Robots, Pariah to FDI

The age of the robots is upon us. Do not take my word for it. It was the think tank McKinsey Global Institute that undertook a study only to conclude 800 million jobs globally would be lost to robots by 2030. That many jobs constitute a third of the planet’s entire labour force.

How this affects politics is obvious. Political candidates will no longer campaign promising job opportunities through this-or-that policies, but how much of taxpayers’ money they will hand out for free. Anti-immigration sentiments, thus,

will unavoidably skyrocket, nativist movements will gain ground, and the world would regress back into intolerance and uncertainty.

Of course, the fact that there would be a repeat of the political dysfunctions that led down the rabbit hole of the Second World War, in one form or another, has not been lost on many. Hence, all those records, the history books and the constant studies, estimates and indicators to gauge just where humanity is heading.

Thus, before beginning to worry about all that doom and gloom, it is necessary to work out ways of mitigating the repercussions of the age of the robots within the Ethiopian growth model.

The Ethiopian growth model has been predicated upon that of, mostly, China. For a government like that of, a double-digit gross domestic growth (GDP), with as many infrastructure projects crammed in between each successive election year as possible, for there needs to be tangible evidence that there is development, has been irresistible.

When it comes to providing job opportunities, the Revolutionary Democrats’ strategies have not fallen very far from that of the Communist Party of China. There are ever more increased efforts to enhance foreign direct investment (FDI), which has at least a couple of benefits. The first is that they are expected to save much-needed hard currency, by reducing imports and improving exports, which is laudable. The other is increased job opportunities for Ethiopians, where the unemployment rate according to the Central Statistical Agency (CSA), stood at 16pc last year.

There is only one snag. Most of the FDI flowing into the country is in the manufacturing sector. And there is no mystery here. Ethiopia is a famous low-cost country (LCC), the primary reason for the overseas companies’ appetite to invest, with a per capita income below 700 dollars.

And this makeup of the labour force is something the government wants to especially exploit. Both China and another LCC, India, have a population whose disposable incomes are growing and becoming less open to the idea of low-paying manual jobs. Thus, investors are increasingly looking to the sub-Saharan region to make up for the labour shortage. The recent labour bill, which endeavours to make the labour market more flexible, is the government’s way of building on the FDI outflow from those countries.

Nonetheless, it is critical to entertain whether the efforts to draw in FDI with the labour market taking the front seat is foolhardy.

In what has been dubbed the ‘Fourth Industrial Revolution’, the digital age, where computers become sophisticated by the day, more jobs than ever will be lost to machines. And most of these jobs will come out of the manufacturing sector.

Humans are still more creative than robots, yet. We have that added ability to adapt, work our way through obstacles and show initiatives. But, robots are already better than us at doing jobs that are routine and involve repetition, such as manual factory work like packing and labelling. As time goes on, fewer people would be present at a manufacturing plant.

Consequently, it will become nonsensical to market low-cost labour when developed countries offer no-labour.

Ethiopia would no longer be able to compete in terms of a flexible labour law because no amount of it could beat a robot that does not request a raise, an annual or maternity leave, or even ever quit. As tech becomes less expensive than cheap labour, companies would unavoidably prefer to stay back home; that way they could also save on shipping costs.

The better antidote would be to try and lure investors through a business-friendly tax regime, better provision of telecom and transportation, smoother public administration and political certainty to ensure long-term investment prospects. All of this, though, will need a lot more courage and ingenuity in resource allocation than current policymakers are willing to risk.

The Mckinsey study has added that not all hope is lost. A job, at the end of the day, is a job and could be replaced by another. The difference here is that most people will have to be retrained for another trade. Robots may make some jobs obsolete, but they will create other opportunities, perhaps as technology specialists.

And to ensure Ethiopians will have jobs in the second half the current century, there is no other place we should look to than the education system in the country.

Most of the university graduates are not fit for today’s jobs, let alone for that of the future’s. Upon joining the workforce, they typically require much training as classroom courses are too theoretical for the reality on the ground. More damningly, higher learning institutions of the country do not reward creativity and initiative. They are inflexible – viciously intolerant to unorthodox thinking.

Within this environment, a youthful population could never be ready enough for a digital age where job opportunities will narrow and competition will increase. The Swedish and the Swiss can dabble with the idea of universal welfare, but that is not idyllic for a country with low productivity, low resources and too many people. The growth model has to be updated. There needs to be every effort to encourage entrepreneurship and make the economy more competitive, and not just through labour. Otherwise, the future appears bleak.

By Christian Tesfaye
Christian Tesfaye ( is Fortune's Op-Ed Editor whose interests run amok in both directions of print and audiovisual storytelling.

Published on Dec 09,2017 [ Vol 18 ,No 919]



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