Introduction
We live in profoundly uncertain times. Much of the uncertainty is driven by our rapidly changing world.
The issue is not change itself. Change has always happened; it has always brought dislocations and upheaval. No, the problem today is twofold: First, the change is happening so fast that people feel challenged to adjust. And second, the process of change is not being “explained” or “managed”— political leaders seldom discuss these issues honestly and openly, and consequently, they seldom make policy provisions to manage the transition. If such matters are talked about at all, it is often with a finger pointed in recrimination to others, and a call to protect what we have by turning inward, against the very open system that created our prosperity in the first place. Small wonder, then, that we live in a world of declining commitment to multilateralism.
Because we don’t discuss these matters openly, there is a sense of inevitability about the upheavals we are going through. The change is inevitable, yes. But the consequences of that change are not. They result from policy choices, or the lack of policy choices. It is the policy choices that determine whether the upside opportunities or the downside risks of transition predominate.
The Digital Society
So, what is, actually going on? Well, whatever it is, it is digital. The world, all of it, is digitalizing at an incredible rate, and that is changing how we produce and consume, how we inform ourselves, and how we interact with each other.
An illustration: I was walking along the street with a young friend of mine two days ago in the evening and I dropped an envelope off into a mailbox with a check to my dentist. My friend, who is 25 and Harvard-educated, told me to be careful, I was revealing my real age. He has never written a check and he claims he hasn’t ever written a snail mail. I realized that I had not written a check in seven months. I am not a wicked delinquent with no credit rating, I do pay my bills, but in the last seven months all my financial transactions had been online, except for the little things I buy in cash (like lottery tickets).
So, we are in, or soon will be in, a digital economy and a digital society. We shop, online. We get news and information, online. We entertain ourselves, online. We interact socially, online. We get government services, online. For you, of the present rising generation, that is your reality, it is the norm. But just ten years ago, all of this was almost science fiction. But think of what that means. All of those things, those services, used to be provided by people interacting directly with us. Their jobs have changed in pretty fundamental ways as well.
The Digital Divide and the Threat of Inequality
But, this new reality is not shared by all. It is easy to overlook the fact that in this country, there are millions of people who do not have smart phones. For them, the 5G revolution and the Internet of Things are not ‘in the palm of their hands’. If we extend our view to the global level, the situation seems downright hopeless—the challenge in many countries in Sub-Saharan African countries is to provide reliable electricity to all, not to provide access to smart phones and 5G digital networks. This points to two big problems that we will have to address as a global community.
First, there is a technological and digital divide within societies, and between countries. With the pace of innovation and change, that divide is rapidly becoming ever wider. Those on the wrong side of that divide will be left ever further behind.
The second problem is the continuing rise in inequality, which is being exacerbated by the digital divide. There are many types of inequality—of the distribution of income and wealth; of women and minorities; of rural populations relative to urban ones; and, tellingly, of access to technology.
In the emerging digital society, those at a technological disadvantage will also suffer a social disadvantage, will be unable to participate fully in the benefits of that society. They will earn less; they will be less able to access core services. It is important to realize that these disadvantages exist, and to address them head-on. Technology can generate tremendous benefits but it can also deepen inequalities. Avoiding that fate requires explicit policies.
The Promise of Technology
As you can tell, the thrust of my remarks today is the challenge we face in managing technology. We are living through a veritable technological revolution, with the potential to transform the global economy, the future of work, the livelihoods of billions, and ultimately the fabric of our societies in the coming years. The changes in the last ten years alone have been extraordinary, and it is hard to imagine the changes that will arrive in the next ten years.
For one thing, technology is the ultimate long-term driver of economic growth and the essential prerequisite for achieving truly environmentally compatible, truly sustainable production. Digital technologies, robotics, artificial intelligence and automation, biotechnology, and nanotechnology—they have all have rapidly advanced in recent years. They have already begun to significantly change global production patterns and employment patterns.
All of these innovations have broad impacts on the economy, society and environment - and on the Sustainable Development Goals. The changes are fundamental and far-reaching, and they impact all countries – whether they are direct users of the technology or not.
