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Robots eroding employment prospects in developing economies, says UN

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Increasing utilisation of robotics and automation technologies in developed countries is ruining emerging economies around the world, according to a report by the United Nations. 

A policy briefing by the United Nations Conference on Trade and Development, Robots and Industrialization in Developing Countries, argues that increased use of robots in developed countries erodes traditional labour-cost advantage of developing countries.

The report notes that new technological breakthroughs in computing, robotics and artificial intelligence in advanced economies will result in large numbers of people being made redundant in developing countries. 

“If robots are considered a form of capital that is a close substitute for low-skilled workers, then their growing use reduces the share of human labour in total production costs,” notes the briefing, adding: “Reshoring economic activities to developed countries is one mechanism that could lead to shrinking output and employment in the manufacturing sector of developing countries.

“Developed countries may aim to reshore in order to regain international competitiveness
in manufacturing and stem the decline in manufacturing employment and the polarization of income that is to the detriment of middle class workers.

“Reshoring could turn global value chains on their head, and lead to their decline as a potential industrialization strategy for developing countries.”

Reshoring is an initiative that has been in existence for some time in the US, where concerns about the loss of manufacturing jobs over the past few decades resulted in significant support for President-elect Donald Trump, who said he bring back manufacturing jobs to the US.

This week, Trump spoke to Apple CEO Tim Cook about the possibility of the tech giant locating at least some of its manufacturing operations in the US.

In an interview with the New York Times, it was pointed out to Trump that even if companies located their factories in the US, the jobs may be replaced by the robots.

Trump replied: “They will, and we’ll make the robots too. It’s a big thing, we’ll make the robots too. Right now we don’t make the robots. We don’t make anything. But we’re going to, I mean, look, robotics is becoming very big and we’re going to do that. We’re going to have more factories. We can’t lose 70,000 factories. Just can’t do it. We’re going to start making things.”

However, the UN report points out that “labour-intensive manufacturing in large developing countries with domestic production linkages is unlikely to be reshored to developed countries”.

The UN briefing advises developing countries to “redesign education policies and embrace the digital revolution – this approach should be combined with supportive macroeconomic, industrial and social policies”.