Digitalisation is in full swing: smartphones, smart banking and smart homes have entered many people’s everyday lives, and none of them would have been possible without automation and modern information technology. The way we work, produce and operate is also being transformed by digitization. It promises huge productivity gains, a greener economy and even a more peaceful world. In fact, these are usually false promises that lead to the opposite of what they claim to achieve.
First, for some time, there has been talk of a fourth wave of industrial revolution, which will fundamentally change the global production system. In the Anglo-Saxon context, this wave is referred to as the “Internet of Things” (IOT), while in this country the term “Industry 4.0” has prevailed. Both terms describe the digitization of horizontal and vertical value chains of companies – with enormous consequences for the world of work and employment – and they describe a vision of the future, which should open up new market and export opportunities for German industry in particular. These are to be miraculously in harmony with an ecologically sustainable way of doing business. The second big promise is: Digital technologies would reduce our environmental footprint by “dematerializing” production and consumption by promoting a low-carbon transformation of energy and mobility systems, contributing to the establishment of a circular economy and enabling effective protection of ecosystems. The third promise finally predicts that digitization will make the world more peaceful. Because it offers a decentralized structure that allows users to cooperate in global networks and to share their knowledge and skills. Cooperative projects based on this could enable greater control of the powerful across borders, so the hope is that they would violate human and civil rights, by whomever,
On the way to the “Industrial revolution”?
Let us first turn to the first promise. Today, those who promote the beautiful new world of smart factories associate this with the expectation that digital infrastructures will open up additional value-added potential and thus bring about a significant growth spurt. With a new wave of automation, it is hoped that a reduction in average production costs could be achieved. For the sale of goods and services, which are then produced more cheaply, the ever-increasing marketing and advertising departments of the companies will already take care of it. Such a development could (especially) enable more exports, especially for the former “export world champion Germany”, and at the same time boost domestic demand for labor.
The hoped-for new growth spurt should be based on the generation of data and its use in all parts of the value chain and ultimately lead to a merger of the physical and the virtual world. Such a system of physical-digital technologies contained in machines and devices such as robots, scanners, or speech recognition programs would enable the capture, monitoring, and control of the entire economy. Artificial intelligence and algorithms, among other things, would then help to determine the optimal size of the production and to determine which tasks can be digitized or automated.
As with every other technological boost in recent decades, a “humanization of the world of work” is promised – through job creation gains and rewards, better cooperation and participation opportunities for workers, replacement of stressful and unattractive tasks and comprehensive training and education career opportunities. Therefore, representatives of almost all parties and business in Germany, innumerable scientists and a host of think tank employees and journalists promote “Industry 4.0”. The industrial unions also support this view.
Because the manufacturing industry in this country still contributes more than 20 percent to the gross domestic product and the manufacturing industry is responsible for 80 percent of German exports, it is expected that a digitization in this industrial sector with the manufacturing costs could also lower prices. As a result, demand (especially abroad) will increase and create jobs in those companies where automation technology is produced. This is also the reason why IG Metall is involved in the “Industry 4.0” initiative run by the Federal Government and business associations.[1] However, the IG Metall agrees with the employer, according to which German companies could play a pioneering role in the incipient technological change and should. The expected job losses, such a widespread hope, could be largely offset by new job opportunities – namely those jobs that are created by increasing demand from abroad. But that would mean nothing more than technologically induced unemployment being exported abroad to an even greater extent than in the past, and workers elsewhere will be outnumbered.
What stands in the way of the digital revolution
However, such a “digital revolution” initially faces enormous technological challenges. For example, fiber optic networks are widely considered the future standard of high-performance networks because they enable a much faster transmission rate than their copper-based precursors. However, these networks simply do not exist in much of the world, and their installation devours high sums. Also missing are several other technological requirements for “intelligent” factories, offices and logistics systems, such as standardized interfaces for application programs, a common data language or the integration of largely self-sufficient systems, for example in the fields of production, logistics, energy supply or building management.
In addition, companies and agencies that are moving their business to the digital world are exposed to the dangers of cyber-attacks. These can come from individuals inside or outside the company, from computers or social networks, through the cloud, or controlled by global criminal organizations. Of course, advocates of advancing digitization expect that most of these technological challenges will soon be overcome. In fact, solutions to these problems are currently not in sight. Meanwhile, the threat of cybercrime is growing both within OECD countries and in many other countries.
