Friday, September 08, 2017

Artificial labour in Jamaica

Putin is recently on record as saying that whoever has a competitive advantage in Artificial Intelligence (AI) will control the future of the world. Elon Musk agrees with him.
Whether or not this will be so (and it does sound logical), what is clear is that the environment for labour is changing. In fact, a recent article suggested that because robots are being used more and more to replace labour, especially blue collar workers, governments should consider making a minimum payment to all their citizens. In other words, a minimum “welfare payment”, which would substitute for the displaced employment caused by robots and AI in the future.

What this onward march of technology means is that, in the very near future, most blue-collar and some white-collar jobs will be replaced by robots and AI. For me it doesn't necessarily mean that there will be no jobs, but that for people to gain employment they would have to be employed in areas that require higher-level thinking.

So recently I purchased, and have been using, a vacuuming robot at home, which can be scheduled to clean the house when no one is there. So even while on vacation the house can be cleaned.

There are also Wi-Fi camera systems that not only allow you to monitor your home from another country, but also allow you to speak through the camera to someone who is in your yard, or in your house, which I also have installed.

But this doesn't mean that you don't need household help or security companies to monitor your house. What it means is that their role changes to more critical and higher-level thinking. So the household worker now needs to understand how to utilise and monitor these house robots, and the security guard must now be familiar with the technology.

Another article pointed to the dominant economies projected for 2050. The similar track for the top 10 was that they all depended on infrastructure development, and very important growing and productive labour. So even in 2050, labour is still being seen as a competitive edge for development.

What must be noted, though, is that labour can only be competitive, and can only raise its value when it is constantly increasing in productivity. But labour can only increase in value, and be competitive, when it is allowed to compete with labour productivity in other countries.

This for me is the biggest impediment that Jamaica faces to our development and competitiveness, which I have been saying for some time.

The fact is that Jamaica's lack of international competitiveness and development is being stymied by our low labour productivity, and has been declining since the 1970s. The only way to increase real labour compensation is by increasing productivity.

However, up to the 2013 IMF Agreement, public sector wages were increasing (in real terms) at a pace faster than productivity. Indirectly also, overall labour compensation has been doled out through government welfare programmes, labour laws, and tax breaks. The result is that products and services do not increase in competitiveness, and as a result labour compensation loses value, resulting in declining standards of living.

If the Jamaican economy is to develop and become internationally competitive, it also means that our labour has to become competitive. Just like in a private sector company, the competitive edge is always labour productivity, such as customer service levels.

But for this to happen, Jamaica must face some facts and address them. The first one is that our policy must recognise that robots will eventually take over and be much more productive in jobs that we cling to for political reasons. These include street sweeping and sugar cane cutting.

This does not mean that we will displace these workers, but rather that we will employ strategies to ensure their training for higher-value thinking jobs, and hence more compensation because of increased productivity.

It also means that we must face the reality that our current labour laws actually end up creating a worse future for labour than the present we are trying to protect.

So I consider the IDT and labour laws major stumbling blocks to productivity, because they allow labour and capital to remain unproductive. This has resulted in more informal labour and less hope of pensions and health benefits accruing to workers.

So eventually the fiscal accounts will be caught with these gaps, which will mean greater taxes in the future.

This is not to say that unions are not relevant in protecting against any advantage being taken of workers, but they must be provided with an environment that promotes productivity and prosperity for their charges.

It is only by taking bold actions to address our present labour and industrial environment that we will begin to see an increase in labour productivity. And if labour productivity increases, then capital and labour compensation will increase. This will in turn increase standards of living.

But this cannot happen with just tinkering at the edge of the problem. Government must take the bold and decisive decision to do so, just as the decision was taken with the ZOSO.

Jamaica's growth and development can only happen when we accept the future of what will develop with labour markets and start to think about how we will make the Jamaican worker more productive, and not rely on “artificially created labour” and short-term impact measures.