By Tresanna Hassanally
Since Donald Trump’s November surprise, article upon article has been written trying to understand Trump voters and their motivations. The dominant and most palatable explanation speaks to the economic disenfranchisement of those in the rust belt who have seen their jobs, particularly in manufacturing, disappear. As the American dream became more difficult to attain and opportunities in the labour market vanished or became increasingly filled with low-income service jobs, these workers have fallen out of the labour force.
The US has seen a steady increase of workers no longer taking part in the labour market since 1980 (from 30% to 37% in 2015), with an accelerated 3.2% decrease in labour force participation since 2006. Developed countries especially face several disruptive changes to their labour markets: an aging population, low birth rates, geopolitical volatility, an emerging middle class in the developing world, and climate change, are just a few.
The loss of manufacturing jobs is the precursor of things to come in a variety of traditional sectors as occupations disappear across the spectrum. While economists search for answers of what has caused the “great decoupling” of total employment and productivity in most technologically advanced countries, a growing number seem to agree that technology has been a determining factor. And its impact is only beginning.
Much of the focus when talking about the shrinking demand for workers has been on manufacturing, but disappearing factory jobs is a global phenomenon. Manufacturing’s peak level of total employment has been declining around the world – with most countries peaking at 13-15%, far below the top (18 – 20% of a country’s labour market) that economists have determined manufacturing must reach to help a country achieve high-income status. While automation may explain much of the job loss, arguably, the move by the multi-national corporations to global value chains, where job functions are dispersed in different geographic labour markets to capitalize on each market’s particular strengths, can account for the diffusion of the sector, signifying that a country can no longer rely on manufacturing to drive its economic growth.
As we enter the fourth industrial revolution, a greater number of traditional jobs are becoming obsolete. The World Economic Forum highlights in their annual Global Challenge Insight Report, this year focussed on The Future of Jobs, an estimated 65% of children starting primary school today will work in jobs that do not yet exist. As technology advances it will continue to expend traditional occupations; clerical, retail and professional fields like medicine, financial services and education all find themselves vulnerable. A 2013 study by Oxford University researchers estimated that 47% of total employment in the US is at risk for computerization; these include the ones one would suspect: transportation and logistics, office and administrative work, and production. Surprisingly, the researchers also found the service sector, which has borne much of the job growth for the last 30 years and is considered key to Canadian economic growth according to Bank of Canada governor Stephen Poloz, has also joined the ranks of increasingly automated fields.
While economists search for answers of what has caused the “great decoupling” of total employment and productivity in most technologically advanced countries, a growing number seem to agree that technology has been a determining factor.
This further automation of low-skilled jobs can only exacerbate a trend researchers have noticed, since automation began in the 1980s – a growing inequality that can be attributed to a polarization of the workforce. The “hollowing out” of jobs in the middle has occurred as computers have increasingly taken over middle-skilled, often middle class jobs like bookkeeping, clerical work, as well as occupations that require repetitive production, like manufacturing. While jobs that are low-skill and low-wage, like restaurant workers, janitors, personal support workers have flourished, these workers are also becoming replaceable. The rise of precarious work plays a role, as companies seek to cut costs. On the other hand, high-wage jobs that require creativity and problem-solving, and usually high computer literacy, have grown in demand. Researchers point out that digital technologies tend to favour superstars, so an individual can earn millions or billions for a technological creation that would eliminate the occupations of countless others.
Andrew McAfee, co-director of the MIT Initiative on the Digital Economy, and associate director of the Center for Digital Business at MIT Sloan School of Management, told the MIT Technology Review in 2013 that the encroachment of technology into traditionally human skills was unprecedented. He continued, “The middle seems to be going away. The top and bottom are clearly getting farther apart.” Technological advances have eliminated jobs before, points out Harvard economist Lawrence Katz to the Review. The industrial revolution and move away from agrarian society saw the proliferation and accessibility of public education in the US, which contributed to an educated workforce that pushed technology forward.
The World Economic forum calls for urgent and targeted action to prepare a workforce with skills that are future-proof; governments that are equipped to handle the growing unemployment and inequality; and, a private sector facing a shrinking consumer base. Training students with transferable, essential skills should be the cornerstone of skills development. As only entrepreneurs’ minds hold the potential for the jobs of tomorrow, equipping the workforce with the skills necessary will need their and industry engagement in skills training. Colleges around the world, and particularly those in Canada, have excelled at developing industry partnerships that benefit their communities and their students.
But, the shocks in the market will not only be felt by the future workforce, they are being felt by the current workforce, as worldwide anxieties grow about unemployment so does the chatter against full employment, as a future without jobs no longer looks hypothetical. Alternatives to work as a source of income are already being investigated, with a number of jurisdictions around the world piloting basic income.
Policymakers face a challenging labour market with its increase in precarious and low-wage occupations, while some workers are not able to be re-trained when they find their careers obsolete. This all contributes to a growing inequality in an increasingly volatile world. And as the election of Donald Trump in the US demonstrates, the instability of the labour market can have surprising consequences that create more geopolitical uncertainty. Responding to the challenge will require commitment by all stakeholders and innovative solutions, but one thing is certain: time is of the essence.
Tresanna Hassanally is a Master’s candidate at the Norman Paterson School of International Affairs, specializing in International Development Policy. She currently works in international education at an international non-governmental organization focused on professional and technical education.