Gojek ride-share service provides transportation, courier, food delivery and shopping services in Indonesia (Dimas Ardian/Bloomberg via Getty Images)

Embracing digitalisation

Investment in reskilling can bridge the digital divide.

Hilman Palaon

11 August 20235 min read

A recent study by the World Economic Forum (WEF) looking across 46 countries estimated that 83 million existing jobs will no longer exist within five years. The reason? Rapid transformation because of digitalisation. But the process is not zero-sum. The study also found that 69 million new jobs will be created.

A net reduction of 14 million jobs may be only 2 per cent of the 673 million jobs assessed in the WEF study, but it will be a very real consequence for those losing work. And as existing jobs are overtaken, the replacement positions will likely require skills and qualifications that might not be readily available in the current workforce. Unaddressed, the impact will be far worse and the ability of society to harness the full benefits of new technologies will also be far less.

There are significant potential upsides to the technological revolution, particularly as the world confronts an additional transformation brought about by climate change.

This means that urgent, comprehensive strategies are needed to address the potential negative impact of digitalisation and automation on employment. Otherwise, the problem will manifest in the significant churn in the global labour market.

There are significant potential upsides to the technological revolution, particularly as the world confronts an additional transformation brought about by climate change. Digital advancements are reducing the need for traditional administrative tasks, for example, with a notable trend in the decline of clerical and secretarial roles. Conversely, the fastest-growing job sectors are those directly linked to digitalisation as well as sustainability and renewable energy. The rise of artificial intelligence (AI), automation, and data-driven technologies has created a demand for professionals skilled in these areas, focusing on innovation, efficiency, and environmentally conscious practices. These emerging fields will be essential in shaping the future workforce to combat climate change. And they are positions that tend to attract higher wages.

Nevertheless, digital technology's potential risks and ethical implications demand careful consideration as automation replaces jobs, privacy becomes compromised, democracy faces new threats, and inequality widens.

MUMBAI, MAHARASHTRA, INDIA - 2023/08/08: A customer (R) checks laptops kept on display at Vijay Sales electronic store. Sale of laptops have surged at electronic stores and e-commerce website due to fears of an increase in the price and shortage in availability of products after the government announced licence requirements for the import of laptops, tablets, personal computers (PC) and servers from 1st November 2023. Shipments will be cleared without licence requirement until 31st October 2023. (Photo by Ashish Vaishnav/SOPA Images/LightRocket via Getty Images)

The rise of artificial intelligence, automation, and data-driven technologies has created a demand for skilled professionals in these fields. Sales of computers surged in India after the government announced licence requirements from 1 November 2023 (Ashish Vaishnav/SOPA Images/LightRocket via Getty Images)

Investing in reskilling and retraining workers is essential for adapting to technological changes. Germany’s dual vocational training system is a successful model, with employers, trade unions, and the government collaborating to tailor education to industry demands. As a result, Germany maintains a strong and competitive manufacturing sector, resilient amid technological disruptions. In contrast, the United States serves as a warning, as neglecting technological advancements led to the decline of its manufacturing industry, causing job losses and economic difficulties in various regions.

The right strategy lies in embracing innovation while ensuring that humans continue shaping technology to best serve societal interests. As a new book Power and Progress by Daron Acemoglu and Simon Johnson argues, it is critical that humans retain full control over the use and direction of emerging technologies, to ensure they align with values and create a world that benefits all.

In developing nations, the gig economy has been fuelled by the growth of digital platforms such as ride-hailing, food delivery, e-commerce, and freelancing.

That’s where politics and geopolitical competition invariably enter. Throughout history, powerful countries have shaped the world at times of major change. The nations of Western Europe and China played crucial roles in shaping civilisations through agricultural advancements. The Industrial Revolution, led by Britain and the United States, brought transformative manufacturing, transportation, and urbanisation. In the modern era, the United States and China have taken the lead in the digital revolution, reshaping the contemporary global landscape. The rapid economic growth witnessed in China, Taiwan, and South Korea was facilitated by the effective use of new technologies.

The fears surrounding AI-driven automation are valid, particularly around job losses. But historical evidence shows that technological advancements have consistently led to new opportunities and industries. Embracing AI and investing in upskilling and reskilling programs will allow the workforce to adapt in this evolving landscape.

And recent US job satisfaction surveys highlight that workers are experiencing higher levels of happiness and job satisfaction than they have in decades, attributed to the impact of digital technology on work arrangements. Hybrid and remote work arrangements enable workers to achieve a better balance between their professional and personal responsibilities.

In developing nations, the gig economy has been fuelled by the growth of digital platforms such as ride-hailing, food delivery, e-commerce, and freelancing. A prime example is Gojek in Indonesia. Tens of thousands signed up as drivers in August 2015 and the company reports the number of driver-partners has now reached more than two million. India has also experienced a surge in e-commerce – Amazon India, Flipkart, and Snapdeal have opened up opportunities for small businesses and individuals to become entrepreneurs and reach a vast customer base across the country.

In Kenya, the digital divide is a major concern, where 40 per cent of the total population, and 70 per cent of the rural population, works in agriculture. Farmers still lack access to modern technologies and digital infrastructure, hindering their ability to tap into the full potential of digital solutions. Tailored digital solutions offer significant benefits to farmers. Digital platforms provide real-time market information, empowering farmers to make informed decisions on selling their produce. Remote sensing, GPS, and data analytics enable precision agriculture, optimising input use for higher yields and cost savings. E-commerce platforms connect farmers directly with buyers, reducing post-harvest losses. Digital weather forecasting aids crop planning, irrigation, and pest control, leading to more effective farming practices. Implementing these digital solutions can revolutionise agriculture, enhancing productivity and profitability.

These opportunities from digitalisation do not extend to the entire world, however, so the challenge remains to ensure the largest number of people have the means to seize the chance on offer.

About the author

Hilman Palaon

Dr Hilman Palaon is a Research Fellow at the Lowy Institute’s Indo-Pacific Development Centre. His work focuses on digital economy issues in the Indo-Pacific region, including financial inclusion, economic empowerment, and technology innovation.

Topics

Cyber & technology