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Wednesday, 08.05.2024, 19:34
Modern complex social problems: robotics, basic income and safety nets
Recent “Social Summit for Fair Jobs and Growth” (17-20
November 2017 in Gothenburg, Sweden) concluded the second stage of European
states’ efforts to find a solution to urgent labour market’s issues. For
example, in 2016, just below 40% of employed people in
the EU were in non-standard employment or self-employed, half of whom are at
risk of not having sufficient access to social protection and related employment services, according to estimates
In modern changing labour market, new forms of work are
emerging and people change more frequently between jobs and employment
statuses. The share of non-standard employment and self-employment is
increasing in the labour market, especially among young people. Due to their
employment status, persons such as those in non-standard employment and
self-employment have insufficient access and are, as a consequence, exposed to
higher economic uncertainty and lower protection against social risks.
Making the most of the future, the Commission is asking the
opinion of the social partners by launching the second stage of the social
partner consultation. The social partners now have seven weeks to let the
Commission know if they are willing to negotiate. In parallel, a wider public
consultation is also open to collect the views of all relevant stakeholders
such as public authorities, companies, the self-employed, platform workers and
the civil society.
Robotics’ threat
Leading economists
in the world have already pointed out at all sorts of automation’s threats to
employment and humans’ lives. And so did political elites at the 2016-Davos’
forum arguing about the 4th industrial revolution with robotics, big
data and artificial intelligence’s effect.
Robotic is
becoming a major issue; one of the first studies in the US have “quantified” large, direct and negative effects
of robots as the issue is most affecting manufacturing. According to two researchers, Daron Acemoglu of M.I.T. and Pascual Restrepo of Boston University, for
every robot per thousand workers, up to six workers lost their jobs and wages
fell by as much as three-fourths of a percent. The analysis is significant in a
sense that researchers had been quite sanguine about the effect of technology
on jobs.
The researchers argued that it
was likely that increased automation would create new, better jobs, so
employment and wages would eventually return to their previous levels. Just as
cranes replaced dockworkers but created related jobs for engineers and
financiers, the theory goes, new technology has created new jobs for software
developers and data analysts.
The effect of
industrial robots in local labor markets in the US has shown that robots have
led to about 670,000 lost manufacturing jobs between 1990 and 2007; and that
“lost figures” would rise because industrial robots are expected to quadruple.
Source:
Global elites’ reaction
At the 2017 annual gathering in
the Swiss resort of Davos, global elites debated “nicer capitalism” vision and
options in defusing populism. In
many states around the world, growing number of people have been enraged at
economic, financial, industrial, etc. elites in their efforts to use
globalisation in their favour. This wave of anger has delivered Donald J. Trump
to the White House, sent Britain toward the EU’ exit and brought numerous
leaders to power in Europe on the waves of populism. Generally, these trends can threaten the
future of global trade; however, global elites have
enjoyed positive aspects of globalisation for economic policies in recent
decades with a growing share of wealth landed in the coffers of people having
bank accounts in off-shore states, while earnings stagnated and declined for
low- and middle-class households.
Negative effect
is seen in the decline of trade unions: in 2016, only 10.7 percent of American
workers were represented by a union, down from 20.1 percent in 1983, according
to the US Labor Department data. Many economists see this decline as a key to a
chance for employers to pay lower wages, phenomena familiar to EU states as
well.
Discussions are
going on around the world and in the EU focused on finding best ways to “reform
capitalism,” make globalization work and revive the middle class. Worries about
shortcomings of globalization are numerous: from deepening anxieties of the
middle class in many developed economies to threats of trade protectionism,
which hit economic growth, to fears that robots are on the verge of sowing mass
unemployment, etc.
What is left for
“response” to globalisation’s threats is discussing more entrepreneurialism,
mindfulness training and education focused on the modern ways of technology,
i.e. 4th industrial revolution.
The global
elites’ message is: people who have not benefited from globalization need to
try harder to emulate those who have succeeded. However, any sincere suggestion
would have to include items that involve transferring wealth and power from
elites to ordinary workers via more progressive taxation, increased bargaining
rights for labor unions, and greater protections for labor in general, etc.
Weak wage’s issue
Economists puzzle over the fix
for persistently weak wage growth: even in reach Norway, global forces are
exposing growing numbers of workers to new forms of competition that limit pay.
The threats are evident: immigrants from Eastern Europe are taking jobs, temporary
positions are increasing. In theory, Norwegian workers are insulated from such
forces. Under Norway’s elaborate system of wage negotiation, unions, which
represent more than half of the country’s work force, negotiate with employers’
associations to hash out a general tariff to cover pay across industries. As
companies become more productive and profitable, workers capture a
proportionate share of the spoils.