For example, cyber-attacks against the financial sector and data breaches, especially developing and emerging countries, are increasingly facing major problems. Because there financial transactions usually have to be made via insecure mobile phones and transmission lines. In addition, the digital divide – the “digital divide” of society – is far from over: Worldwide, almost four billion people still do not have Internet access. Even on the African continent, which has the fastest growth in Internet access from all regions of the world, only about a quarter of the population uses the network, even less so is the proportion of households with their own computers. [2]
The global south is suspended
Nonetheless, the rapid growth in smartphone use in countries outside the OECD world is often seen as an indicator of their willingness to innovate and an impending “digital revolution”. In fact, numerous studies point to the increasing use of electronic purses in Kenya since 2007. They argue that this has given poor people access to banking services. This technical development in Kenya and other developing countries is coupled with the hope that offshore call centers and other large-scale ambitious projects could create many new jobs in the long term, especially since many people in this region are powerful English speakers, the global language of globalization.
However, most African users still need to go to internet cafés to go online. Their offers but are relatively expensive and also usually have only a small bandwidth in the data transfer. In addition, access to new technologies in Africa is limited by a lack of power, a fragmented telecommunications infrastructure and low broadband coverage. [3] The technological bottleneck in broadband deployment, but especially the shortcomings in education and training, present a major obstacle to any “digital revolution” in Africa, but also in other regions outside the OECD, than in the countries of the global economy North.
Even more difficult is the starting position of developmental and also many so-called emerging countries in the field of artificial intelligence (AI). [4]The situation is different in the USA and China. Billions are being invested in AI research from public and private sources to apply it to a variety of functions, including image identification, speech recognition and self-driving vehicles. China, as announced in its “Made in China 2025” and “Internet Plus” programs, wants to surpass the US as a leader in the high-tech sector and become the technology leader in AI by 2030. The People’s Republic plans to pump around $ 60 billion a year into the AI industry. In fact, Chinese high-tech trio Baidu, Alibaba and Tencent have a significant advantage over their Silicon Valley rivals Google, Apple, Facebook and Amazon: it potentially has access to more than a billion people’s data. But also Russia, Japan and South Korea are trying to establish their own AI systems. Even France, Germany, the United Kingdom, Canada and small countries like Estonia, Finland and Iceland have started their own AI initiatives to improve the productivity of the national economy. At EU level, too, investment in research and development in the area of AI should be extended to further the development of the European single market and to ensure that European companies can defend or even expand their industrial dominance worldwide. However, the global competition for supremacy in this key 21st century technology is essentially between a handful of US and Chinese companies. Even France, Germany, the United Kingdom, Canada and small countries like Estonia, Finland and Iceland have started their own AI initiatives to improve the productivity of the national economy. At EU level, too, investment in research and development in the area of AI should be extended to further the development of the European single market and to ensure that European companies can defend or even expand their industrial dominance worldwide. However, the global competition for supremacy in this key 21st century technology is essentially between a handful of US and Chinese companies. Even France, Germany, the United Kingdom, Canada and small countries like Estonia, Finland and Iceland have started their own AI initiatives to improve the productivity of the national economy. At EU level, too, investment in research and development in the area of AI should be extended to further the development of the European single market and to ensure that European companies can defend or even expand their industrial dominance worldwide. However, the global competition for supremacy in this key 21st century technology is essentially between a handful of US and Chinese companies. Finland and Iceland have launched their own AI initiatives to improve the productivity of the national economy. At EU level, too, investment in research and development in the area of AI should be extended to further the development of the European single market and to ensure that European companies can defend or even expand their industrial dominance worldwide. However, the global competition for supremacy in this key 21st century technology is essentially between a handful of US and Chinese companies. Finland and Iceland have launched their own AI initiatives to improve the productivity of the national economy. At EU level, too, investment in research and development in the area of AI should be extended to further the development of the European single market and to ensure that European companies can defend or even expand their industrial dominance worldwide. However, the global competition for supremacy in this key 21st century technology is essentially between a handful of US and Chinese companies. in order to promote the further development of the European internal market and to ensure that European companies can defend or even expand their industrial dominance worldwide. However, the global competition for supremacy in this key 21st century technology is essentially between a handful of US and Chinese companies. in order to promote the further development of the European internal market and to ensure that European companies can defend or even expand their industrial dominance worldwide. However, the global competition for supremacy in this key 21st century technology is essentially between a handful of US and Chinese companies.
What is undisputed is that technological sovereignty, if at all feasible, presupposes today that companies in a country or a larger economic area are able to form closed value chains: from the production of processors to computers and batteries, right through to software , Ultimately, it will depend on the extent of this technological sovereignty in which countries or regions most jobs are created – and who has to bear the negative consequences of digitization.