These new technologies hold great promise for our aspirational SDGs. They could improve governance, the delivery of public services, accountability and inclusion; they are already accelerating mankind’s knowledge base; they can bring high quality education to all; greatly improve resource efficiencies; they can help us find vaccines for the most intractable diseases; eradicate the most egregious forms of poverty; and finally make a fully renewable, circular economy possible.
The potential benefits are so great, that we cannot afford not to make wise use of these technologies.
But, as always in the past, there are risks tied to today’s technological change. It is not neutral. Benefits are not equally distributed—there are winners and losers. Innovation cycles are shortening and the pace of change is picking up. New technologies can have unanticipated negative consequences. And, there are technology gaps between countries and social groups, including gender-based gaps. These gaps often correspond to differences in socio-technical and social-economic capacities. It is not entirely clear exactly what all this might mean for the poorest and most vulnerable, but there is widespread fear that some will be stuck in permanent, low technology traps.
One thing is for sure – these technological changes are definitely affecting labour markets. A recent ILO working paper reported that employment losses due to robotization from 2005 to 2014 were about 14 per cent in emerging economies, compared to 0.5 per cent in developed countries, most notably in industrial employment. Technology-driven re-shoring or declines in incentives for off-shoring reportedly already depressed employment in emerging economies by 5 per cent over the same time frame. In other words, employment impacts are already significant and especially in emerging economies. Indeed, many countries may need to find new types of development models, even as some of them must deal with this “premature deindustrialization”.
Furthermore, the deployment of large-scale artificial intelligence could lead to automation of many cognitive tasks. This is no longer science-fiction but has started in earnest in a number of niches.
Dramatic employment impacts due to automation and artificial intelligence have been recently reported in newspapers and magazines. According to oft quoted estimates, computers and robots would replace as many as half of all human jobs in the coming decades. However, experts agree neither on the current nor on the future impacts of these technology trends.
In the past, jobs lost to innovation have been replaced by others. Some argue that this effect may be less marked now. For some developing countries it might mean that some jobs will not be created due to reshoring.
Others argue that despite the loss of jobs to automation, new jobs are being created to meet what seems to be unbounded “human wants”. In this view, compensation effects of technological change will continue as in the past. Moreover, it could be that technologies will only replace part of existing jobs – basically enhancing our performance.
The net effects will most likely depend on circumstances and the actions that we take. The potential impacts are highly uncertain and context-specific, and we may indeed be quite surprised by some of the developments that await us. But there are several things that we can, must do, to shape these developments.
First and foremost, we need better information. Otherwise, it is impossible to have an informed debate grounded in reason and empirical evidence. At a minimum, information must be sufficient to allow for an ethical assessment of the options before us.
Second, we should take socio-environmental considerations into account at the design stage of these technology systems, including a detailed reflection of their likely or possible impact on the future of work and other social issues. Calls for a more responsible and ethical deployment of such technologies have to be balanced against the fear that constraining innovations may deprive people of many benefits.
And we need quantitative, coherent, and plausible scenarios of how these socio-technical systems might unfold and what their broad sustainable development impacts could be.
Some Trends that might influence the Future
Let me speak now of five or six big picture trends that I think will affect the nature and organization of work and therefore have consequences for the ways our societies function.
First, the economy of the next decade will be characterized by the increasing digitalization of operational technologies, the technologies that produce the goods and services that people demand and consume. This digitalization will unfold the full potential of the Internet of Things, but it will also change the nature of work and how it is organized.
The range of things produced without recourse to digital technologies will decline, as will the occupations that do not require digital skills. But work done digitally will be much less bound to a physical location. The ‘globalization of production’ enabled by trade will cede to a ‘globalization of work’ enabled by digital technologies.
Second, not only the nature of work but also its organization will change. The “platform economy”, as the ILO calls it, is already becoming more important and is spreading into more sectors—some refer to it as the Uberization of the economy. What is significant here is that the traditional longer-term relationship between the “employer” and the “employee” become less prevalent.
This has tremendous implications for taxation—does one tax economic activity where it is commissioned and paid for, where goods and services are produced, or where they are consumed, and how is this taxation to be organized if each level of activity takes place in a different tax jurisdiction? These jurisdictional concerns extend also to the regulation of economic activity.
The implications for social protection are just as serious, particularly as social protection is a critical part of the fight against inequality. Many of the traditional instruments of social protection are intrinsically linked to the employer-employee relationship. How does one organize health insurance and retirement savings when this relationship dissipates?
