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MACRO MIRROR

Winners and losers in the Fourth Industrial Revolution

Fahmida Khatun
Every time I travel to a developed country, I observe new ways of doing things. I find that human interaction has become unnecessary in getting services. Machines have replaced workers. As a citizen of a less developed economy, 1 am sometimes taken aback with such fast pace of changes. We are still used to getting personalised services! Starting from simple things such as airline check-in to train tickets to restaurant reservations to getting coffee from machines, technology has now become the service provider. Immigration clearance in advanced countries is now a matter of two to three minutes, while bank transfer takes only a few seconds. We see fewer people, faster service. So technology is our new way of life. This will continue to unfold with further technological revolution in the coming days.
Modern economies have been observing a technological revolution for more than half a century. Now artificial intelligence, robotics, internet-of-things, block chain, etc. are rapidly changing their economies, societies and cultures. The Fourth Industrial Revolution (41R) is changing every spectrum of human life.
The most significant impact of 4IR will be felt in the labour market. Low-skilled and repetitive work will be carried out by machines. Machines will be able to work better and faster. Of course, new types of jobs will emerge with higher productivity and higher pay. New products and services will be in demand. So, new skills and new jobs will be required. But who will get those jobs and how the labour market will cope with the technological “disruption" are important issues that should be explored.
The labour-market implications of the 4IR are very important for Bangladesh, a country that has a large labour force. This is all the more important because, despite having high growth, the economy has not been able to create enough jobs.
On the other hand, the country has not been able to benefit from the structural change in terms of employment generation. For example, the contribution of agriculture to our gross domestic product (GDP)has reduced to 13.7 percent in 2018, compared to 28.7 percent in 1990. Contrary to this, the share of industrial sector has increased from 20.2 percent in 1991 to 32.3 percent in 2018. Similarly, the contribution of the services sector has gone up from 48.3 percent in 1991 to 50 percent in 2018. However, employment generation does not follow the same trend. Agriculture, being the lowest contributor to GDP, creates 40.6 percent of total employment. Industry creates 20.4 percent and services sector creates 39 percent of total jobs. Besides, more than 80 percent of employment is in the informal sector with low and unpredictable income without jobsecurity.
Some sectors of late are increasingly resorting to automation to increase efficiency and productivity. The export-oriented readymade garments (RMG) sector is one of them. Though the adoption of technology in the RMG sector is still slow, the impact is already visible. The share of female labour force has declined in the sector since they have least technological skills. This indicates to the differential impact of technology on workers. Not everyone will experience the impact in the same manner. Not everyone will benefit from the technological change in the same way.
No doubt, technology has made life smooth, saved time, and improved
efficiency. Technology has enabled us to be more productive and expand our economy. We can use technology for improving almost every sphere of our lives, if we use it in the right manner. We can expect to have a pollution-free, cleaner and smarter city, we can save time being more efficient and have more leisure time, just to name a few prospects.
But technology can also be a source of inequality and discrimination. During the Third Industrial Revolution, which is about information and communications technology (ICT), we have observed a "digital divide". The privileged individuals with access to technology
and education could grab the new jobs. They could earn a lot more than those who did not have access to technology. So if technology is in the hands of a few rich people and if the benefits of technology are not distributed fairly, it worsens the inequality situation.
The other issue related to technology is the quality of jobs. Our attention is more on economic growth, less on the quality of growth. We do not know whether those working in digital platforms, such as e-commerce, have basic labour rights that guarantee a minimum wage and bargaining power. Ensuring quality of jobs and maximisation of decent employment should receive more importance, as we
expand the size of digital economy.
The distributional aspects of 4IR are to be ensured through well-designed policies, such as education policy, labour policy, industrial policy, digital policy, competition policy, tax policy, etc. In case of education, the policymakers should move beyond mere numbers, such as enrolment rates and gender parity. More focus should be on the quality of education, and opportunity for reskilling, retraining and relearning. To improve the quality of education, adequate public resources should be made available. The current allocation of only 2 percent of GDP for education is inadequate to bring any positive change
in the education outcome. But the tax-GDP ratio is only about 9 percent. The number of people under the tax net is much lower than that of the potential taxpayers. Tax avoidance is high. As a result, resources from tax collection cannot be ploughed back to sectors such as education, health and social protection.
So the distributional aspect of 4IR should be at the forefront. And the realisation of technological opportunities to everyone's benefit will hinge on appropriate policy response by the government.
Fahmlda Khatun Is the Executive Director of Centre for Policy Dialogue (CPD).