Achieving growth without employment

The issue whether greater automation and mechanisation leads to unemployment on a large-scale is an issue with which nations and societies have been grappling right from the time of Industrial Revolution leading to invention of machines displacing labour. Fortunately till now though there were fears that every new invention would lead to displacement of labour it did not happen on the scale it was predicted and with increased skill levels people are able to turn out better work with better productivity resulting in higher levels of growth and prosperity.

Computers, one of the biggest invention of the last century in the initial stages were feared, with apprehensions of large-scale labour displacement. But on the contrary they have resulted in greater levels of efficiency and the consequential virtuous cycle of development resulting in skill up gradation and higher levels of efficiency. In fact, they have reduced lot of drudgery in the work by performing a number of complicated arithmetic in no time.

Again, the fears of new inventions leading to large-scale labour displacement and consequential unemployment have cropped up with the progress in the field of artificial intelligence and robotics. This time for a variety of reasons the fears look to be genuine.

This is happening at a time when the fruits of development are spreading to more populous countries like India and China resulting in an increase in supply of labour force across the world. Establishment of World Trade Organisation and consequent increased trade across the globe led to International division of labour and manufacturing getting relocated in the Asian countries especially in Southeast Asia and China. It is this labour force which may get displaced with the advancement of Artificial Intelligence and Robotics.

Already there are reports of higher growth levels with higher unemployment levels as well. Increase in growth is not automatically leading to creation of employment. This is happening even before robots are displacing human beings. When that process starts and robots start replacing human beings on the manufacturing floors of the industry the levels of unemployment across the globe can be very high.

With greater growth rates and incomes, some of the more prosperous countries may be able to have a strong social social security network to deal with such high levels of unemployment. But for highly populous countries with low levels of income provision of such a social security network may not be possible. This is bound to lead to major social unrest in those country. Even in the more prosperous countries higher levels of unemployment may have serious social consequences. They may be able to provide for them through a social security network but idle man’s brain will be a devil’s workshop.  

They can go in for reduced number of working days and working hours to contain the problem but even that may have a limitation of its own. At certain stage people would like to work just for the sake of the work and keeping themselves occupied. Though the social security network can provide them a source of income but it cannot keep them gainfully engaged which is equally important to ensure that the extra time available is not misutilised resulting in social problems.

In the not- so- prosperous developing countries this higher-levels of unemployment can result in economic ruin of the families as well as consequential social problems. Fearing such consequences Mahatma Gandhi always was against labour displacing machinery. Companies whose performance is assessed based on the profits will not hesitate to cut down on the labour and employ robots in their place if it works out cheaper. Communism failed because of lack of incentive for work and with its failure the Communist countries suffered political social and economic upheaval. 

Since communism was prevalent only in certain countries damage at that time was limited. Capitalism may fail due to mindless focus on maximisation of profits and for not focusing on creation of employment. Today capitalism is adopted as a framework for development across the globe. The failure of this model to create employment will have serious consequences across nations.