Automation will make countries with a youth bulge more volatile

Automation will make countries with a youth bulge more volatile

Automation is on track to disrupt the status quo everywhere, but nations with a youth bulge will be more affected than others. A large youth population whose employment and future is threatened by automation could drive political instability and violence.

The risks of a youth bulge

It is becoming quite clear that automation will be able to replace an increasing number of human tasks from driving to answering phones. This has the potential to boost economies and improve quality of life, but for many it will mean an uncertain future and fewer opportunities. Governments must find ways to occupy or support those who lose their jobs to automation or else face diminishing legitimacy in the best-case scenario and politically motivated violence in the worst.

The risks of political violence will be higher in countries with a youth bulge (a relatively large youth population). Fewer employment opportunities and heightened competition could drive young people towards alternative institutions that channel their rage and anxiety. Failure to adapt could fuel populism, extremism, or fascism.

A gift or a curse

Extensive empirical research has connected youth bulges with political violence. Being born into a large youth cohort usually means being faced with heightened competition, fewer opportunities, and therefore a lower opportunity cost of joining a violent political movement. Terrorism, civil war, and other forms of political violence can be the result. Much of the conflict in the Middle East can be at least partially attributed to a large youth population – in most Middle Eastern countries the majority of the population is under the age of 25.

But a large youth population is not the precise cause of political violence – a large youth population can be a huge boon for the economy, known as the demographic dividend. The problem arises when a large youth population cannot be absorbed by the economy, leaving masses of youth disillusioned with the current political system and broader status quo. Automation will contribute to this problem, making it harder for economies to absorb new workers and large youth populations by replacing their jobs with machines.

Automation and unemployment

Estimates on the impact of automation on jobs vary widely in both severity and time frame. Some have calculated that 47% of jobs could be automated in the next 10-20 years. The OECD suggests the number is closer to 9% since some tasks could be automated but not the entire job. And McKinsey estimated that 45% of work done today could be automated using existing technologies. All of the estimates, however, represent a significant shift for labor markets.

Most impacted will be low skill, low income jobs which tend to be routine and therefore easily automated. Manufacturing jobs are the most obviously threatened industry – as automation gets cheaper, fewer human employees will be required for certain tasks. But the concern extends beyond assembly lines – moving goods around a facility, for example, can increasingly be done by agile robots.

Some have asserted that industrial robots boost productivity without causing substantial manufacturing job losses. In many cases this will be true – people will increasingly work with robots in ways that boosts their productivity. But this change is nonetheless disruptive, with some people becoming more competitive and others less.

More importantly, however, advances in technology are threatening many jobs previously impervious to automation. Autonomous cars are already on our roads, and artificial intelligence that can respond to basic human requests is growing more advanced. It would not be unforeseeable for a product to be ordered, manufactured, and delivered without human interaction.

Who is at risk?

This increased automation is especially threatening to countries with large youth populations. India, Indonesia, Mexico, and Nigeria, for example, have both large youth populations and a high susceptibility to automation.

Many developing countries with large youth populations act as outsourcing hubs for low skilled work. This emphasis on low skill, labor intensive manufacturing has traditionally been a way to boost economic growth. However, there is the risk that automation will prove a lower-cost alternative.

An example of this is the automation of clothes manufacturing. Advancements in machine vision are improving to the point that garments can be made by machines with precision. Since the technology is new, it has some limitations in terms of garment complexity and cost. It will only be a matter of time before these hurdles are overcome and some manufacturing is insourced to machines.

Services are not immune to automation either. Routine jobs, even cognitive ones, such as those often outsourced to countries like India and Indonesia, are equally at risk. The work of telemarketers, customer service professionals, and IT professionals can increasingly be automated thanks to machine learning.

The decline of outsourcing threatens to leave such countries with a large, unemployed, and anxious youth population. This combination is a threat to political stability, but the precise effect will vary widely by country depending on demographics, economy, society and how the government responds. In many cases, low intensity political violence may evolve into graver forms such as terrorism or other extremism.

Adapting to an automated future

The answer is not to fight automation – globalization has made it such that jobs will generally be performed wherever it is cheapest. Fighting automation would only lower competitiveness. Automation eliminates many jobs but often creates new ones as well. Education will be key for preparing youth for the jobs that emerge. More challenging, however, will be occupying the time of those whose skills are too low for cost-effective employment.

Both automation and youth bulges can have massive benefits if the government channels them appropriately. But the technology will charge on ahead regardless of whether governments are ready or not, which is why they need to be fully prepared.

Categories: Economics, International

About Author

Peter Hays

Peter is a London based analyst. He specializes in trade and regulation in the Asia Pacific region. He holds a MSc in Economy, Risk and Society from the London School of Economics and a BA in International Studies from American University.