The robots on the rise
One of the key reasons why the development of AI and robots is being driven forward, especially in China, lies in its demographic development: the Chinese population is aging rapidly, which increases the pressure on companies to pay. Therefore as many robots as possible should be used in the manufacturing industry and many other branches of industry as quickly as possible. In this way, companies could keep costs down and increase profits even in times of slower economic growth and increased competition.
So far, however, just every fourth robot is manufactured by a Chinese company. [5] In addition, only 97 robots per 10,000 employees joined in 2017 in China used far less than in South Korea. Meanwhile, the use of robots in Singapore, Germany and Japan is quite common, with the peak in the German automotive industry by the end of 2017 at more than 1,000 robots per 10,000 employees. This is what the local engineering sector is focusing on: It produces those robots that will replace human work elsewhere, and therefore believes it can count itself among the winners of “Industry 4.0”.
However, China is catching up fast. With the help of the Swiss industrial group ABB, Beijing is currently building a state-of-the-art production facility in Shanghai, where robots and workers will fabricate new robots – approximately 100,000 units per year, which is one quarter of the world’s global robot production. The International Federation of Robotics expects nearly 500,000 robots to be deployed in Asia in just two years, compared to less than 100,000 in Europe and only 64,000 in the US. The bulk of global robot sales are expected to be forthcoming focus on the five markets China, South Korea, Japan, USA and Europe. By contrast, the use of robots in the countries of the global South is likely to lag far behind. Due to the few robots that have been in Africa so far,
The radical change of the professional world
In industrialized countries, however, the use of robots and AI means nothing more than a new automation push that will affect almost all sectors of the economy: the automotive and electrical industries, metalworking, the plastics and chemicals industries, the beverage and food industries And last but not least, the defense and security industry, where AI is already integrated into numerous products and operations. In agriculture, retail, administration, banking and insurance, lawyers, radiologists and call centers, too, many jobs will be affected by automation. Practically, robots and software systems can replace all activities that are easily measurable and repeatable.
But that’s just the beginning. In the future, taxi, courier and freight forwarding companies will increasingly use autonomous drive systems. Even in many occupations that are characterized by a high degree of cognitive activity, computers will take over such services on a larger scale. In the future, software applications and not individual bank employees could decide who gets a loan on which terms. Robotization is also becoming increasingly important in care: machines support patient transfers and ensure that medications are taken on a set schedule. And not only in the US, but also in this country probably more and more personnel decisions based on computer algorithms are likely to be made.
Many scenarios assume that in the short term, at least a third and, in the long run, far more than half of all occupations currently practiced by humans will disappear. New fields of activity, however, are created in the area of social media management, the interior design of virtual spaces or the assurance of algorithms. This could be in line with the dreams of many young people in Europe, Africa, and other places around the world who prefer to become influencers , creators, or gamers rather than waiters, administrators, or metalworkers.
But the downsides are obvious: while many low-pay jobs, which require little education, will disappear, at the same time, higher-skilled workers – such as those in care, which are expected to grow despite automation – are unlikely to receive adequate pay. At the same time, a two-stage system will permanently establish itself for specialist work in technology companies – from content moderation to software testing. Growing parts of the workforce will have to be content with contracts that they conclude with external agencies, at significantly lower wages than those shrinking number of permanent employees.
Companies are hoping that the digitization of production and business processes will result in significant savings in personnel, energy and raw material costs, and their representatives and think tanks argue that the pace, scale and impact of change are far from being as catastrophic as currently feared. If the new technological thrust is adequately accompanied by investment in education, training, and the social cushioning of the negatively affected, its worst social consequences could be kept to a minimum.
How much work is lost?
One thing is certain: the quantitative and qualitative effects of digitization on the labor markets are currently difficult to assess in detail. Therefore, the numbers presented in many studies vary in part strongly. While 2013’s influential study by Benedikt Frey and Michael Osborne claims that in the US, nearly half of all professions in all sectors are automated by 2030, McKinsey argues in an analysis from 2017 that this will not happen before Happened in the middle of the century. A similar study to that of Frey and Osborne for the US was conducted by Jeremy Bowles for the European Union. Thus, in less competitive economies such as Romania, Bulgaria, Greece and Portugal even lost up to 60 percent of all jobs due to digitization. Even in Germany, a loss of around 60,000 jobs is expected over the next ten years, especially in the manufacturing sector. At the same time, however, it is expected that the German metal industry will be able to maintain its high export quota and therefore almost as many new jobs with an IT and scientific profile will be created as are lost through digitization. In any case, unlike in the USA, investments in robots do not seem to have led to a decline in total employment. At the same time, however, it is expected that the German metal industry will be able to maintain its high export quota and therefore almost as many new jobs with an IT and scientific profile will be created as are lost through digitization. In any case, unlike in the USA, investments in robots do not seem to have led to a decline in total employment. At the same time, however, it is expected that the German metal industry will be able to maintain its high export quota and therefore almost as many new jobs with an IT and scientific profile will be created as are lost through digitization. In any case, unlike in the USA, investments in robots do not seem to have led to a decline in total employment.
