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Automation and inequality The changing world of work in the global South Andrew Norton Issue Paper Green economy Keywords: August 2017 Technology, social policy, gender About the author Andrew Norton is director of the International Institute for Environment and Development (IIED), [email protected] (@andynortondev) Acknowledgements This paper covers a broad territory and many conversations over many months fed into it. I am grateful to the following colleagues for ideas, comments on drafts and conversations that have influenced the paper. From outside IIED: Simon Maxwell, Alice Evans (University of Cambridge), Mark Graham (Oxford University), Becky Faith (IDS Sussex), Kathy Peach (Bond), Joy Green (Forum for the Future), Stefan Raubenheimer (South South North), Arjan de Haan (IDRC), Rebeca Grynspan (SEGIB). From within IIED: Alejandro Guarin, Tom Bigg, Clare Shakya, Sam Greene, Paul Steele, Lorenzo Cotula, Sam Barrett. Much of the content of the paper was stimulated by a panel on the future of work in developing countries at the 2017 conference of Bond (UK) that included (in addition to Joy, Kathy and Becky) Elizabeth Stuart of ODI, and a webinar organised by Bond and Forum for the Future in June 2017. Responsibility for final content and errors is of course entirely mine. Produced by IIED The International Institute for Environment and Development (IIED) promotes sustainable development, linking local priorities to global challenges. We support some of the world’s most vulnerable people to strengthen their voice in decision making. Published by IIED, August 2017 Norton, A (2017) Automation and inequality. The changing world of work in the global South. Issue Paper. IIED, London. http://pubs.iied.org/11506IIED ISBN 978-1-78431-493-4 Printed on recycled paper with vegetable-based inks. Cover image credit: © ILO/Aaron Santos. Creative Commons via Flickr (CC BY-NC-ND 2.0). International Institute for Environment and Development 80-86 Gray’s Inn Road, London WC1X 8NH, UK Tel: +44 (0)20 3463 7399 Fax: +44 (0)20 3514 9055 www.iied.org @iied www.facebook.com/theIIED Download more publications at http://pubs.iied.org IIED is a charity registered in England, Charity No.800066 and in Scotland, OSCR Reg No.SC039864 and a company limited by guarantee registered in England No.2188452. ISSUE PAPER This paper examines the relationship between rapid technological change, inequality and sustainable development. It asks how development processes can be shaped to provide decent, sustainable and inclusive work opportunities in low-income developing countries. In discussing this policy challenge, the paper seeks to stimulate thought and debate among a broad audience of researchers, civil society organisations and public practitioners. Social payments for environmental public goods 19 Contents Education and skills 20 Social policy and the issue of tax 21 Summary 4 4 Rethinking politics for an era of disruption 22 1 Disruption and technological change 7 5 Towards futures that work 25 Exponential change and why it matters 8 Impacts on the world of work 8 Get there while you can 26 Improve digital infrastructure 26 2 The inequality dimension 11 Build on what you have 26 Inequality — what do we actually know? 12 Address inequality 27 Automation and ‘the end of convergence’ 13 A watchful, proactive and innovative state 27 The political disruption narrative 13 The taxation challenge 28 Automation and inequality within countries 14 Rich country futures and their implications 28 Automation and the agricultural sector 15 A changing politics 28 Intersecting inequalities 16 A policy research agenda 28 3 Social policy responses for sustainable Notes 30 development 17 Social transfers and precarious work 18 www.iied.org 3 AUTOMATION AND INEQUALITY | THE CHanging WORLD OF WORK in THE GLOBAL SOUTH Summary How can development processes be shaped to provide ‘decent work’ on an inclusive and sustainable basis in low- income developing countries? The literature on accelerating technological change Africa, with a burgeoning cohort of young people and the world of work offers varying scenarios for entering the workforce, not being able to capitalise on the future we face, and some claims of future human low-cost labour to attract manufacturing investment is redundancy are overblown. But we can reasonably a particular concern. expect to see the following marked trends continue 2. Increasing returns to capital vs labour. The tendency and accelerate: of technological advance to increase financial returns • Disruption to the world of work in both developed to capital and decrease returns to labour will further and developing countries polarise incomes and wealth, in effect boosting the process of increasing inequality.2 • Erosion of jobs in manufacturing even in countries where manufacturing output is growing 3. Raising incomes of top-end workers. Digital technologies can provide a huge boost to the • Increasing impact of automation and digital supply productivity of highly skilled workers in some sectors, chain management on agricultural production, eroding demand for the less skilled.3 processing and trade, with eventually a profound impact on rural society in developing countries 4. Transforming rural economies. If automation lets agribusiness develop more profitable business models, • Increasing impacts across other sectors of that could drive further waves of commercial land economies (services, retail); change impacting the acquisition, which, under weak land governance, would conditions of work as well as the nature of work, put the asset base of poor households at risk. Similarly, particularly through digital ‘on demand’ platforms that digital management of supply chains will integrate are transforming both local labour markets (taxi rides) production, processing and marketing to an increasing and global ones (accounting services). degree. Smallholders may struggle to engage with Accelerating digital development (including these changing distribution systems. automation/robotics, artificial intelligence (AI) and 5. Increasing insecurity and isolation for workers in advances in information and computing techology) will the digital economy. Whether in the global internet- affect inequality at different levels and in different ways. based market for services, or in arenas such as To take the ‘negatives’ first, we can identify six stylised domestic labour, on-demand ‘gig economy’ platforms causal pathways that could amplify income and wealth create challenging conditions for collective action inequality at the global or national levels. for workers, thereby eroding worker protections and 1. The ‘structural transformation’ route to growth living standards.4,5 declines. Many Asian countries have grown rapidly 6. Eroded openness and solidarity in rich countries. through simple manufacturing for export to rich The erosion of the world of work’s meaning, security country consumer markets. Automation is already and certainty in rich countries also has potentially eroding this pathway and can be expected to continue serious impacts on developing countries.3 If this is to do so, with significant implications for inequality a factor (among others) in promoting a nativist and between countries.1 Manufacturing for export has nationalist political reaction, then it could have multiple driven dramatic convergence between poor and rich impacts on poor countries, through reducing tolerance country GDP since the late 1990s, so any closing for migration, public support for aid, openness to of this route is likely to stem the reductions in global imports and support for multilateral action to tackle inequality that have been achieved over the past global challenges such as climate change. 20 years. Some of the sectors in the front line of the next wave of automation (for example, call centres But growing inequality is not inevitable. Any of the using AI and voice recognition software) have been causal pathways described above can be mitigated or important for expanding opportunities for women in reversed by policy interventions. And a range of other developing countries, so automation could bring a developments could drive powerful benefits for the sharply negative impact on gender equality. And for populations of developing countries. Among the many 4 www.iied.org IIED ISSUE PAPER possible positive effects on livelihoods of poor people Where countries lack rapid formal sector growth, in poor countries: the informal sector offers alternatives. The spread of mobile phones through Africa, for example, built • Energy access. Smart grid systems or other digital on a hybrid of formal and informal retail networks, technologies could greatly enhance access to clean particularly kiosks that supply or top-up SIM cards. energy from renewable sources — a powerful boost Formal companies depend on informal retailing at to livelihood potentials in poor countries. least as much as the retailers depend on the formal • Information and computing technology. Mobile telecommunication companies. The low level of capital phone technologies have already brought immense in relation to labour in the bulk of informal sector micro- benefits to livelihoods, and access to services enterprises also suggests that informal employment and information, in developing countries. Further will be quite resistant to automation. applications include: enhancing people’s access to social transfers (including offering more reliable Addressing inequality delivery); reducing the cost labour migrants face Measures to
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