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Fourth Industrial Revolution
Throughout history, technological breakthroughs have created industrial revolutions that have shaped not only how we produce goods and services but also the movement of people around the world. The Fourth Industrial Revolution, also known as the New Machine Age, is no different. As increasing automation makes some jobs obsolete and additive manufacturing moves industries and jobs across national borders, these technological changes will upend the politics and economics of global labour migration.
Spindles, steam, bytes
The First Industrial Revolution began in Great Britain in the 18th century with new machines that switched textile production from hands to machines. In turn, it dramatically boosted populations, incomes and emigration.
In the mid-19th century, the Second Industrial Revolution added steam transport and steam factories. By speeding the movement of people and the power of factories, it ushered in a great wave of European migrant workers seeking livelihoods in US factories.
More recently, the Third Industrial Revolution introduced digital technologies that put a premium on knowledge and services. It also allowed many people to do jobs from anywhere.
The new machine age
In the Fourth Industrial Revolution, additive manufacturing (3D printing) will move many jobs closer to the markets where they are sold. Automation will replace many moderate and low-skilled jobs.
These new technologies will attract people to higher-paying employment where innovation drives economic growth. However, those with fewer talents or skills suited to this new economy will not fare well.
“Technological progress is going to leave behind some people, perhaps even a lot of people, as it races ahead,” the MIT researchers Erik Brynjolfsson and Andrew McAfee wrote in their book, The Second Machine Age. They argue that although new technologies ultimately will be beneficial, the transition will not be easy.
The Fourth Industrial Revolution will disrupt global labour migration, increasing disparities between the countries and regions that have capital and technology and have traditionally attracted migrants, and those that have depended on low labour costs and have prompted people to seek work elsewhere. Thus, many of the people left will be those who can choose not to emigrate and those who do not have the right skill sets to do so.
These changes will not take place in a vacuum. They will intersect with three related megatrends: demographic change, widening income inequality, and unequal access to education in a world that places an increasing premium on talent and skills.
Fifty shades of grey
The greying of wealthy countries is both speeding up the demand for automation and creating demand for workers. As populations age, they draw down savings and increase demand for a different mix of goods and services, particularly healthcare. Because birth rates have fallen dramatically, every country will need to get a lot more done with fewer people.
In developed countries, the United Nations Population Division estimates that there are 29 people over 65 years for every 100 people aged 20 to 64 whose labour will support retirees. This ratio is expected to rise to 50 by 2050. In less developed countries, which tend to have younger populations and send migrants abroad, 100 working age people are supporting only 11 seniors now, rising to 25.4 by 2050.
As countries adopt labour-saving technologies, they will offset falling birthrates for places like Japan and Europe, where birth rates are low. These demographic trends are so strong that automation will not be enough to remove the need for migrant workers. This will be particularly true in health care, where many essential functions still need a human touch.
Nor will technology solve the bigger problem of the need for younger workers to support seniors. Robots don’t pay in to pension funds. Migrants do, if they are employed within the formal economy.
Jobs, jobs, jobs
The healthcare industry is a perfect example of the ways in which machines will replace some jobs but will create others, placing a premium on jobs that still must be performed by humans. While new technologies will affect how patients are diagnosed and monitored, many aspects of healthcare will still require a human touch.
Similarly, manufacturing workers with less education are likely to shift to manual jobs that, while considered low-skilled, require dexterity that machines cannot yet match. So will the kinds of tasks that may be considered low-skilled in today’s economy, but that machines cannot do: services, health and animal care. Some jobs that traditionally have attracted migrants, like taxi driving, will disappear, as self-driving cars are adopted.
At the same time, people who can think strategically and creatively will be at a premium. Those who are educated are moving to higher skilled jobs. Both the number of jobs and the number of job seekers will expand at the high and low ends of the skill and economic spectrum, to which immigrants have always gravitated. The resulting widening of job market polarization will worsen economic inequality.
