in our jobs.

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New ways of working

While technology is going to replace jobs, we will create new ones. But to be factful, we need to recognize that technology is already changing the way we work. We now work fewer hours because we are more efficient, but our salaries are not increasing on par with technological development. Hence, we can’t enjoy the benefits of the higher quality of life that arises from technology. I can book a vacation much faster and cheaper with Airbnb, but the problem is that I may not be able to pay for it, because my salary has not increased in the last 10 years. With more free time, better mobility, driverless cars, smart cities, mobile communications and cloud-based systems, the ways we work are going to change radically. The implications of this are profound: Our urban infrastructure will radically change, so economic activity will not be concentrated among major cities as it is today. Our physical interactions will be sparse, social networks will be primarily digital, social cohesion will be built on digital platforms, and not in the town square.

Last but not least, there is going to be a fundamental shift in the concept of work. Historically, a job entails a productive task, and in equilibrium we are compensated at par with our productivity. That is why football players (who are marketing tools to sell t-shirts and tickets) make so much money, and lumberjacks so little. But in the future, as productivity will be generated by machines, we humans will perform tasks that do not generate revenue, and we will not get paid for it in the same way as we do now. Jobs will therefore be self-fulfilling and not economically profitable. Which jobs will they be? Also, how will labor be compensated in a world in which production relies mostly on machines? What will the schemes—fiscal, social, political—be that transfer wealth from capital-intensive, productive industries, to labor-intensive but self-fulfilling and comforting tasks?

We need guidance from our leaders today, not a futuristic view of a world that we cannot control.

Professor Arturo Bris is Director of the IMD World Competitiveness Center.

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