World on a “crash course”

Jim Yong Kim, the President of World Bank, has warned that unless nations invest in human development, people across the world will lost millions of jobs to automation and remain unemployed.

Background

The inherent economic problem of any country is unemployment. Furthermore, the rise of machines has made the existing jobs even more vulnerable. The fear of machines taking over jobs i.e., automation has now become a reality. The significant rise in the need and development of smart software and artificial intelligence (AI) has created a severe threat of replacement of present jobs of employees in the Information Technology sectors (IT).

Technology automation is the use of control systems, such as computers or robots, and information technologies for handling different processes.

Automation is prevalent in nearly every industry including:

• Manufacturing
• Transportation
• Utilities, including water and wastewater, oil and gas, electric power, and telecommunications
• Defense
• Facility operations, including security, environmental control, energy management, safety, and other building automation

In 2017, research firm PwC conducted a study that revealed that countries across the world will begin losing jobs to automation. The study noted that in the next 15 years, 40 percent of jobs in the U.S. may be vulnerable to automation and robots. In the same time frame, 35% of jobs in Germany could be replaced by automation and 30% of jobs in UK will become vulnerable. In Japan, 21% of jobs will become vulnerable to robots and automation. Developing nations like India with a growing labor force will also face a massive challenge in the years ahead. According to research by human resources (HR) solutions firm PeopleStrong, by 2021 nearly a quarter of people in India will be losing their jobs to automation.

The World Bank is an international financial institution. They assist nations across the world by providing loans for capital programs. Jim Yong Kim is a South Korean-American physician and anthropologist. He has served as the President of World Bank since 2012.  

Analysis

Jim Yong Kim, the President of World Bank is currently in New York ahead of the group's annual meeting in Washington DC. He has sounded a dire warning noting that the world is on a “crash course” as people will have to deal with millions of jobs getting automated. He said that it is therefore imperative for nations to invest in education and health of their citizens. Low skill workers are at the greatest threat of losing their jobs to automated robots. Hence, education and imparting vital skills is necessary, argued Kim.

To that effect, World Bank is contemplating plans to publish a ranking of countries that measures investments in "human capital". Some of the factors that will be considered will be the nation’s investment in education.

Speaking to BBC Kim said, “The one thing you know for sure that you'll need in whatever the economy looks like in the future is people who can learn. We want to create a sense of urgency to invest in people that we think is necessary given the way ... the global economy is changing." He added that this cause frustration and even violence among people. He warned, “If your aspirations start to rise but then there's no opportunity it can lead to fragility, conflict, violence. This is the crash course we're going down."

In October 2017, BAE Systems announced that it planned on cutting 2,000 jobs in military, maritime and intelligence services. Charles Woodburn, Chief Executive, BAE Systems plc said, “The organisational changes we are announcing today accelerate our evolution to a more streamlined, de-layered organisation, with a sharper competitive edge and a renewed focus on technology. Those actions are necessary and the right thing to do for our company, but unfortunately include proposed redundancies at a number of operations. I recognise this will be difficult news for some of our employees and we are committed to do everything we can to support those affected.”

Despite fears that humans might lose jobs to robots, the world economy is predicted to expand. According to the IMF, global economy will grow by 3.5% in 2017 and 3.6% in 2018. However, the growth rates of UK and the US were recently downgraded. The economic growth of India has also slowed down in 2017.

Assessment

Our assessment is that low skilled workers across the world are most vulnerable to lose their livelihoods in the coming years. This bodes badly for India. According to government figures, fewer than 5% of India's 487 million workers have received any formal skills training. Additionally, every year, there are 12 million Indians entering the workforce. We believe that governments, including the Indian government should heed Jim Yong Kim’s warning and begin training unskilled workers with urgency.