Carl Benedikt Frey and Michael A Osborne of Oxford University have calculated that 47% of US jobs could be lost to automation, even as the mix of jobs changes. They identified some of the most vulnerable fields as telemarketers, clerks, data entry, tax preparation, cargo agents, title examiners, library technicians, loan officers and credit analysts, and photographic process workers. The least vulnerable include mechanical supervisors, emergency management, choreographers, public safety supervisors, education administrators, and a range of healthcare professions from recreational therapists to social workers to physicians and surgeons.
Data from the Organization for Economic Cooperation and Development report, International Migration Outlook 2015, show that we already are seeing significant shifts in employment patterns, particularly in healthcare. Between 2000 and 2010, the number of immigrant doctors and nurses working in OECD countries rose by 60%, with India sending the most doctors and the Philippines sending the most nurses.
Between 2011 and 2014, the report showed, the industries with the biggest increase in employment for both native and foreign-born workers were building services and landscaping, followed by education; both saw significant drops in jobs in construction. Food and beverage services, human health activities and social work were the third, fourth and fifth biggest increases for foreign-born workers. In a significant contrast, native born workers saw the next biggest increases in residential care, head office and management consultancy activities and manufacturing. In other words, the mix of jobs between migrants and native-born workers is changing.
Combined, these job disruptions will affect the optics of immigration. Where relatively low-skilled native-born workers feel that their jobs are being replaced, resentment toward migrants may dramatically increase.
The disruption across borders will be as jarring, if not more so, than the tectonic shifts within industries.
Technology will make it easier and cheaper for companies to manufacture goods closer to where they are consumed. This will hurt jobs in the low-wage countries to which many of those jobs have shifted in recent decades. Jobs will increase in wealthy countries, attracting more migrants.
As manufacturing relocates to developed countries, it will increase demand for marketing, legal services, personal and home care and other ancillary services that support increasingly affluent populations and companies. Thus, though some low-skilled jobs will disappear, new professions will appear.
How do we respond?
These changes raise troubling questions. As many lower-skilled jobs become obsolete in wealthy nations, what will become of the people who previously would have migrated to take those lower skilled jobs? And what of the countries that high-skilled migrants leave behind? What goods and services can traditionally migrant-sending countries of Asia, Latin America and Africa produce at a comparative advantage? With emigration less reliable as a safety valve and source of remittance income, how will they address social pressures?
Education will make the difference in determining which individuals and societies profit and which ones will fall behind. Host countries must educate their populations to provide workers with opportunities that are better than the jobs being replaced. Migrant-sending countries will depend on education and technology transfer to improve productivity, create jobs at home, and give aspiring emigrants the skills base they need to find jobs abroad to create a virtuous cycle of brain circulation.
In most countries, migration policies are set as if in stone; they are very difficult to change. With the approaching labour market changes, the time is now to create more flexible migration policies that are more responsive to labour markets. It’s also important to bring as many migrants as possible into formal economies where they will contribute to retirement funds.
If societies and economies fail to adapt to the major disruption ahead, we will see new waves of forced migrants and resistance to them. This will create moral dilemmas and impose heavy economic costs. Forced migration freezes the human capital embodied in refugees, while imposing costs of maintaining temporary housing and food for people who are stuck in limbo.
That would undermine the essence of global labour migration: achieving human potential.
Author: Michele Wucker is a 2009 Young Global Leader and the author of Lockout: Why America Keeps Getting Immigration Wrong When Our Prosperity Depends on Getting It Right. Her new book, The Gray Rhino: How to Recognize and Act on the Obvious Dangers We Ignore, will be published in April 2016.
Image: A humanoid robot works side by side with employees in the assembly line at a factory of Glory Ltd., a manufacturer of automatic change dispensers, in Kazo, north of Tokyo, Japan, July 1, 2015. REUTERS/Issei Kato
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The views expressed in this article are those of the author alone and not the World Economic Forum.
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