The forecast scenario for developing and emerging countries looks quite different. If there are any data on employment trends as a result of digitization, they are anything but hopeful. In its 2016 World Development Report, for example, the World Bank assumes that, in the low and middle income countries, two thirds of all jobs are susceptible to automation; Secondly, most of these countries simply use robots and other automation equipment but will not produce it themselves, and thirdly, the potential for massive job losses in these groups of countries is particularly high. Although the World Bank acknowledges, inter alia, in Brazil, India, Indonesia, Malaysia, Mexico, Thailand and Turkey opportunities for the establishment of “intelligent production processes”, for example in the production of 3-D printers. However, for most other countries in the global South, the bank has a shortage of trained technicians and engineers, and this shortage, along with the well-known infrastructure deficits, will severely limit their digital development potential. Therefore, the World Bank expects – as a result of the technological upheaval, a significantly slower development of world trade in the future and an increasing concentration of global value chains in a few countries – the expansion of the manufacturing industry for low and middle income countries, unlike in the past, will no longer be a growth path. for example, in the production of 3-D printers. However, for most other countries in the global South, the bank has a shortage of trained technicians and engineers, and this shortage, along with the well-known infrastructure deficits, will severely limit their digital development potential. Therefore, the World Bank expects – as a result of the technological upheaval, a significantly slower development of world trade in the future and an increasing concentration of global value chains in a few countries – the expansion of the manufacturing industry for low and middle income countries, unlike in the past, will no longer be a growth path. for example, in the production of 3-D printers. However, for most other countries in the global South, the bank has a shortage of trained technicians and engineers, and this shortage, along with the well-known infrastructure deficits, will severely limit their digital development potential. Therefore, the World Bank expects – as a result of the technological upheaval, a significantly slower development of world trade in the future and an increasing concentration of global value chains in a few countries – the expansion of the manufacturing industry for low and middle income countries, unlike in the past, will no longer be a growth path. However, for most other countries in the global South, the bank has a shortage of trained technicians and engineers, and this shortage, along with the well-known infrastructure deficits, will severely limit their digital development potential. Therefore, the World Bank expects – as a result of the technological upheaval, a significantly slower development of world trade in the future and an increasing concentration of global value chains in a few countries – the expansion of the manufacturing industry for low and middle income countries, unlike in the past, will no longer be a growth path. However, for most other countries in the global South, the bank has a shortage of trained technicians and engineers, and this shortage, along with the well-known infrastructure deficits, will severely limit their digital development potential. Therefore, the World Bank expects – as a result of the technological upheaval, a significantly slower development of world trade in the future and an increasing concentration of global value chains in a few countries – the expansion of the manufacturing industry for low and middle income countries, unlike in the past, will no longer be a growth path.
This least optimistic scenario of digital capitalism on a global scale is supported by recent findings from the McKinsey Global Institute and PricewaterhouseCooper. Both think-tanks assume that the destruction of jobs will accelerate under the pressure of technological change, so that machines, robots and computers will increasingly have an absolute – and not only comparative – cost advantage over the “living work”.
South East Asia predicts the most profound implications of digitization in the manufacturing sector, where, under pressure from international institutions, export production in sectors such as clothing, footwear, textiles and electronics has become a backbone of economic development in recent decades. Many jobs in these sectors, as well as in the assembly and parts production of the automotive industry, are now endangered in this region by the new automation wave. For Cambodia, Laos, Vietnam, the Philippines and Thailand, job losses of 50 percent and more are expected; around 137 million people would be affected. [6]
Some companies, such as the shoe manufacturer Adidas, have already started to expand production in Germany on the basis of digitally controlled automation processes. The Verisk Maplecroft’s Human Rights Outlook for 2018 expects a momentum of relocation ( re-shoring) from industrial production to capitalist core countries will not only lead to disastrous deindustrialization in Southeast Asia, but will also increase the risk that slavery and trafficking in global supply chains will increase significantly. This could be the case in particular in the five above-mentioned Asian countries, as they are anyway considered to be so-called high-risk countries in the Modern Slavery Index. In Vietnam and Cambodia, where more than 85 percent of jobs in the apparel, textile and footwear industries are at risk of automation, women are likely to lose their jobs. They would then have to look for a job opportunity further down the supply chain – wherever regulations and employee rights are more frequently violated and abuse is more likely.
