At the recently concluded World Economic Forum (WEF) conference, one topic that caught the imagination of almost everyone was “Artificial Intelligence and Robotics” (https://www.weforum.org/agenda/archive/artificial-intelligence-and robotics/?utm_ content= buffer55b47utm_medium=social &utm_source=twitter.com&utm_campaign=buffer).
More oil over the fire was poured by Jack Ma of Alibaba who said that even CEOs could be replaced by robots (https://twitter.com/wef/status/920572853401083905?s=08). Ma believes that companies must be prepared for decades of pain to come to terms with the advance of robots. This sentiment was reinforced by the president of the World Bank (https://www.weforum. org/ agenda/2017/10/the-world-bank-chief-think-robots-have-put-us-on-a-dangerous-path) who believes that robots have put the entire world on a dangerous path.
So are all jobs at risk? Not really. But the factors impacting jobs will be many (see chart). Countries will have to navigate carefully, to find ways to ensure that job formation efforts do not flag. They will have to ensure that the adverse impact of Artificial Intelligence (AI) and robotics are minimised as far as is possible – at least for the short term. In the long term, it will depend on how fast robots adapt to the new demands of the market, and how rapidly humans come up with newer ideas than robots can.
An endearing thought is that Germany – which has many more industrial robots than even the US – has not faced job losses (https://www.weforum.org/ agenda/2017/10/germany-has-way-more-industrial-robots-than-the-us-but-they-haven-t-caused-job-losses). By 2014, there were 7.6 robots per thousand German workers, compared to 1.6 in the US. Germany has managed to stay ahead of the curve.
It has come up with more innovations and concepts than can be mastered by robots overnight. So who are the gainers and losers in the advance of AI? According to PWC, the biggest beneficiary will be China see chart, sourced from https://www.weforum.org/agenda/2017/10/AI-transforming-work-relevant) , which wants to retain its position as the world’s biggest exporter of almost everything. China could see almost 26% of its GDP coming from AI and robotics. This would be closely followed by the US (14.5%).
Of course, this would assume that global business would be dependent on mass production. But that might not be the case. Consider how Germany has almost 6.6% of its GDP coming through exports. Compare this with 3.5% for China. Germany’s exports come from micro, small and medium sized enterprises (MSMEs).
These companies offer the world products that do not have a market for large numbers, but are extremely sophisticated – even customized — and are demanded by countries in small numbers. That is clearly the strategy India too may want to adopt. In the coming decade, India may have to work on several policy initiatives. One of them will be to realise that it will not be able to stave off automation (even in jobs for drivers) for too long. It will therefore have to focus on new job opportunities. It will have to plan on disruptions that make older models of growth impossible to protect or promote. The need for good school education will therefore be crucial.
One way in which India can create huge numbers of jobs – both directly and indirectly – is by adopting a new model for distributed solar and methane clusters (http://www.asiaconverge.com/2017/10/solar-power-couldtrigger-employment-generation/). By creating a middle layer to install, maintain and regulate decentralised power generation and gas supplies, India could achieve two objectives. It could create around 83 million jobs directly and indirectly — enough for at least 6-7 years (assuming a minimum demand for 12 million jobs each year). It could also see a reduction in imports, which then could be used to promote skills development and school education. Small numbers will matter.
It may be worth recalling that one reason why Indian fabrics got exported in very large numbers was because it could offer countless designs in small runs. That gave customers greater variety, more exclusivity, and at reasonable prices.
China hasn’t been able to dent this market as yet.
Therefore, the focus will have to be on reinvigorating a shattered and pulverised school education. It means revamping India’s skill development, which remains in a time warp in most places. If India can do all this, it can withstand the onslaught of AI and the robots. If it cannot, expect a lot of pain to follow.
The author is consulting editor with FPJ.