Third, with the evolving nature and organization of work, the content of jobs is changing rapidly. For many of you in this room today, the job that you will be doing in ten years may be very different from the job you start out doing when you leave university. The model of training for a career and then spending thirty or forty years in that profession is disappearing. As jobs change, so too will training change, and we will move to a model of life-long learning. I invite you to consider the massive changes in our social structures that will be necessary to make true life-long learning a reality.
Fourth, automation/robotization, artificial intelligence—these and other technological innovations are fundamentally recasting the dynamic of global trade and global value chains. Re-shoring is a phenomenon that is already having implications for developing countries and their efforts to converge. The export-led manufacturing/industrialization model of development may be losing much of its validity in today’s world.
Fifth, we face the imperative of bridging the technological divide. Where one stands—as a country, a society or an individual—relative to that divide determines the risk of being left behind. National development strategies and international development cooperation must recognize this fact and align themselves to it.
Establishing the digital infrastructure is a precondition of bridging the divide and thus of development itself, but there is also the challenge of ensuring access to the devices that will enable people to use that infrastructure. The latter is a necessary condition for engaging the private sector in the provision of the digital infrastructure, for without the devices, there can be no real and growing market for the digital services that will justify the investment in the digital infrastructure.
Sixth and finally, we must deal with the problem of rising inequalities, which threaten the very basis of sustainable and sustained growth and the fabric of our societies. But as noted above, technology itself exacerbates and accelerates the widening of inequality. And this means that the traditional approach of trying to converge post-tax disposable income through progressive taxation and social outlays comes under increasing stress and strain, it simply cannot keep up. The problem is further worsened by the precipitous decline in the share of national income accruing to labour over the past thirty years—the reflects the importance of capital in technological innovation, and the relative weakening of the institutions of labour markets – collective bargaining and unionized representation.
So, what can be done?
First, address explicitly the challenges and disruptions that confront us. Accept and recognize that there will be winners and losers in the transition to the digital society and the sustainable economy and provide support measures to ease and manage the transition for those most likely to suffer losses.
Second, foster a well-informed and open participatory discussion about the ethical dimensions of technological innovation. We need to establish a set of principles for the governance of technology, the appropriate standards and ethical boundaries within which the technologies must evolve if the unintended consequences of technological innovation are to be avoided. This will include issues such as data governance, privacy and protection; cybersecurity; managing the environmental consequences of digital technologies; and dealing with the market concentration that seems to attend technological innovation. Beyond any doubt, there must be a significant element of international engagement and cooperation in establishing the ethical approach to the design use and governance of new and emerging technologies.
Third, undertake a concerted national and international effort to bridge the digital and technological divide. Private actors will play the central role in innovation, but governments can influence this process by enabling and supporting market-based solutions for diffusing technology through well-functioning national innovation systems. Such systems will identify key challenges and constraints to innovation, inform and guide priorities for research agendas, provide or help mobilize funding sources, and help in establishing appropriate and flexible intellectual property rights regimes, and in general balancing the roles of the different actors in innovation. Strategies are also needed for improving and extending the digital infrastructure and helping to secure access to the digital devices that everyone will need.
Fourth, narrow the gaps in innovative and absorptive capacity. Governments must lead a society-wide effort to enable people to take full advantage of all that technology has to offer. This goes far beyond setting up appropriate educational curricula—it will include supportive financing arrangements, child-care and income support programmes that will make it possible for adults with family obligations to pursue life-long learning opportunities.
And finally, reduce inequalities. The standard approach of progressive taxation and social spending must be complemented by steps that address not the inequality of income and wealth itself, but their social consequences, policies that seek the equality of access to opportunity. The most evident of these would be ensuring equal access to high-quality education and health care. The education, of course, would be targeted to training the digital citizen. That can be supplemented by encouraging positive social impact as the new paradigm for private investment—that way, the socially positive outcomes of the use of wealth can compensate for some of the inequality of its ownership.
It is not clear to me how soon we will succeed in bridging the technological divide or addressing in inequality. In the meantime, the changes in the nature of work, and the fabric of our societies are happening rapidly, and many, including many of us here today, face the very real prospect of being left behind in some way or another. It is certainly worth thinking about.
Thank you.
