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As economies see productivity rise and jobs decline, is technological innovation in the 21st century driving jobless growth?

The Issue

This Forum Debate considered whether technological innovation is largely responsible for jobless growth, or whether jobless growth is principally the result of political decisions and economic policies. Before the debate, participants leaned in favour of the proposition 57% to 43%. After the debate, participants were evenly divided.

The Debate

Proponents of the proposition argued that technology is the big driver of jobless growth and that its impact is increasing. One example is tax preparation software that, once created, can be replicated infinitely and distributed globally without significant additional costs. This technological innovation has made its creators very rich, and has benefited consumers, but has adversely impacted the employment opportunities for certified public accountants and other tax preparers.

“Software is eating the world,” noted Erik Brynjolfsson, Professor, Sloan School of Management, Massachusetts Institute of Technology, USA. Digitalization is destroying jobs involving routine information management, including travel agents, secretaries and other clerical staff. Software and robots are destroying manufacturing jobs. Internet courses can be offered to hundreds of thousands of students at a time, greatly reducing the need for teachers.

New technologies increase productivity. As with the Industrial Revolution, technological advances destroy jobs and create new ones. People learn new skills and find new jobs. However, there is often a temporal mismatch between job destruction and job creation. The current technological revolution may be different from the Industrial Revolution that saw employment shift from agriculture to manufacturing. “The sizes of the sectors being disrupted are much bigger than the sizes of the sectors that will accept the unemployed,” added Lawrence H. Summers, Charles W. Eliot University Professor, Harvard University, USA.

In 1965, only one in 20 men aged 25-54 was not working. It is estimated that by 2017 the number will be one in seven – a tripling of non-working men of prime working age. This is a long-term trend substantially driven by technology and capital-labour substitution, Summers said.

Opponents argued that policy, not technology, is responsible. “Don’t blame technology, blame the EU troika”, argued Philip J. Jennings, General Secretary, UNI Global Union, Switzerland. The nature of work has changed from secure employment to uncertain, insecure work. “”This is market driven, not technology driven – with financial pressures on companies to reduce headcounts,” Jennings added. Harsh austerity policies have led to a reluctance of companies to hire.

In developing countries like Indonesia, technology holds the promise of creating jobs, urged Gita Wirjawan, Minister of Trade of Indonesia. Smartphones can make essential financial services more accessible. Indonesia sees the possibility of manufacturing inexpensive smartphones domestically. “Developing countries like Indonesia want to see technology create jobs for their people,” he added.

Panellist on both sides of the issue agreed that governments must provide significantly greater resources for education and reskilling displaced workers. They criticized austerity policies and called for a new social contract. They also called for job creation through needed infrastructure projects.

Significant Quotes

“Economics and politics have led to 205 million unemployed. Politics, not technology, is responsible for jobless growth.”
Philip J. Jennings, General Secretary, UNI Global Union, Switzerland

“We need a narrative that focuses on employment, not GDP.”
Philip J. Jennings, General Secretary, UNI Global Union, Switzerland

“The workforce no longer has a seat at the table. In the US, collective bargaining is almost extinct.”
Philip J. Jennings, General Secretary, UNI Global Union, Switzerland

“We pay people too much not to work, and not enough to work.”
Lawrence H. Summers, Charles W. Eliot University Professor, Harvard University, USA

“Avoiding a race to the bottom will require cooperation among regions and countries. One country alone cannot create a new social contract.”
Lawrence H. Summers, Charles W. Eliot University Professor, Harvard University, USA

“We need a new social contract – we need to rethink how to divide productivity gains.”
Erik Brynjolfsson, Professor, Sloan School of Management, Massachusetts Institute of Technology, USA

Disclosures

This summary was written by David Watkiss. The views expressed are those of certain participants in the discussion and do not necessarily reflect the views of all participants or of the World Economic Forum.