Artificial Intelligence, Automation & Jobs

• Cars that drive themselves, machines that read X-rays, and algorithms that respond to customer service inquiries are all manifestations of automation. These technologies increase productivity and improve our lives, their use will substitute for some work activities humans currently perform has sparked much public concern.
• Technology destroys jobs, but not work. Automation adoption could be a powerful productivity booster.
• More than 60% of occupations have at least 30% of constituent work activities that could be automated. Less than 5% of occupations can be fully automated. It will also create new occupations that do not exist today, much as technologies of the past have done.

• About 15% of work activities could get automated by 2030. Advanced economies would get more effected by automation reflecting higher wage rates and thus economic incentives to automate.
• Even with automation, the demand for work and workers could increase as economies grow fueled by productivity growth. Rising incomes and consumption in developing countries, increasing health care for aging societies, investment in infrastructure and energy etc will create demand for work that could offset the displacement of workers. Additional investments in infrastructure and construction could be needed to reduce the risk of job shortages in advanced economies.
• By 2030, 75 million to 375 million workers (3 to 14% of the global workforce) will need to switch occupational categories. Displaced workers are unlikely to get jobs if idle for more than an year. If their transition to new jobs is slow, unemployment could rise and dampen wage growth.
• All workers will need to adapt increasingly capable machines which require higher educational attainment, spending more time on activities that require social and emotional skills, creativity, high-level cognitive capabilities and other skills relatively hard to automate.
• Automation will enable growth of high wage jobs in advanced economies while middle-wage jobs might decline. Automation will spur growth of middle wage jobs in emerging economies mostly in construction and service sectors which further boost the emerging middle class.
• The benefits of automation will be vast but addressing worker transitions is imperative by business and political leaders. Economies that are not expanding do not generate job growth. Mid career job training and worker redeployment will become essential. The priority is strengthening transition and income support for workers caught in the crosscurrents of automation.
• This job gained could more than offset the jobs lost to automation only if businesses and governments seize opportunities to boost job creation and for labor markets to function well.
• Technical feasibility of automation is important, other factors such as cost of developing and deploying automation solutions for specific uses in the workplace, the labor market dynamics, the benefits of automation beyond labor substitution, and regulatory and social acceptance will influence the pace and extent of automation adoption.
• In the US, the agricultural share of total employment declined from 60% in 1850 to less than 5% percent by 1970, while manufacturing fell from 26% of total US employment in 1960 to below 10% today. China’s one third workforce moved out of agriculture between 1990 and 2015. Yet overall employment grew. Such shifts can have painful consequences for some workers during the transition period that could be eased only after policy reforms.
• Robust aggregate demand and economic growth are essential for job creation. New technologies have raised productivity growth, enabling firms to lower prices for consumers or pay higher wages. This stimulates demand across the economy, boosting job creation.
• Rising productivity is usually accompanied by employment growth thus creating demand for goods and services across the economy. 
• Productivity growth enabled by technology has reduced the average hours worked per week. Across advanced economies, the length of the average work-week has fallen by nearly 50% since the early 1900's.
• Although the historical record is largely reassuring, some people worry that automation today will be more disruptive than in the past. If technological advances are adopted rapidly, the rate of worker displacement could be faster. If many sectors adopt automation simultaneously, the percentage of the workforce affected by it could be higher.
• Automation will have a lesser effect on jobs that involve managing people, applying expertise, and those involving social interactions, where machines are unable to match human performance for now.
• Jobs in unpredictable environments such as gardeners, plumbers, or providers of child and elder care will also see less automation by 2030, because they are difficult to automate technically and also command lower wages, which makes automation a less attractive business proposition.
• Automation displacing labor is clearly visible but it is difficult to envision all the new jobs that will be created as most new jobs are created indirectly and spread across different sectors and geographies.
• Global consumption grows as incomes rise and consumers spend more and their spending patterns also shift, creating more jobs in the countries where the income is generated, but also in economies that export to those countries. 
• People aged above 65 years could grow by 300 million, by 2030, and their spending will increase on health care and other personal services. This will create significant demand for doctors, nurses, health technicians, home health aides, personal care aides and nursing assistants but reduces demand for pediatricians and primary school teachers. 
• Jobs related to developing and deploying new technologies may also grow. Overall spending on technology could increase by more than 50% between 2015 and 2030. The number of people employed in these occupations is small but they are high-wage occupations.
• Rising incomes also create demand for more and higher quality buildings. Both factors could create new demand, mainly in the construction sector. These jobs include architects, engineers, carpenters and other skilled tradespeople, as well as construction workers, machinery operators and other jobs with lower skill requirements.
• Advanced economies may also see employment declines in occupations that are most susceptible to automation. These include office clerks, office assistants, finance and accounting, customer interaction jobs, cashiers, food service workers, and a wide range of jobs carried out in predictable settings, such as assembly line workers, dishwashers, food preparation workers, drivers, and agricultural and other equipment operators. Helping individuals transition from the declining occupations to growing ones will be a large scale challenge.
• The changes in occupational growth or decline imply that a very large number of people may need to shift occupational categories and learn new skills in the years ahead. The challenge in advanced economies will be to retrain mid career workers. There are few precedents in which societies have successfully retrained such large numbers of people. Frictions in the labor markets including cultural norms regarding gender stereotypes in work and geographic mismatches between workers and jobs could also impede the transition.
• Between 400 million and 800 million individuals could be displaced by automation and need to find new jobs by 2030 around the world. However people will need to find their way into these jobs. Of them, 75 to 375 million may need to switch occupational categories and learn new skills. 
• China faces the largest number of workers needing to switch occupations if automation is adopted rapidly. For advanced economies the share is much higher - up to one-third of the 2030 workforce in the US and Germany, and nearly half in Japan.
• History suggests that over time, labor markets adjust to changes in demand for workers from technological disruptions, although at times with depressed real wages.
• With sufficient economic growth, innovation, and investment, there can be enough new job creation to offset the impact of automation, although in some advanced economies additional investments will be needed to reduce the risk of job shortages.
• Future jobs lost and jobs gained vary by country, with the largest disruptions expected in advanced economies.
• Higher wages make the business case for automation adoption stronger. Some economists worry about “premature deindustrialization” in developing countries due to automation.
• Economic growth is essential for job creation. Economies that are stagnant or growing slowly create few new jobs. Countries with stronger economic and productivity growth and innovation will be expected to experience more new labor demand.
• Countries with a rapidly-growing workforce, such as India, may enjoy a “demographic dividend” that boosts GDP growth, if young people are employed. Countries with a declining workforce need automation to offset their shrinking labor supply, while countries with growing work forces have greater job creation challenges.
• India, a fast-growing developing country with modest potential for automation over the next 15 years due low wage rates. Most occupational categories are projected to grow reflecting its potential for strong economic expansion. However, India’s labor force is expected to grow by 138 million people by 2030, or about 30%. Employing these new entrants in formal sector jobs will require job creation on a much larger scale than in the past. Automation will make this challenge more difficult; some fear “jobless growth.” However analysis suggests that India can create enough new jobs to offset automation and employ new entrants, if it undertakes the investments.
• China and Mexico have higher wages than India, and so are likely to see more automation. Mexico’s projected rate of future economic expansion is more modest. Like the United States and Japan, Mexico could benefit from the job creation in new occupations and activities to make full use of its workforce.

