Just transition towards a digital economy

By Rene Ofreneo – December 6, 2018

In the run-up to the G20 Summit in Argentina, the trade unions from the G20 countries held their own “The Summit of the Labor 20”. The L20 Summit came up with a Declaration asking the G20 Leaders to heed labor’s call for new architecture of economic globalization, one that is just, equitable and sustainable.

One of the L20 demands is a call on governments to prepare the workforce for a “just transition to a digital future of work”. This is a popular call because there is so much anxiety among workers all over the world on how the technology revolution or the Fourth Industrial Revolution is “disrupting” or subverting existing jobs and work arrangements.  There are also threats of mass layoffs due to robotization, automation, AI and other technological advances.

The unions seek social dialogue on how technology is deployed without displacing workers, on how social protection can be strengthened in the digital era, and how the circumvention of workers’ rights can be prevented when employers adopt new technologies. They declared: “Rapid technological change requires new regulations and investment in jobs, and a just transition framework to ensure full employment”.

The above issues were the same topics tackled in the recent Asean Regional Tripartite Social Dialogue Conference held in Singapore. The Tripartite Conference, which succeeded in getting the participation of the Asean Services Employees Trade Union Council and the Asean Confederation of Employers, came up with a Declaration stressing the importance of social dialogue and sustained information sharing and consultation between and among the tripartite social partners on the social, economic and labor impact of technological changes. The idea is for the parties “to come up with measures to minimize the pains of disruptions, maximize the gains from technological advances, and share the benefits from such advances for the good of the whole community”.

The above are music to the ears of the trade union movement. The problem is whether Asean governments and employers are prepared to walk the talk, that is, for the parties to sit down and come up with doable or implementable road maps to make the just transition happen. For the reality is that just transition entails a number of just transformation measures, at the national as well as industry and firm levels.

At the national level, just transformation would involve an  unavoidable review and re-assessment of the existing industrial development blueprint. For example, there is so much emphasis being given by the DTI on increased Philippine participation in the global value chains (GVCs) in electronics, auto parts and so on. The Philippine participation has always been at the low end or low-value-adding segments of the GVCs, mainly in the labor-intensive assembly of GVC parts or components. With automation and robotization, the threat of job displacements in these industries in the foreseeable future is very real.  In fact, some economists have already coined a word for what is likely to happen – “re-shoring”, meaning industrial work outsourced to developing countries in the name of the GVCs can be brought back to the home countries of the GVC players, the multinationals from Europe, America and Japan.

As pointed out in an earlier article, re-shoring is now a viable and realistic option to the MNCs. This was amply illustrated by the action of Adidas of Germany. This shoe manufacturer used to have a giant factory in Novaliches.  This was closed down due to an industrial strike staged by the KMU in the 1980s. Adidas then transferred part of its production to China. But last year, Adidas announced it is now able to operate, profitably, a factory in Germany and a new plant in America. According to some informants, Adidas, through the 3D technology, is able to manufacture shoes on demand, meaning it can produce a pair of shoes based on a customer’s wishes (design, color, etc.) and deliver the order within two days.

The re-shoring threat also applies to the call center/BPO sector. One informant manager informed this writer that jobs in the call centers, not so much in the higher-value-adding BPO segment, are likely to decline, by as much as 50 percent in five years, due to advances in AI-assisted interactive communications, DIY instruments and various types of software automation.

Should we then fold our arms and wait for a job Armageddon?

The answer is a clear No. But our government officials, along with their industry and labor partners, should get their act together. They should go beyond discussing, sometimes endlessly, what is the Fourth Industrial Revolution and what are the threats to jobs and businesses the said Revolution poses. There should be doable and actionable road maps. Along this line, one can learn some pointers from Singapore.

Alerted some years ago that its industries are highly vulnerable to the disruption impact of the technology revolution that is rolling all over the world, the Singapore government undertook a series of consultation meetings with industry and the National Trade Union Congress. The tripartite parties came up with a number of readiness programs.

At the center of Singapore’s comprehensive readiness program is the Future Skills for Digital Workplace (FSDW), a program which provides skills upgrading opportunities to adult citizens, employed or retired, complete with training allowances and a well-researched menu of training modules. The program, now running for at least two years, helps individual workers understand the emerging technologies, how they impact work, how to collate and interpret data, and how to adopt a positive mindset for change and innovation. The program is also beamed at employers, especially the SME players. They are oriented on how to understand and manage technological changes at the workplace and how to take advantage of opportunities in the cyber era.

The FSDW is fully budgeted. Every interested Singaporean is given the opportunity to upskill himself/herself regardless of his/her employment status, meaning he/she can be prepared to pursue a possible alternative future career. In short, no one need to worry if he/she loses a job because there is an opportunity for a second career path.

On the other hand, should there be displacement  in an industry due to technological change, the Singapore tripartite system is always there to discuss problems in a proactive and constructive way.

At any rate, the question being raised by this article needs some answers from the policy makers: Does the Philippines have a realistic, doable and people-centered transition program towards a digital future?

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