Employers are
supposed to pay temporary workers at the same scale as their permanent
employees. In reality, fledgling companies have captured slices of the
construction industry, employing Eastern Europeans at sharply lower wages. Some
firms pay temporary workers standard wages but then have them work overtime
without extra compensation. Unions complain that enforcement is patchy. Source:
The New York Times,
7.x.2017, at: https://www.nytimes.com/2017/10/07/business/unemployment-wages-economy.html?_r=0
Globalization
and development professor at Oxford University, Ian Goldin once said: “You can’t stop managing an entangled environment
by disconnecting. This is the fundamental mistake of Brexit, of Trump, and of
so many others. We are not simply connected; we are entangled: our lives, our
destinies are intertwined. What happens in China, what happens in Indonesia,
what happens in India, what happens across Europe, and what happens in North
America, across Africa and Latin America will affect all of us in dramatic new
ways. The idea that somehow we can forge our future in an insular way, even for
the biggest countries like the U.S., is a fantasy. We need to make the choices
to ensure that globalization is sustainable, that connectivity is sustainable,
that we deal with the intractable problems that are worrying people”. Source:
https://www.nytimes.com/2017/01/18/business/dealbook/world-economic-forum-davos-backlash.html
Basic income’s issue: a popular idea
As a concept, basic income has
been discussed in various levels for centuries, gaining adherents across a
strikingly broad field of ideological spectrum, from the English social
philosopher Thomas More to the American revolutionary Thomas Paine.
The populist firebrand Louisiana
governor Huey Long, the civil rights icon Martin Luther King Jr., and the
laissez faire economist Milton Friedman would presumably agree on “small
version”, yet all advocated some ideas of basic income.
In a clear sign of its modern-day
currency, the International Monetary Fund, which is far from any utopian ideas,
recently explored basic income as a potential salve for economic
inequality.
See: http://www.imf.org/en/Publications/FM/Issues/2017/10/05/fiscal-monitor-october-2017
Stark reality of
globalization is that bargaining rights for workers are reducing and corporations
have taken advantage of it. In a new economic order based on globalisation,
working people are at the mercy of their employers, as trade unions are losing
bargaining’s abilities and clout. Companies are relying on temporary and
part-time workers while deploying robots and other forms of automation in ways
that allow them to produce more without paying extra. Globalization has intensified
competitive pressures, connecting factories in Asia and Latin America to
customers in Europe and North America. For example, in Norway and in Germany, modest pay raises are the results
of coordination between labor unions and employers to keep costs low to bolster
industry. That has put pressure on Italy, Spain and other EU states to keep
wages low so as not to lose orders. But the trend also reflects an influx of
dubious companies staffed by immigrants who receive wages well below prevailing
rates, undermining union power.
Famous Nordic model places a
premium on social harmony; it underscores the global forces that are at work.
Jobs that require specialized, advanced skills are growing along low-paying and
low-skill jobs. Positions in between are under perpetual threat. Latest crisis
accelerated the adjustment, the restructuring away from goods producing jobs
and more into the service sector; many of those who lost jobs and went back to
work landed in jobs that pay less. Source:
https://www.nytimes.com/2017/10/07/business/unemployment-wages-economy.html?_r=0
The idea of universal basic
income is gaining attention in many countries as a proposal to “soften the edges” of capitalism. Though the idea’s details and philosophy vary
from place to place, the general notion is that the government hands out
regular checks to everyone, regardless of income or whether people are working.
The money ensures food and shelter for all, while removing the stigma of public
support.
Some position basic income as a way to let market
forces work their ruthless magic, delivering innovation and economic growth,
while laying down a cushion for those who fail. Others present it as a means of
liberating people from wretched, poverty-level jobs, allowing workers to
organize for better conditions or devote time to artistic exploits. Still others
see it as the required response to an era in which work can no longer be relied
upon to finance basic needs.
Advocating universal social safety net, one has to see that basic income gives increasing precariousness of
employment the worker decreasing their willingness to work.
The universal basic income is
clearly an idea with momentum: for example, in 2017 Finland started a
two-year national experiment in basic income.
https://www.nytimes.com/2016/12/17/business/economy/universal-basic-income-finland.html
In the United States, a trial was
completed in Oakland, Calif., with another one in nearby Stockton, a community
hard-hit by the Great Recession and the attendant epidemic in home
foreclosures. See: http://www.nytimes.com/2013stockton.html
The Canadian province of Ontario
is enrolling participants for a basic income trial. Several cities in the
Netherlands are exploring what happens when they hand out cash grants
unconditionally to people already receiving some form of public support. A
similar test is underway in Barcelona, Spain, etc. A nonprofit
organization, GiveDirectly, is proceeding with plans to
provide universal cash grants in rural Kenya. See: http://www.nytimes.com/2013stockton.html
Not everyone loves the basic
income idea: conservatives fret that handing out money free of obligation will
turn people into dole-dependent slackers.