We live in profoundly uncertain times. Much of the uncertainty is driven by our rapidly changing world.
The issue is not change itself. Change has always happened; it has always brought dislocations and upheaval. No, the problem today is twofold: First, the change is happening so fast that people feel challenged to adjust. And second, the process of change is not being “explained” or “managed”— political leaders seldom discuss these issues honestly and openly, and consequently, they seldom make policy provisions to manage the transition. If such matters are talked about at all, it is often with a finger pointed in recrimination to others, and a call to protect what we have by turning inward, against the very open system that created our prosperity in the first place. Small wonder, then, that we live in a world of declining commitment to multilateralism.
Because we don’t discuss these matters openly, there is a sense of inevitability about the upheavals we are going through. The change is inevitable, yes. But the consequences of that change are not. They result from policy choices, or the lack of policy choices. It is the policy choices that determine whether the upside opportunities or the downside risks of transition predominate.
The Digital Society
So, what is, actually going on? Well, whatever it is, it is digital. The world, all of it, is digitalizing at an incredible rate, and that is changing how we produce and consume, how we inform ourselves, and how we interact with each other.
An illustration: I was walking along the street with a young friend of mine two days ago in the evening and I dropped an envelope off into a mailbox with a check to my dentist. My friend, who is 25 and Harvard-educated, told me to be careful, I was revealing my real age. He has never written a check and he claims he hasn’t ever written a snail mail. I realized that I had not written a check in seven months. I am not a wicked delinquent with no credit rating, I do pay my bills, but in the last seven months all my financial transactions had been online, except for the little things I buy in cash (like lottery tickets).
So, we are in, or soon will be in, a digital economy and a digital society. We shop, online. We get news and information, online. We entertain ourselves, online. We interact socially, online. We get government services, online. For you, of the present rising generation, that is your reality, it is the norm. But just ten years ago, all of this was almost science fiction. But think of what that means. All of those things, those services, used to be provided by people interacting directly with us. Their jobs have changed in pretty fundamental ways as well.
The Digital Divide and the Threat of Inequality
But, this new reality is not shared by all. It is easy to overlook the fact that in this country, there are millions of people who do not have smart phones. For them, the 5G revolution and the Internet of Things are not ‘in the palm of their hands’. If we extend our view to the global level, the situation seems downright hopeless—the challenge in many countries in Sub-Saharan African countries is to provide reliable electricity to all, not to provide access to smart phones and 5G digital networks. This points to two big problems that we will have to address as a global community.
First, there is a technological and digital divide within societies, and between countries. With the pace of innovation and change, that divide is rapidly becoming ever wider. Those on the wrong side of that divide will be left ever further behind.
The second problem is the continuing rise in inequality, which is being exacerbated by the digital divide. There are many types of inequality—of the distribution of income and wealth; of women and minorities; of rural populations relative to urban ones; and, tellingly, of access to technology.
In the emerging digital society, those at a technological disadvantage will also suffer a social disadvantage, will be unable to participate fully in the benefits of that society. They will earn less; they will be less able to access core services. It is important to realize that these disadvantages exist, and to address them head-on. Technology can generate tremendous benefits but it can also deepen inequalities. Avoiding that fate requires explicit policies.
The Promise of Technology
As you can tell, the thrust of my remarks today is the challenge we face in managing technology. We are living through a veritable technological revolution, with the potential to transform the global economy, the future of work, the livelihoods of billions, and ultimately the fabric of our societies in the coming years. The changes in the last ten years alone have been extraordinary, and it is hard to imagine the changes that will arrive in the next ten years.
For one thing, technology is the ultimate long-term driver of economic growth and the essential prerequisite for achieving truly environmentally compatible, truly sustainable production. Digital technologies, robotics, artificial intelligence and automation, biotechnology, and nanotechnology—they have all have rapidly advanced in recent years. They have already begun to significantly change global production patterns and employment patterns.
All of these innovations have broad impacts on the economy, society and environment - and on the Sustainable Development Goals. The changes are fundamental and far-reaching, and they impact all countries – whether they are direct users of the technology or not.
These new technologies hold great promise for our aspirational SDGs. They could improve governance, the delivery of public services, accountability and inclusion; they are already accelerating mankind’s knowledge base; they can bring high quality education to all; greatly improve resource efficiencies; they can help us find vaccines for the most intractable diseases; eradicate the most egregious forms of poverty; and finally make a fully renewable, circular economy possible.
