Does Technology Boost Resilience or Inequality?
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- Published: September 1, 2020
COVID-19 as a global technology stress test
- The COVID-19 global lockdown triggered an unprecedented experiment in remote work and service delivery, demonstrating technology's role as a resilience factor for the global economy.
- Examples of resilience enabled by technology:
- IMF officials working remotely approved more than 70 emergency loans in three months.
- Traders continued to buy and sell stocks from mountain cabins.
- Videoconferencing and cloud services enabled dispersed teams to remain productive.
Telework and digital divides
- Key statistics on telework and access:
- Half of the US labor force has been working from home amid the COVID-19 onslaught, up from 15 percent previously.
- 58 percent of households in Brazil don’t even have a computer, according to a 2019 report.
- Recent IMF research indicates that fewer than half of people in developing economies have internet access.
- One IMF paper estimated that 100 million people in 35 advanced and developing economies are at high risk of layoffs or pay cuts because their jobs can’t be done remotely.
- International Labour Organization researchers estimated that fewer than one in five workers worldwide are in occupations and live in countries with the infrastructure needed for effective working from home.
- In North America and western Europe, the proportion is 1 in 3.
- In sub-Saharan Africa it is 1 in 17.
Automation, jobs, and "destructive creation"
- Observations on automation and labor markets:
- The pandemic did as much damage to employment in a few weeks as automation was expected to inflict over decades, according to Daniel Susskind.
- Traditional "creative destruction"—innovation destroying some jobs but creating others—may not produce matching jobs in location or skill, and labor mobility is lower than believed.
- Automation is widely viewed as a major factor behind massive destruction of manufacturing jobs in recent decades in countries such as the United States.
- Susskind argues that AI accelerates machines’ ability to outperform humans in more tasks: “Machines will not do everything in the future, but they will do more.”
- Professions requiring social intelligence and face-to-face interaction grew 12 percent as a share of the US workforce between 1980 and 2012, but those same jobs have become highly vulnerable during the pandemic.
Sectoral examples: labs, health care, retail, and offices
- Laboratory automation and AI:
- A University of Liverpool chemistry lab machine programmed with AI can work 22 hours a day and once carried out more than 600 tests in eight days; the machine complements researcher work but may make one or more lab assistants redundant.
- KUKA mechanical arms can sort blood samples in Denmark and speed COVID-19 tests in the Czech Republic, mixing reagents faster and more precisely than humans.
- Telemedicine:
- In the United Kingdom, only 1 percent of general practitioner appointments were remote before the pandemic; after it hit, that share soared to 90 percent.
- In the United States, one health insurer reported that online appointments jumped from 10,000 a month before the pandemic to 230,000 last April—in only one state.
- Regulatory changes (e.g., allowing doctors to bill online appointments the same as physical visits, and removing patient location requirements) facilitated rapid adoption.
- Transition to telehealth likely reduces demand for nurses, receptionists, technicians, and managers in some settings.
- Retail and offices:
- Increased e-commerce disadvantages physical retailers; Nestlé reported recently that online demand for coffee pods increased 30 percent with the pandemic.
- The long-term fate of offices is uncertain: benefits of remote work (flexible hours, less commuting, broader hiring pools) are weighed against risks such as cybersecurity (more people on unprotected domestic networks increase the so-called attack surface) and impacts on cities and local services (hotels, restaurants, shops).
Policy implications and recommendations
- Short-term government actions:
- Spend more to help companies keep current employees.
- Expand training and facilitate rehiring to reduce displacement from technology and the pandemic.
- Long-term priorities:
- Invest in education and broader internet access to enable digital inclusion and translate it into economic inclusion.
- Make inclusiveness a priority so innovation creates new growth and boosts productivity rather than deepening exclusion.
- Broader considerations:
- Economies must make technology work in their favor through policy choices; governments will face a tall order, especially in emerging economies still struggling with basic needs.
- Regulatory and social protections can temporarily suppress incentives for automation; once protections expire, incentives may be unleashed again, potentially accelerating automation.
Does Technology Boost Resilience or Inequality? – IMF F&D
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- ¿Para bien o para mal? ● Finanzas y Desarrollo ● Septiembre de 2020
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- Does Technology Boost Resilience or Inequality? – IMF F&D