As a result of technological development, labor markets may face changes against which the loss of jobs by artisans at the beginning of the industrial revolution will seem trivial, warns Latvian economist Peteris Strautins.
The industrial revolution is the process of transitioning from an agrarian economy, characterized by manual labor and artisanal production, to an industrial society dominated by machine production. The process began in England in the 1740s–1780s and reached the present territory of Latvia by the mid-19th century.
Strautins warns: the world in which a human is no longer the smartest person or system — at least in aspects important for the labor market — will no longer be able to remain the same.
The Latvian economist notes that not long ago it seemed that the main challenge for the labor market in Latvia in the future was demographics. This is still very important, but now it has a serious competitor.
Strautins points out that this is not only about the visions of technological gurus and long-term macroeconomic forecasts. Representatives of industries that have largely driven the development of the Latvian economy in this century — IT and business services — are already directly speaking about the challenges posed by the automation of functions. For example, about the reduction in the number of workers both in companies investing in Latvia and in countries where outsourcing service buyers are located, as costs are higher there.
Therefore, the wave of change may eventually reach Riga as well. According to Strautins, the previously consistently rapid growth of exports of intellectual services in this century has become less uniform.
The economist notes that even a conservative publication like The Economist is already directly talking about the need for the introduction of universal basic income (UBI) in the relatively near future. This raises the question of how such a system can be financed. Strautins notes that there are countries that might be able to redistribute funds for UBI from companies operating in the field of artificial intelligence, albeit with difficulty. At the same time, the economist doubts that Latvia will have enough additional resources generated by AI.
Strautins has no doubt that artificial intelligence will contribute to productivity growth by improving various administrative and production processes. However, the economist is not sure that AI will provide Latvia with sufficient export revenues.
"In our country, there are no large companies that could play the role of shovel sellers during the AI gold rush — producing microprocessors, computer memory, or being global leaders in energy technologies. There are interesting developments in creating artificial intelligence modules, for example, for translating European languages, but this is a very small part of our economy," says Strautins.
Leave a comment