Automation not a threat to Asian workers, says ADB

Chief economist says new trade pacts will offset impact of US-China tariff fight

by ZACH COLEMAN, Nikkei Asian Review deputy editor, Apr 12, 2018

A recent ADB report says, “The anxiety over automation is overblown.” © Reuters
HONG KONG — Despite rising worries that artificial intelligence and robots will displace humans in a wide range of occupations, the Asian Development Bank says such technological developments will on the whole result in more job opportunities.

Central to this view is the bank’s assessment of the relative cost of new technologies, even for automating labor-intensive work like garment sewing. Chief Economist Yasuyuki Sawada told Nikkei Asian Review in an interview that such automation is “technically feasible, but not necessarily economically feasible.”

“I think sewing bots cannot really compete with low-wage, capable Bangladeshi workers,” he said. As the bank’s new report this week put it, “Most executives of large garment exporters say replacing operators with sewing robots is unlikely in the next decade because it is barely feasible, either technically or economically.”

The regional lender’s conclusions are based on its study of the impact of technological developments on jobs in 12 developing Asian economies between 2005 and 2015. “The anxiety over automation is overblown, and predictions are unfounded that a majority of jobs in the developing world may be lost to automation,” the report says.

While the bank acknowledges that machines and technologies will take over some tasks now done by people, it argues this effect will be more than offset by other impacts. For example, the higher productivity of automated processes should lead to lower prices, raising demand and in turn leading companies to expand capacity and overall employment.

New technologies also result in the creation of new work roles, and the bank noted how this has happened over the past decade in Asia with finance, health care, education, insurance and real estate. These new jobs have generally paid much more than the jobs that were lost. As these trends could exacerbate inequality, the ADB called for governments to step in with programs to support skills development and social protection.

ADB chief economist Yasuyuki Sawada is also sanguine about the outlook for regional trade.
Sawada is also sanguine about the outlook for regional trade, even amid the rapid escalation of import tariffs between the U.S. and China. He pointed to the offsetting impact of the signing last month of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership by 11 nations that carried on after the U.S. dropped out of the grouping, as well as advancing talks on the Regional Comprehensive Economic Partnership among an overlapping group of 16 nations.

“As a stepping stone toward a more open global trade and investment [system], these different programs and arrangements seem to be progressing,” he said. “Overall, the global economy is moving in the right direction.”

He said the private sector in Asia remains supportive of both bilateral and regional trade pacts. “It indicates there has been a benefit from these free-trade agreements,” he said.

Sawada is also optimistic that rising U.S. interest rates will not cause significant disruption for Asia’s economies. He said that, according to the ADB’s studies, even under an accelerated move toward rate normalization, “the impact on the Asian economy would be only limited.” This is partly because of the increasing role of domestic and intra-regional demand in driving growth.