UN Report: Robots Will Replace Two-Thirds of Workers in the Developing World

It’s been one year since I published the “Saudi Disruption”, a 2036 scenario in which a Saudi investment in automated manufacturing displaces over four million Bangladeshi workers in the textile industry, leading to unrest and political upheaval. A new UN report (PDF) warns that “about two thirds of all jobs” will be lost to automation in developing countries.

The UN report reviews the prospects of re-shoring – manufacturing returning to developed economies – which is already happening in limited fashion. Next year, Adidas will open an automated factory in Germany, its first factory in Germany in over 20 years. It’s a test for their automated factory with plans to expand to the United States and Europe.

The Guangdong and Zhejiang provenances alone have allocated US$270 billion to help automate factories.

The greater concern for developing countries, however, will come from China itself. Higher wages and a slowing population growth is pressuring China to embrace automation. The Chinese Government have pushed for robot revolution with its “Made in China 20205” campaign to continue its manufacturing prowess. The Guangdong and Zhejiang provenances alone have allocated US$270 billion to help automate factories.

The UN recommends considering new taxes for these robot workers: “Clearly, without the introduction of a major tax on robots as capital equipment, robot-based manufacturing cannot boost the fiscal revenues needed to finance [social transfers].” This is something the European Union have considered this year in the form of a social security tax for robots as “electronic persons.”

For countries like Indonesia, with over 2 million young Indonesians entering the workforce each year, automation will be a threat to their job security and Indonesia’s development. The traditional “escalator of development” – industrialisation and export-based economy – will exist no more.

Dani Rodrik, an economist and expert on “premature deindustrialisation”, warns how countries may deindustrialise to low-paying service jobs:

“Because of automation, the skills required have increased significantly and many fewer people are employed to run factories. What do you do with these extra workers? They won’t turn into IT entrepreneurs or entertainers; and, if they become restaurant workers, they will be paid much less than in a factory.”

For Indonesia to India and even the middle class in the US, it’s a warning that GDP growth and abundance – provided by ever cheaper, automated technologies – are decoupling from job growth and supporting a raising middle class.







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