The 4th IR and the changing patterns of employment: What should Bangladesh do?

The Fourth Industrial Revolution is dramatically changing the pattern of labour demand across all countries. Both developed and developing parts of the world are at risk of losing their comparative advantage.

It seems like the entire system is transforming radically. Many of the mechanically repetitive jobs in advanced countries are already automated.

The exponential growth of computing power and automation is predicted to substitute nearly 50 percent of the US jobs over the next two decades.

The job creation rate is rather not very promising; only 0.5 percent of jobs were created in the new industries in 2000 compared to eight percent and 4.5 percent in the 1980s and 1990s respectively.

This is alarming. Will the Fourth Industrial Revolution create more unemployment in Bangladesh?

History suggests that the technological innovation brought by the previous revolutions created more jobs than they had destroyed.

Theoretically, technological innovation enhances productivity, increases wealth, which then increases aggregated demand for goods and services and creates more jobs to meet up the increased demand. The consequence is that there is a positive effect on the long-run economic growth.

However, the application of a new technology always destructs some jobs in the short run, causing "technological unemployment' as termed first by John Maynard Keynes. The total outcome of this creation and destruction depends on the transition process of the displaced workers.

Policies have a very important role here, in upgrading skills of the displaced workers and supporting them during the transition period.

But the Fourth Industrial Revolution is different compared to the previous industrial revolutions, as this will change the nature of jobs in demand and the change will happen at an unprecedented speed across all occupations.

Automation has already started replacing the jobs that require performing repetitive tasks, mostly by the less and semi-skilled workers. It is anticipated that the demand for the high-income cognitive jobs and the low-income manual jobs will increase.

This would imply an inevitable polarisation in the labour market. As the changes will have profound effects, the governments must take right policies to upgrade their human capital.

Technological change brought by the Fourth Industrial Revolution will require soft skills such as problem solving, interpersonal skills, collaboration, creative thinking, adaptability etc. The education specialists will face serious challenges to develop these skills using the current curricula, pedagogy and the age-old traditional classroom teaching.

What will be the possible impact of this new revolution on the labour market of Bangladesh? Let me give a brief review of the education system first, as education and other human capital play a key role in this context.

Primary, secondary and tertiary are the three major stages of education in the country. The primary has two streams: general and madrasah education. In addition to these two, the secondary has technical-vocational stream, while tertiary has all three streams, including the general education comprising pure and applied science, arts, business and social studies.

The quality of education depends on the quality of the all three stages, as they are inter-related. While basic education serves well in the initial stage of structural transformation (agriculture to industry) of a country (East Asian countries for example), later stages of development require quality secondary and higher education.

Currently, over one third of the population of this country are less than 15 years old, in addition to the fact that we are experiencing demographic dividend. This age group must be prepared with the right kind of skillset required for the 21st century, particularly for the Fourth Industrial Revolution.

The country's current education system is not designed to equip the current and future workforce with the skills most likely they will need in the 21st century.

More importantly, the sector will not be able to absorb all the students. The Technical and Vocational Education and Training (TVET) could be the solution here, which can prepare our workforce for the future.

There are studies suggesting that vocational trainings had better prospects in many students' life compared to the general education system in many countries around the world.

Take, for example, Switzerland. A recent report by the World Economic Forum shows that the country has the most highly skilled workers in the world.

What did Switzerland do? Well, 70 percent of the Swiss secondary school children take part in the vocational education training system.

Finland is another example, which has one of best education systems in the world. High school students there follow national curricula. In addition, they practice "teaching collaboration through internship, active citizenship and social awareness with real world applications".

More importantly, participation in the Fourth Industrial Revolution and achieving the country's long-run economic growth objectives will require a knowledge-based society and a large pool of Science, Technology, Engineering and Mathematics (STEM) graduates, implying that more importance should be placed on higher education.

But this does not mean that the lower level education is less important. Cognitive and behavioural skills of students are developed in pre-primary and primary stage which help them be life-long learners by developing skills such as critical thinking, problem solving etc. at secondary and higher secondary levels.

Hence, in order to take advantage of the Fourth Industrial Revolution, we need to stress on all three stages of education, particularly on tertiary education.

Unfortunately, the current trend is just the opposite. More and more business graduates and less and less science graduates are joining our workforce every year. The passing rate in science subjects in SSC and HSC has declined from 50 percent in 1998 to only 36 and 22 percent respectively in 2018, and that of business graduates increased from seven percent to 25 percent during the same time period, according to the latest statistics of Banbeis.

This indicates that the current education system is creating skill gap that is generating unemployable graduates. High youth unemployment (10.2 percent) is mostly due to the skill gap.

Private sectors are filling up such skill gap by importing foreign nationals, thus raising remittance outflow. Remittance inflow, on the other hand, are not qualitatively increasing, as we export mostly less and semi-skilled workers.

This changed pattern of less and less STEM graduates will create serious labour supply shortage during the Fourth Industrial Revolution. Artificial Intelligence will certainly replace some jobs, resulting in job losses.

If we cannot create a pool of STEM graduates urgently for the operation and maintenance of the Artificial Intelligence applications used in our industries, then either foreign nationals will take those jobs or multinationals will reshore their business for the same reason, both adding to unemployment.

We need to immediately rescale and upscale the current unemployable graduates and the workers who lost their jobs to Artificial Intelligence.

Standing on the threshold of the Fourth Industrial Revolution, we need to focus on our tertiary education now more than ever. The country's human development strategy must be aligned with the need of the Fourth Industrial Revolution as well as the Perspective Plan 2041.

The author is a Professor of Economics at the Department of Economics and Social Sciences, Brac University.