Figure of the week: May Day and the future of labor in Africa

May Day, a public holiday in place to celebrate workers’ rights, is celebrated on May 1. With the notable exceptions of Canada and the United States, May Day often serves as Labor Day throughout the world. As countries celebrate this day, many reflect on future of work—and largely the role automation will play in it. Development experts are presently working to uncover mechanisms to boost structural transformation and increase the role of manufacturing in job creation. Meanwhile, many maintain that automation may threaten these efforts toward industrialization and their potential progress. But are these fears realistic?

During last month’s spring meetings, World Bank President Jim Kim warned that automation will eliminate two-thirds of the jobs that presently exist in developing countries. Kim is unsure of the timeline, but stated that automation is a bigger threat to job creation than free trade. In December 2016, the Oxford Martin School, in collaboration with the financial institution Citi, published a report titled, Technology at Work V2.0, The Future Is Not What It Used to Be, which explores the meaning of a rapidly changing technological landscape for the future of work. The report finds that 47 percent of U.S. jobs are at risk of automation. This figure is even higher for developing countries: For example, in Ethiopia, 85 percent of jobs are at risk.

The figure below, extracted from the January 2017 publication of Foresight Africa, gives the respective figures for a number of African and non-African countries. Developing countries seem more at risk of losing jobs to automation overall than OECD countries. For instance, in Angola, Ethiopia, Thailand, and Bangladesh, over 75 percent of jobs are susceptible to automation, against 55 percent in OECD countries. However, the narrative becomes optimistic when the data accounts for adoption time lags. For example, under the time lag, only 45 percent of employment in Ethiopia is susceptible to automation. In OECD countries, by contrast, the figures change much less. In fact, factoring in the time lag, some African countries actually fare better than the OECD ones. Indeed, the large technology adoption time seems to work in favor of Africa’s labor force, though many African jobs are still under threat.

In 2015, the services sector made up 58 percent of GDP in sub-Saharan Africa. Conversely, the manufacturing sector made up 10 percent of GDP. As noted above, the relatively small share of jobs in manufacturing is being threaten by automation. Experts have warned against Africa’s leapfrogging from the agriculture service to the manufacturing sector, thus preventing the growth of the manufacturing sector and its potential absorption of moderately skilled workers. With automation now threatening to eliminate manufacturing jobs, the future of Africa’s structural transformation is uncertain. Moreover, the services sector, on which the African economies are increasingly dependent, is not immune from the dangers of automation. With the proliferation of internet usage, the services sector is increasingly susceptible to losing jobs to automation. Nevertheless, the situation is not necessarily dire, as slow adoption of advanced technology and lower wages may just stave off automation and its resulting job displacement in developing countries.