To ensure that everyone can benefit from new technologies, policymakers will need to pursue education reforms that promote lifelong learning, maintain labour market flexibility, strengthen social protection systems, and reduce income inequality,

The Asian Development Bank (ADB) issued its latest report yesterday on the impact of technological advances on labour markets in Asia.

New research on how technology affects jobs, the subject of the special theme chapter in the ADB’s flagship economic publication, Asian Development Outlook (ADO) 2018 report, points out that while some of the region’s jobs will be eliminated through automation, countervailing forces will more than compensate against job losses. 

The report found that technological advances have transformed the two billion workers Asian labour market, helping create 30 million jobs annually in industry and services over the last 25 years, drive increases in productivity and wages, and reduce poverty.

Mr Yasuyuki Sawada, Chief Economist at ADB, said the latest research shows that, on the whole, countries in Asia will fare well as new technology is introduced into the workplace, improving productivity, lowering production costs, and raising demand.

At the same time, Mr Sawada also highlighted the important role of policymakers in ensuring that everyone can benefit from new technologies.

“To ensure that everyone can benefit from new technologies, policymakers will need to pursue education reforms that promote lifelong learning, maintain labour market flexibility, strengthen social protection systems, and reduce income inequality,” Mr Sawada added.

Job displacement VS job creation

The report acknowledges that advances in areas such as robotics and artificial intelligence (AI) pose challenges for workers. Jobs that require repetitive, routine tasks and workers who do not have the education or training to move easily to other occupations, may face slow growth in wages.

It was also found that jobs that are intensive in cognitive tasks, social interactions, and the use of ICT—jobs that tend to be held by the better educated and better paid—expanded 2.6% points faster than total employment annually over the last 10 years. Moreover, average real wages for these jobs increased faster than for routine or manual jobs. This would potentially exacerbate income inequality in the region.

However, ADB research shows that even in the face of advances in robotics and AI, there are compelling reasons to be optimistic about the region’s job prospects. It is because: (1) new technologies often automate only some tasks of a job, not the whole, (2) job automation goes ahead only where it is both technically and economically feasible, and (3) rising domestic demand offsets job displacement driven by automation and contributes to the creation of new professions.

ADB’s analysis of employment changes in 12 economies in developing Asia from 2005 to 2015 strongly supports the idea that rising domestic demand more than compensates for job losses associated with technological advances.

Furthermore, analysis of a broad array of data shows that many new job titles have arisen in ICT, and new types of jobs will arise in healthcare and education, as well as in finance, insurance, and real estate.

The role of policymakers

As the report highlights, policymakers will have to be proactive if the benefits of new technologies are to be shared widely across workers and society.

Governments will need to respond to the risk of workers being left behind by ensuring that they are protected from the downside of new technologies and able to take advantage of new opportunities. This will require coordinated action on skills development, labour regulation, social protection, and income redistribution.

New technologies can help deliver solutions in many of these areas. Adaptive learning technology, an educational method that uses computer algorithms designed to adjust to individual students, has enhanced learning outcomes in schools; governments should use and promote their adoption.

Similarly, technological advances in biometric identification can improve how social protection programs function by reducing costs, overcoming implementation challenges in sophisticated unemployment benefit systems, and enabling the tracking of job-placement services.

At the same time, governments also need to ensure that the development of new technologies take place in ways that benefit people and protect their rights and privacy, by, for example, protecting personal data.