A worker at an industrial factory in India. Photo: Ray Witlin / World Bank / CC BY-NC-ND

NUSA DUA, Indonesia — Fears that technological advances will wipe out jobs and worsen working conditions are “largely unfounded,” according to a major report by the World Bank, which argues that innovation will instead create new jobs and opportunities.

However, governments will need to roll out social protections and invest more in human capital to ensure the poorest workers are not left behind, the report says, adding that labor regulation may need to become “more flexible” and labor costs lowered to help companies adapt to the changing nature of work.

Civil society groups have slammed the 2019 World Development Report, launched Friday morning during the World Bank annual meetings in Bali, which they say underplays the risks that automation poses to jobs, and promotes deregulation policies that will harm workers’ rights. They also say it contradicts views and policies put forward by some parts of the World Bank and the International Monetary Fund.

“The WDR on work is a massive disappointment … The core message is [that] the rights and freedoms of … poor [workers] around the world are somehow too much and we need to water them down in the interests of progress,” Max Lawson, Oxfam International head of inequality policy, told Devex.

During a side session to the meetings on Wednesday, Edward Miller, Asia-Pacific campaign officer for the Building and Woodworkers International trade union, added that the WDR has a “strong deregulatory thrust within it [and includes] attacks on many basic worker rights.” The International Trade Union Confederation has issued a strongly worded critique of the report.

However, speaking at the session, Michal Rutkowski, World Bank senior director of social protection and jobs, said the recommendations focus on informal workers whose needs are “far more dire … than those covered by collective bargaining schemes.” Nothing in the report goes against the work of trade unions to secure better working rights, he said, although “it does make a point [that] the over-regulation of the labor market is not particularly friendly to informal sector workers because it may enhance segmentation.” The report is about “how to make labor markets ... more dynamic and flexible and [establish] social protection that is universal and not linked to one employer,” he said.

“If we don’t address the fact that technology is pushing down the value of labor in the economy … we will end up with an environment where capital [has] increased power against labor.”

— Kate Lappin, Asia-Pacific secretary for Public Services International

The WDR responds to major concerns that technological advances, especially automation, will cut the need for low-skilled jobs and disrupt the traditional economic path for developing countries. There are also fears that the technology-enabled “gig economy,” in which independent workers are contracted for short-term assignments, is increasing inequality and worsening working conditions.  

“If we don’t address the fact that technology is pushing down the value of labor in the economy … we will end up with an environment where capital [has] increased power against labor,” said Kate Lappin, Asia-Pacific secretary for Public Services International, which represents public service workers around the world.

But the report’s authors are more optimistic. They argue that while some jobs will inevitably be lost to automation, new ones will be created since “technology provides opportunities to create new jobs ... new sectors and new tasks.” Furthermore, concerns about working conditions in the informal economy “predate the latest technological wave,” they write.

“We come up with optimistic scenarios saying … the changing nature of work will not displace workers … [since] various job losses will be even more than made up for by gains in jobs created elsewhere … [These are] always jobs with higher productivity and less physical activity,” said Rutkowski.

At the same time, the poorest and informal workers will not be able to access those new jobs without major increases in social protections, which need to come from governments and not employers, Rutkowski explained.

The report also came in for criticism from Lappin for its framing, which she said pitted workers against machines. Instead the report should explore how technology can be controlled and utilized to make working life better, she said.

“Trade unions are certainly not anti-technology,” Lappin said. “[We see] huge value in the way technology can be used by workers … However it needs a deliberate policy on how we best use technology.”

Campaigners also pointed to inconsistencies between the message of the WDR and other World Bank and IMF policies. Miller said the bank’s recently released Environmental and Social Standards on labor and working conditions are “very good” and contradict the tone of the WDR.

“The World Bank and the IMF might be in a state of flux right now because [there are] different ideas that exist within the institutions … This battle for the future of the face of the World Bank is going to be critical over the next couple of years,” he said.

Earlier this month IMF released a report on the macroeconomic outlook for sub-Saharan Africa which concluded that there is “inherent uncertainty in assessing the impact of technology" on the future of work.

Catch up on what happened at the World Bank Annual Meetings in Indonesia, where Devex reporters Michael Igoe and Sophie Edwards were on the ground.

About the author

  • Sophie Edwards

    Sophie Edwards is a Reporter for Devex based in London covering global development news including global education, water and sanitation, innovative financing, the environment along with other topics. She has previously worked for NGOs, the World Bank and spent a number of years as a journalist for a regional newspaper in the U.K. She has an MA from the Institute of Development Studies and a BA from Cambridge University.