Jobless growth: is China next?

An interesting weak signal from Beijing:

Foxconn, the world’s largest contract electronics manufacturer by revenue, plans to increase the use of robots in its factories 100-fold to 1m within three years, according to Terry Gou, chairman and chief executive. The move underlines the drastic changes China-based manufacturers are forced to make as the country’s unlimited supply of cheap labour is running out […]

Foxconn, which makes iPhones and iPads for Apple and other electronic gadgets for more than a dozen branded vendors, has said before that it will increase automated production. But Mr Gou outlined the scale of the changes for the first time in a speech on Friday at a party organised for workers at its largest plant in Shenzhen.

According to people in the audience, the chief executive said the group currently uses just 10,000 robots, but that number would increase to 300,000 next year and to 1m in three years. The numbers are likely to cause jitters among local governments in China as several provinces have set high hopes on the group, China’s biggest employer, to create jobs for their young people.

If this is an indication of things to come, then it answers one of the questions I wondered about in my 2020 Development Futures report in January this year, in which I speculated on whether we’d see the phenomenon of jobless growth arriving in the emerging economies:

In some developed economies (and especially the US), research suggests that job opportunities are increasingly being polarised into high and low skill jobs, while middle class jobs are disappearing due to “automation of routine work and, to a smaller extent, the international integration of labour markets through trade and, more recently, offshoring”. Meanwhile, data also show that while more women are entering the global labour force, the ‘gender gap’ on income and quality of work is widening between women and men. These trends raise a number of critical uncertainties for employment and development to 2020.

If automation of routine work genuinely is a more significant factor in developed economy job polarization than international trade or offshoring, then the implication is that developing economies may increasingly also fall prey to job polarisation as new technologies emerge and become competitive with human labour between now and 2020. Chinese manufacturing and Indian service industry jobs could increasingly be replaced by technology, for example, and find their existing rates of inequality exacerbated still  further.