Is modern technology destroying more jobs than it creates, precipitating a social crisis ? This topic was debated heatedly at the Davos symposium which I attended last week.
This question has been asked for two centuries since the industrial revolution, and the Disparities have increased between knowledge workers and others, between entreprenuers and others. Unemployment is rising fast among people above 40, answers so far have been comforting. Technology destroys old jobs but creates new ones. Since the new ones are more productive, technology has enabled living standards to zoom to undreamed-of heights without causing any long-term worsening of unemployment.
Ah, say pessimists, but today’s technology is different, causing problems that yesterday’s did not.
- Earlier, new factories meant more jobs. Today, new factories employ far fewer workers than old ones.
- In the old days, high profits in a company were accompanied by rising employment. Today, companies show rising profits even while laying off workers. This is one reason why unemployment in Europe is now 10 per cent, the highest since World War II.
- In the old days unemployment occurred during recessions but disappeared during booms. Now, unemployment in some countries is high even in a boom.
Why the change? Pessimists answer that technology did not change so fast in the old days. Some manufacturing processes remained unchanged for generations. But today the computing power of a chip doubles every 18 months while its price halves. At this speed of change, say the pessimists, technology is destroying more jobs than it creates.
Not so, say the optimists. Dr Atan Krueger, a top US economist, notes that job creation was as fast in the 15 years preceding 1979 as after, despite the computing boom in the latter period. Unemployment has risen in Europe, but that reflects policies which make hiring and firing more difficult, and give high doles that reduce the incentive to find a new job.
He notes that half the work- force in the US uses computers against one-third in Europe, yet the US has an infinitely better record of job creation. So, Dr Krueger tells Europeans, don’t blame your unemployment on technology or cheap imports from the Third World-blame your domestic policies.
Pessimists say better policies will not create enough jobs, not the right ones at any rate. Wage disparities in the US have widened greatly the premium that college graduates enjoy over school-leavers has shot up from 38 per to 74 per cent in the last 17 years. Disparities have increased between knowledge workers and others, between entrepreneurs and others.
Unemployment is rising, fast among people above the age of 40, who are less adaptable. They are the first to be retrenched, and the least likely to be hired by new employers. Their experience counts for nothing-they are among the ‘digital homeless’, those who cannot master a new computer programme. Where will jobs be found for such people?
I think the pessimists misunderstand the technological revolution, by overemphasising computers. In fact, technology is expanding in all other areas too. One is health care. Unprecedented research on ways to cure or mitigate diseases means people are living much longer. The trend is so marked in some countries that they may one day have half as many pensioners as workers. Life expectancy in the USA has risen from 47 in the 1940s to 77 today. In India, it is up from 27 at independence to 59 today.
Old people need looking after. So medical technology is creating a huge new service industry-the care of the aged. People with ailments like Alzheimer’s disease may need lull-time nursing for the last 20 years of their life.
This means jobs in old-age care ire going to shoot up. This work cannot be done by computers. Nor toes it need high-tech „ skills. needed, it is tailor made for toe digitally homeless. So, retrenched workers above 40 seeking new jobs should look away from .factories towards service industries, of which fast-growing ones will be old-age homes and nursing homes. That is where the jobs of the future lie in a post-industrial society. Many governments foolishly try to strain workers on machines and computers. In fact, service jobs should be the focus of retraining.
In the next 25 years, the ratio of pensioners to workers in industrialised countries will rise relentlessly, causing an acute labour shortage. So, in ways that re invisible but unstoppable, medical technology will create far more jobs than industrial and computer technology destroy. This will happen in Third World countries too.
This is only one example of how new technology will create jobs- in completely unrelated service areas. There are many others (like bigger, faster planes creating more jobs in tourism).
Jobs in old age care are going to shoot up. This work cannot be done by computers. Nor does it need high-tech skills. Indeed it is tailor-made for the digitally homeless.
But the old-age example is an instructive one, for it is one change which cannot, be dismissed as temporary, liable to washed away by the next scientific revolution. The world is going to grow older, inexorably. Unless, that is, technology uncovers, the secret of eternal youth!