The potential benefits are so great, that we cannot afford not to make wise use of these technologies.
But, as always in the past, there are risks tied to today’s technological change. It is not neutral. Benefits are not equally distributed—there are winners and losers. Innovation cycles are shortening and the pace of change is picking up. New technologies can have unanticipated negative consequences. And, there are technology gaps between countries and social groups, including gender-based gaps. These gaps often correspond to differences in socio-technical and social-economic capacities. It is not entirely clear exactly what all this might mean for the poorest and most vulnerable, but there is widespread fear that some will be stuck in permanent, low technology traps.
One thing is for sure – these technological changes are definitely affecting labour markets. A recent ILO working paper reported that employment losses due to robotization from 2005 to 2014 were about 14 per cent in emerging economies, compared to 0.5 per cent in developed countries, most notably in industrial employment. Technology-driven re-shoring or declines in incentives for off-shoring reportedly already depressed employment in emerging economies by 5 per cent over the same time frame. In other words, employment impacts are already significant and especially in emerging economies. Indeed, many countries may need to find new types of development models, even as some of them must deal with this “premature deindustrialization”.
Furthermore, the deployment of large-scale artificial intelligence could lead to automation of many cognitive tasks. This is no longer science-fiction but has started in earnest in a number of niches.
Dramatic employment impacts due to automation and artificial intelligence have been recently reported in newspapers and magazines. According to oft quoted estimates, computers and robots would replace as many as half of all human jobs in the coming decades. However, experts agree neither on the current nor on the future impacts of these technology trends.
In the past, jobs lost to innovation have been replaced by others. Some argue that this effect may be less marked now. For some developing countries it might mean that some jobs will not be created due to reshoring.
Others argue that despite the loss of jobs to automation, new jobs are being created to meet what seems to be unbounded “human wants”. In this view, compensation effects of technological change will continue as in the past. Moreover, it could be that technologies will only replace part of existing jobs – basically enhancing our performance.
The net effects will most likely depend on circumstances and the actions that we take. The potential impacts are highly uncertain and context-specific, and we may indeed be quite surprised by some of the developments that await us. But there are several things that we can, must do, to shape these developments.
First and foremost, we need better information. Otherwise, it is impossible to have an informed debate grounded in reason and empirical evidence. At a minimum, information must be sufficient to allow for an ethical assessment of the options before us.
Second, we should take socio-environmental considerations into account at the design stage of these technology systems, including a detailed reflection of their likely or possible impact on the future of work and other social issues. Calls for a more responsible and ethical deployment of such technologies have to be balanced against the fear that constraining innovations may deprive people of many benefits.
And we need quantitative, coherent, and plausible scenarios of how these socio-technical systems might unfold and what their broad sustainable development impacts could be.
Some Trends that might influence the Future
Let me speak now of five or six big picture trends that I think will affect the nature and organization of work and therefore have consequences for the ways our societies function.
First, the economy of the next decade will be characterized by the increasing digitalization of operational technologies, the technologies that produce the goods and services that people demand and consume. This digitalization will unfold the full potential of the Internet of Things, but it will also change the nature of work and how it is organized.
The range of things produced without recourse to digital technologies will decline, as will the occupations that do not require digital skills. But work done digitally will be much less bound to a physical location. The ‘globalization of production’ enabled by trade will cede to a ‘globalization of work’ enabled by digital technologies.
Second, not only the nature of work but also its organization will change. The “platform economy”, as the ILO calls it, is already becoming more important and is spreading into more sectors—some refer to it as the Uberization of the economy. What is significant here is that the traditional longer-term relationship between the “employer” and the “employee” become less prevalent.
This has tremendous implications for taxation—does one tax economic activity where it is commissioned and paid for, where goods and services are produced, or where they are consumed, and how is this taxation to be organized if each level of activity takes place in a different tax jurisdiction? These jurisdictional concerns extend also to the regulation of economic activity.
The implications for social protection are just as serious, particularly as social protection is a critical part of the fight against inequality. Many of the traditional instruments of social protection are intrinsically linked to the employer-employee relationship. How does one organize health insurance and retirement savings when this relationship dissipates?