With inputs from:

Transitions in a time of Automation

In coming years 'Automation' in many predictable activities is inevitable in India, its immediate impact on our 4 million IT work force is tremendous. 65% of existing IT employees are not re-trainable and will end up losing their jobs sooner or later. To over come impact of automation it is necessary to retrain our workforce but also create new jobs. But our track record in new job creation is dismally low. Today our economy is facing 'jobless growth' which is neither sustainable nor desirable. Due to Automation, job losses would be local where as new job creation would be any where in the world. New investments, infrastructure spending and construction requires higher budgets otherwise widespread unemployment is imminent. Unless agriculture is made remunerative and vibrant, migration of rural labour to urban localities in search of livelihoods will continue unabated and is destructive for our economic progress. Vibrant economies will easily adjust and derive benefits of 'Automation' but struggling economies like India will see painful disruption and deindustrialisation.

Vikas gando thayo chhe (Gujarat development gone berserk)

Man telling his curious friends that he is "looking for vikas"

Viral social media campaign on poor infrastructure has the party worried ahead of polls

The much vaunted ‘Gujarat model of development’, once the poster-child of economists, has “gone crazy”, according to the top trending hashtag on social media. With State elections barely two months away, the ruling BJP is worried.

Over the past two weeks, witty posts, satirical memes, and audio-visual capsules — all with the Gujarati hashtag, ‘vikas gando thayo chhe’ (‘Development has gone crazy’) — have gone viral on Twitter, Facebook and WhatsApp. Mostly shared by youngsters, it has turned into a trending social media campaign that has put the ruling BJP on the defensive.

The campaign began spontaneously after the monsoon rains that left potholes in roads across the State, including in cities such as Ahmedabad, and the government’s claims about smart cities and world class infrastructure took a beating. Soon, people started sharing photographs or video clips of caved-in roads, decrepit State transport buses, roadside garbage dumps, flooded streets, and figures of swine flu-related deaths, all tagged with the catchy ‘vikas’ punch line.

