The Impact Of Technological Unemployment Will Be Colossal – If Left Unchecked. That's Why Concepts Such As Universal Basic Income Must Be Explored – And Urgently

Some people call it the Fourth Industrial Revolution (4IR), others label it the first Technological Revolution. Either way, this epoch as defined by a confluence of enabling innovations is rapidly disrupting markets, and dramatically transforming economies and societies across the globe. It's clear that the impact of technological unemployment will be colossal, if left unchecked.

It is an exciting age, but as with previous iterations of the Industrial Revolution, which dates back to the 18th century when machine tools and steam power fuelled new factory systems, right now there are many millions of workers worried that their jobs will be displaced by technology - and sooner rather than later.

One study, published in November 2017 by the McKinsey Global Institute, predicts that by 2030 up to 800 million human workers - one-fifth of the world’s workforce - are likely to have their roles superseded by automatons and because of artificial intelligence (AI).

History indicates that humans find enforced transition challenging to deal with; it takes decades to adjust to Industrial Revolutions properly. There may not be such a long transition period this time around, though, because of the incessant gallop of technology. In modern life, change is the only constant, and the future of work looks more uncertain than ever before.

Developments in automation are continually expanding the span, ability and precision of tasks that machines can do. Concurrently, prices are being driven down, making automatons - who don’t need breaks, holidays, or pensions - increasingly a viable alternative to human labour.

The substitution of routine cognitive and non-cognitive tasks by robots and artificial intelligence will reduce the number of available low - and medium -skilled jobs for people. The resulting gap among the supply and demand for skills required in the new jobs could foreshadow so-called “technological unemployment”.

Riding The Waves Of Change

The aforementioned McKinsey Global Institute report estimates that up to 375 million people will be required to switch occupational categories and learn new skills by 2030 to continue working.

However, in previous Industrial Revolutions new roles have been invented, and many thought leaders argue that automation should complement human labour. Moreover, the combination of man and machine will forge new products, services, firms, and jobs. By taking on the more mundane, routine elements of a job, AI, in particular, will free up humans to focus on the more creative, exciting and motivating aspects. Occupations involving people management, application of expertise and social interactions will be less challenged by machines, which will not be capable of imitating human performance.

Based on the McKinsey Global Institute’s macroeconomic projections, new types of occupations that have not existed before will correspond to 8–9% of the labor demand in 2030. Automation will improve efficiency and productivity, and in turn that should boost economic growth. Supported by continuous innovation and investments, the future economy will be more dynamic, runs the argument.

Globally, the largest number of jobs will likely be automated in the countries with the largest investments in technology, such as China and America. These could refer to industrial robots for production of goods or data-hungry algorithms for the performance of services.

Demographic Displacement

The top-five markets of robot sales in the world are China, South Korea, Japan, the United States and Germany. Led by China and Japan, the number of operational industrial robots will increase from about 1,828,000 units at the end of 2016 to 3,053,000 units in factories, by 2020, according to the European Engineering Industries Association. That figure represents an average annual growth rate of 14%, between 2018 and 2020 and will pave the way to more flexible automation.

As a consequence, these countries are likely to face the most significant displacement of workers, points out the McKinsey Global Institute. Indeed, it is expected that 100 million people will be forced out of jobs in China by 2030, making up 12% of the workforce. Advanced economies like the United States and Germany will see up to one-third of 2030 workforce displacement. Japan will be most vulnerable in relative terms, with almost a half of the 2030 workforce being automated.

People in developed countries will probably be better positioned to benefit from the automation of services. Workers in poorer regions, such as African workers or sweatshop workers in the far east, could be worse off, due to lack of adequate and flexible education systems and access to technology, which will make retraining for new technologically intensive jobs more difficult. Moreover, governments in these countries might not be prepared to understand the implications of the new business models.

Lifelong Learning

In the future, the labour markets will require collaboration and dialogue among businesses, governments, educational institutions and civil societies. Thus, a greater challenge would be ensuring that workers have appropriate skills for the new jobs. This will be necessary in both the developed and developing countries.

Retraining and surviving the transition during a period of potential technological unemployment would require a social safety net. One form of providing protection and adjustment may involve the implementation of a universal basic income (UBI).

In its simplest form, UBI could be paid to every citizen of working age, regardless of employment or social status. As an unconditional social transfer, it would bring numerous benefits to the economy and all of its participants. Before becoming reality, UBI will need a more formal consensus and government approval.

Realising The Potential Of UBI

Considering the time constraints and the impending pressures caused by automation, cryptocurrencies could be a viable alternative to the temporary losses in income during technological unemployment.

Numerous crypto tokens have already been enriching millions of people all over the world, through the infinite power of decentralised blockchains. In addition, the number of regulators developing legislation has been increasing, while mainstream financial institutions have been working on the widespread use of tokens.

Combined, the resilience and growing awareness about the positive potential of cryptocurrencies are already reshaping the global financial systems, amid the biggest wealth transfer in history.

Therefore, if cryptocurrencies can improve efficiency in every industry and replicate most existing business models, it is only a matter of time when they will do the same for UBI. Given the current pace of change, powered by the exponential rise of technological capabilities, a meaningful large-scale UBI solution will be available before we know it - at least that is the hope of a growing number of business leaders, tech visionaries, pioneering politicians, and other luminaries across the gamut of industry.

For more in how UBI can be realised in the 21st century please read this blog.