Crowd Work: the new normal of casual work
Nonetheless, advocates of “Industry 4.0” point out that routine processes and physically demanding activities are soon being carried out entirely by machines. People would then become machine operators and would no longer be active producers.
In fact, digitization, even for highly skilled workers, is likely to be accompanied by a further blurring of the boundaries between working time and lifetime, less control over the pace and intensity of work, more stress and new challenges for reconciling work and family life. At the same time, companies will be even less dependent on a permanent workforce than they are today and instead will only be hired as needed.
For many workers, the employment relationship will change into a chain of work orders of different lengths. The physical and therefore all social connections with the companies would be cut off and the unions would find themselves in even greater difficulties than today in communicating with dependent employees, organizing and representing their interests. All routine work, including standardized and anonymous processes, but especially digital services, would become casual work. They would be exposed to strong pressure for ever increasing efficiency. Activities that require direct human interaction may then be valued higher. But digital services can be divided into smaller and smaller tasks and more often delegated to “virtual workers” than they are today. These people are then responsible for all those tasks that can be done in a few seconds and each be paid with a few cents. The cloud and crowd-working (via Amazon Turk, Clickworker or Crowdflower) and all forms of “on-demand” work (such as Uber, Lyft, TaskRabbit or Wonolo) could become the new norm in the lives of millions of people.
As is well known, the “crowd” or “click-worker” are usually very isolated and, as in the past, merits that can be achieved on demand with modern piece-work pay are still rather low and, above all, irregular. The misleading description of these workers as independent contractors is not a new phenomenon – we know it from the clothing, construction and shipping industries. The misleading classification of this group of employees as self-employed aims to avoid labor rights as well as the payment of benefits and taxes. Furthermore, the transnational nature of crowd-work – which is already very widespread in countries such as China, India, the Philippines and Indonesia – makes it difficult to establish which national legal systems governing the regulation of working hours,
This development is exacerbated by the widespread neoliberal ideology that many crowd-workers encourages them to view their activity as a pastime, as a means against boredom, an easily achievable additional income or as an entry into a future life as an entrepreneur. Many young people, whether in the USA, Brazil, Kenya or Germany, see themselves as so-called micro-entrepreneurs, although they rarely work autonomously. Their self-employment is usually not linked to a career or escape from poverty. Rather, their formal independence often proves to be a trap: they often commute endlessly between short-term self-employment with poor income, low-grade and short-term employment to poor working conditions and low pay, and (short-term or longer-term) dependency as an unpaid “helping” family member.
In short, “work on call” will ensure that irregularity, flexibility, uncertainty, unpredictability and risks of many kinds become the new normal in digital capitalism. Increasing numbers of people in a global market are subject to unstable employment, low income and sometimes dangerous working conditions without receiving regular social benefits; The right to collective representation of interests must first be struggled for.
Published by permission of Blätter für deutsche und internationale Politik. You can second the second part here.
Birgit Mahnkopf is a retired Professor for European Social Policy at the Berlin School of Economics and Law, and an expert in the economic, social and political dimensions of globalization.
[1] Cf. DGB Index Good Work 2016, Dissemination, Consequences and Design Aspects of Digitalization in the World of Work, November 2017.
[2] The exception is South Africa, where, however, most of the communication infrastructure is in the hands of the affluent white population, who have both access to computers and the Internet and the knowledge they need to use them.
[3] Cf. International Telecommunication Union 2017, ITU releases 2017 global information and communication technology facts and figures, ITU News, 31.7.2017,www.news.itu.int.
[4] The term “artificial intelligence” refers to programs and applications that can be integrated into almost all digital systems via neural networks. Such networks use algorithms that process structured data (such as metrics, names or addresses) and unstructured data (such as images, movies, or text) to transform large amounts of information into useful patterns.
[5] See International Federation of Robotics, World Robotics 2018 Edition,www.ifr.org.
[6] For an overview of the findings of recent empirical studies cf. Thereza Balliester and Adam Elsheihhi, The Future of Work: Literature Review, ILO Research Department, WP no. 29th ILO, Geneva