Sensing an opportunity, the Congress party’s social media teams latched on to the campaign. As the phenomenon became a talking point across age groups, Gujarat Chief Minister Vijay Rupani responded by blaming the Congress. “Those who are saying ‘vikas gando thayo chhe’ have themselves gone crazy,” he said. Recently, party president Amit Shah felt compelled to ask the State’s youth not to “fall prey to anti-BJP social media campaigns.”

However, many BJP leaders admit that they are unable to counter the forceful social media posts on fuel price hikes, high GST rates, and job losses.

“This campaign is a huge success. Even BJP supporters are forwarding these posts,” said Saral Patel, a Congress social media volunteer.

Though the Congress social media team has taken credit, the phrase “Vikas gando thayo chhe” is attributed to 20-year-old Sagar Savalia, a civil engineering student and member of the Patidar Anamat Andolan Samiti which leads the Patidar quota agitation.

“On August 23, I received some photographs of a dilapidated State transport bus. I forwarded them with the line, ‘Stay Away! Vikas has gone crazy in Gujarat’, and it went viral,” Mr. Savalia told The Hindu.

Modi & co will not learn lessons on their own. They must be dumped into garbage. Otherwise they will destroy the nation beyond recognition with their funny adventures. They don't know how to rule a nation democratically. The present 5.7% GDP growth if corrected with low oil regime benefit and fudging economic data with new parameters, the real GDP growth will be less than 2% and massive job losses indicates economic collapse of nation!

Low inflation is an anemic economic condition

• Low inflation at 2.28%, IIP at 3.12% is due to low food prices and only indicates anemic state of economy which is unable to produce more and spend more. There is  no need to greet 'low inflation' with a hurrah, which is a symptom of ailing economy.
• Modi administration has laundered away savings due to low oil prices on his mindless adventures in the name of reforms.
• Make in India campaign without any ground work has deindustrialized India and our economy dependent on Chinese imports so much like never before.
• Low food prices and low consumption has not increased the consumption pattern. Low consumption is injurious to market economy and indicates declining economy.
• Farmers are on street agitation due to prices not even covering production expenses.
• Low crude oil prices for last three years even though good for consuming countries like India is destroying economies of oil producing countries.
• RBI's higher interest rates and not cutting them are not indicative of inhibiting expenditure and holding back consumption. It is weak demand that is culprit.
• Higher inflation within a band is preferable, because it means economy is moving and sputtering.
• It is Modi & BJP's failure to spur growth even after three years. Blaming predecessor doesn't work beyond two years.
• The over publicized 'demonetization' has failed to achieve any of its stated objectives but has jolted informal sector which operates on cash that brought its economy to its ominous halt. What ever good it may do in long term, demonetization has proved to be painful and disastrous in short term.
• The other big decision of Modi administration is uniform GST rate across nation, w.e.f. July 1, 2017, is supposed to improve tax compliance and governments will be able to spend more money on infrastructure and enable people to produce more, sell more and buy more and will result in economic growth. Paradoxically, benefits might come only in long term but its devastating short term effects are to be coped with by our already ailing economy. The transition to GST and its impact on lower tax compliance might persist over an year. 
• There is hardly any activity on ground. Economy needs a push. GST is going to be a speed breaker rather than a stimulus at least during first year. It is not going to energize our economy, which at the moment is going nowhere.
• Low inflation, low growth, demonetization and GST are aggravating the already bleak situation and when economy will become better is a million dollar question? In the meantime, how many will vanish or perish?

Inflation is taxation without legislation ... Milton Friedman
Inflation effectively transfers wealth from savers to borrowers.

The government will always tell you that it wants low inflation. 

The real issue is the horizon over which to bring inflation down ... Raghuram Rajan

My View:

Low inflation and low growth are features of rich & developed nations. Their economy is largely dependent on consumption. Yet they grow rather slowly. For a developing nation like India with considerable infrastructure activity, higher inflation rates within a band is necessary for good growth associated with job creation. Here, RBI's primary role is to contain inflation within the band by managing interest rates and bank's CRR & SRR ratios. India with 40% people below poverty line and half of the population without personal latrines, low inflation and low growth regimes are undesirable. Modi government resorting to high speed & high risk financial reforms only to please rating agencies and foreign financial institutions, indicates his lack of understanding of the ground realities and exposes his incompetency as a sound economic manager. Today, instead of creating a million jobs every month, reckless Modinomics resulted in deindustrialization, exorbitant Chinese imports, loss of millions of livelihoods in informal sector is what he has done so far. Modi must realize that perpetual promises and blaming predecessors work well during initial years only but not during fourth year. Prolonged low inflation resulted in agriculture becoming a loss making activity and with no support from government, farmers have taken to streets. GDP growth with  job losses is an astonishing feature of Modi's achievement. Pep talk & unsubstantiated publicity won't do any trick.