Third, with the evolving nature and organization of work, the content of jobs is changing rapidly. For many of you in this room today, the job that you will be doing in ten years may be very different from the job you start out doing when you leave university. The model of training for a career and then spending thirty or forty years in that profession is disappearing. As jobs change, so too will training change, and we will move to a model of life-long learning. I invite you to consider the massive changes in our social structures that will be necessary to make true life-long learning a reality.
Fourth, automation/robotization, artificial intelligence—these and other technological innovations are fundamentally recasting the dynamic of global trade and global value chains. Re-shoring is a phenomenon that is already having implications for developing countries and their efforts to converge. The export-led manufacturing/industrialization model of development may be losing much of its validity in today’s world.
Fifth, we face the imperative of bridging the technological divide. Where one stands—as a country, a society or an individual—relative to that divide determines the risk of being left behind. National development strategies and international development cooperation must recognize this fact and align themselves to it.
Establishing the digital infrastructure is a precondition of bridging the divide and thus of development itself, but there is also the challenge of ensuring access to the devices that will enable people to use that infrastructure. The latter is a necessary condition for engaging the private sector in the provision of the digital infrastructure, for without the devices, there can be no real and growing market for the digital services that will justify the investment in the digital infrastructure.
Sixth and finally, we must deal with the problem of rising inequalities, which threaten the very basis of sustainable and sustained growth and the fabric of our societies. But as noted above, technology itself exacerbates and accelerates the widening of inequality. And this means that the traditional approach of trying to converge post-tax disposable income through progressive taxation and social outlays comes under increasing stress and strain, it simply cannot keep up. The problem is further worsened by the precipitous decline in the share of national income accruing to labour over the past thirty years—the reflects the importance of capital in technological innovation, and the relative weakening of the institutions of labour markets – collective bargaining and unionized representation.
So, what can be done?
First, address explicitly the challenges and disruptions that confront us. Accept and recognize that there will be winners and losers in the transition to the digital society and the sustainable economy and provide support measures to ease and manage the transition for those most likely to suffer losses.
Second, foster a well-informed and open participatory discussion about the ethical dimensions of technological innovation. We need to establish a set of principles for the governance of technology, the appropriate standards and ethical boundaries within which the technologies must evolve if the unintended consequences of technological innovation are to be avoided. This will include issues such as data governance, privacy and protection; cybersecurity; managing the environmental consequences of digital technologies; and dealing with the market concentration that seems to attend technological innovation. Beyond any doubt, there must be a significant element of international engagement and cooperation in establishing the ethical approach to the design use and governance of new and emerging technologies.
Third, undertake a concerted national and international effort to bridge the digital and technological divide. Private actors will play the central role in innovation, but governments can influence this process by enabling and supporting market-based solutions for diffusing technology through well-functioning national innovation systems. Such systems will identify key challenges and constraints to innovation, inform and guide priorities for research agendas, provide or help mobilize funding sources, and help in establishing appropriate and flexible intellectual property rights regimes, and in general balancing the roles of the different actors in innovation. Strategies are also needed for improving and extending the digital infrastructure and helping to secure access to the digital devices that everyone will need.
Fourth, narrow the gaps in innovative and absorptive capacity. Governments must lead a society-wide effort to enable people to take full advantage of all that technology has to offer. This goes far beyond setting up appropriate educational curricula—it will include supportive financing arrangements, child-care and income support programmes that will make it possible for adults with family obligations to pursue life-long learning opportunities.
And finally, reduce inequalities. The standard approach of progressive taxation and social spending must be complemented by steps that address not the inequality of income and wealth itself, but their social consequences, policies that seek the equality of access to opportunity. The most evident of these would be ensuring equal access to high-quality education and health care. The education, of course, would be targeted to training the digital citizen. That can be supplemented by encouraging positive social impact as the new paradigm for private investment—that way, the socially positive outcomes of the use of wealth can compensate for some of the inequality of its ownership.
It is not clear to me how soon we will succeed in bridging the technological divide or addressing in inequality. In the meantime, the changes in the nature of work, and the fabric of our societies are happening rapidly, and many, including many of us here today, face the very real prospect of being left behind in some way or another. It is certainly worth thinking about.
Thank you.
File date:
Thursday, April 11, 2019