LABOR REFORM AND FOURTH INDUSTRIAL REVOLUTION - IDESA


Informe Nº: 06/02/2018

LABOR REFORM AND FOURTH INDUSTRIAL REVOLUTION

Throughout history, humanity has experienced deep changes in the organization of its production processes. In the latter part of the eighteenth century, the use of steam energy and mechanization created the first industrial revolution. Towards the end of the 19th century, mass production based on electricity and the division of labor generated the second industrial revolution. In the second half of the 20th century, electronics and information technologies generated the third industrial revolution. Nowadays the fourth revolution is being driven by robotization, digitalization and artificial intelligence.

In all cases, there were disruptions: many jobs disappeared and new ones, with different characteristics, were created. The particularity of the current situation, and the one projected for the next years, is the greater speed with which the changes are propagated by the context of a deeper globalization.

Are the labor institutions ready for these challenges? According to the World Bank’s Doing Business rigidity of employment index, Argentina has a score of 21 between 0 and 100, where greater value implies greater rigidity. Among the advanced countries, this same index yields the following rigidity measures:

  • In Denmark it is 7 out of 100.
  • In Canada it is 4 out of 100.
  • In Australia it is 0, being the country with the most fluid labor regulations.

These data show that advanced countries, with proven concern for the protection of workers and good working conditions, have labor rules that give much more fluidity to employment than the Argentine legislation. In the Southern Cone, this same index for Chile and Uruguay shows a value of 18 out of 100 for each. Among the advanced countries with more rigid labor institutions appear Germany and France with scores of 42 and 52, respectively. Due to this high rigidity, it is projected that in these countries new technologies will be applied with greater speed and impact, generating a faster destruction of traditional jobs.

As it happened with the previous revolutions, the fourth industrial revolution will not imply the end of employment. This is so because robotization, digitalization and artificial intelligence come with a huge increase in productivity, income growth and, associated with it, a massive generation of new jobs. Robots and computers can do a lot of activities that humans have been doing until now. But in parallel, new demands will occur in activities that need only human intervention. These are the jobs that require sensitivity, warmth, empathy, humor, sociability, leadership and, obviously, technological capabilities.

The discussion on the labor reform should take as a central point the challenges posed by this disruptive technological change. Pointing out how many “labor rights” are lost in comparison to the current legislation is irrelevant because sooner or later the new technologies will eliminate them merciless. On the contrary, the most effective way to promote labor protection and more quality of life is to put the energies in modernizing the labor institutions so that the transit of workers to new jobs is more fluid and less traumatic. There must be innovations in legal figures to facilitate the creation of jobs under the new technological environments, to de-bureaucratize and establish mechanisms that do not block the exit of workers from jobs in extinction, but to protect them help them in the transition to the new jobs.

Trying to stop the effects of new technologies by clinging on to old labor legislation could be political attractive, but socially damaging. Facing the inevitable destruction of many traditional jobs due to new technologies, the labor reform should be the opportunity to make this process less traumatic and faster generating of new opportunities.

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