In the US context, any talk of a
truly universal form of basic income also collides with arithmetic. It goes the
following way: give every American $10,000 a year (a sum still below the
poverty line for an individual) and the national economy’s tab runs to $3
trillion a year. That is about eight times what the US now spends on social
service programs.
Labor-oriented economists in the
US are especially wary of basic income, given that the American social safety
programs have been significantly trimmed in recent decades, with welfare,
unemployment benefits and food stamps all subject to a variety of restrictions.
If basic income were to replace these components as one giant program — the
proposal that would appeal to libertarians — it might beckon as a fat target
for additional budget trimming.
“Tens of millions of poor people
would likely end up worse off,” declared Robert Greenstein, president of the
Center on Budget and Policy Priorities, a Washington-based research institution.
If the US political culture would be more like the one in Western Europe, the
universal basic income’s idea might be a real possibility in the US. Thu some
advocates for working people’s rights dismiss basic income as a wrongheaded
approach to the real problem of not enough quality paychecks.
Nobel laureate economist, Joseph
E. Stiglitz is closer to the US thoughts about basic income meaning that people
want to work, they don’t want handouts.
Yet some of the basic income
experiments now underway are engineered precisely to encourage people to work
while limiting their contact with public assistance.
For example, Finland’s trial is giving jobless people
the same amount of money they were already receiving in unemployment benefits,
while relieving them of bureaucratic obligations. The bet is that people will
use time now squandered submitting paperwork to train for better careers, start
businesses, or take part-time jobs. Under the system the trial replaces, people
living on benefits risk losing support if they secure other income.
In short, basic income is being
advanced not as a license for Finns to laze in the sauna, but as a means of
enhancing the forces of creative destruction so central to capitalism. As the
logic goes, once sustenance is eliminated as a worry, weak companies can be
shuttered without concern for those thrown out of work, freeing up capital and
talent for more productive ventures.
The trials in the Netherlands,
conducted at the municipal level, are similarly geared to paring bureaucracy
from the unemployment system.
Silicon Valley has embraced basic
income as a crucial element in enabling the continued rollout of automation.
While engineers pioneer ways to replace human laborers with robots, financiers
focus on basic income as a replacement for paychecks.
The experiment in Stockton,
Calif., (set to become the first US city’s government to test basic income) is
underwritten in part by an advocacy group known as the Economic Security Project, whose backers
include the Facebook co-founder Chris Hughes. The trial is set to begin in 2018,
with an undisclosed number of residents to receive $500 a month.
See more at: https://economicsecurityproject.org
The trial in Oakland was the work
of Y Combinator, a start-up
incubator. Its researchers handed out varying grants to a few dozen people as a
simple feasibility test for basic income.
The next phase is far more
ambitious. The Y Combinator
researchers plan to distribute grants to 3,000 people with below-average
incomes in two yet undisclosed American states. They will hand out $1,000 a
month to 1,000 people, no strings attached, and $500 a month to the rest,
allowing for comparisons in how recipients use the money, and what impact it
has on their lives.
One key element of the basic
income push is the assumption that poor people are better placed than
bureaucrats to determine the most beneficial use of aid money. Rather than
saddle recipients with complex rules and a dizzying array of programs, better
to just give people money and let them sort out how to use it. References in: https://www.nytimes.com/2017/11/15/business/dealbook/universal-basic-income.html
Distribute grants is a central
idea of GiveDirectly’s program in
Kenya, where it began a pilot study in 2016 in which it handed out small,
unconditional cash grants (about $22 a month) to residents of a single village.
The program is now expanding its sights, with plans to hand out grants to some
16,000 people in 120 villages.
Conclusion
From a purely academic and researcher’s point of view, these are going to be quite early days for basic income’s ideas. Serious experimentation and assessment are needed as well as serious investments to a new model public assistance to employment.
A definite answer, for example has to include all effects on a more active role of state and public sector in modernized and evolving labour relations.
Yet from a political standpoint, basic income idea appears to have found its momentum. On one side, there is an anxiety to “combine working poor” with those of the wealthy; on another, still growing inequality on all fronts giving the elites some potentials of “wielding pitchforks”.
Most important is that the interest to the basic income’s issue is exploding all over the world; and the expected outcomes seem to be extraordinarily fertile for new approaches to universal social safety net ideas. What could be more important for the three Baltic States?!