The digital economy has changed the rules of the game for all stakeholders in the labour market. Countries like Nigeria need to not only recognize the new rules but use them to their advantage.
The Fourth Industrial Revolution has kept the world in anticipation of the next big thing. With each technological breakthrough, the world moves one step closer to a future where robots and automation will be applied to as many spheres of life as possible. While this is undoubtedly geared to improve economic output, many fear that these ‘disruptions’ will lead to a future of joblessness. Indeed, manufacturing jobs are already vanishing in developed countries and for countries like Nigeria, it is only a matter of time before the same outcome starts to happen.
As well as the Fourth Industrial Revolution, another issue that has the world in its thralls, are the digital platforms that enable what we have come to know as the Gig Economy. This is where it is commonplace for independent contractors with short-term contracts to occupy temporary positions in a variety of different organizations, with different employers, often concurrently. The digital skills market is growing at an exponential rate and is radicalizing traditional concepts of work, with digital platforms and marketplaces that enable the gig economy and make more imminent its implications on the future of work.
While the fears outlined earlier exist, there are those, however, who welcome the expansion of automation and Artificial Intelligence (AI). They look forward to a future where mechanizable jobs would be taken over by AI and automation, freeing up professionals to engage in more important tasks that require innovation and creativity, whilst increasing production to meet the rising demands of a growing global population. For instance, certain manual and routine tasks in law firms like reviewing agreements and writing search reports would become automated thereby leaving specialized tasks like client briefing, case analysis, consultation etc for legal personnel to handle thereby increasing productivity and reducing redundancy.
From the perspective of the labour market, Nigeria can prepare for the inevitable effects of automation and artificial intelligence that comes from the Fourth Industrial Revolution. This should be done through a focus on the new structure of labour, the virtual freelance workplace and on the need to reform traditional labour laws to address the unique challenges faced by this subsector.
RESPONDING TO THE FOURTH INDUSTRIAL REVOLUTION
The world is on the brink of an industrial revolution that is radically changing the relationship between stakeholders in the labour industry. Significantly, these changes are in the relationships between organizations and their employees and between employees themselves, such as with the growing popularity of gigging and reliance on core digital skills for workers. With the scope and scale of Artificial Intelligence integration, when properly aligned can accommodate smooth interrelationship between these parties.
Although we cannot yet predict the ways the future will unravel, it is necessary for Nigeria at all levels (both within the public and private sectors) to adopt a comprehensive approach to integrating AI into the economy with clearly defined roles for all stakeholders.
Each industrial revolution has built upon the last. In the early 1760s, the First Industrial Revolution mechanized production with the use of water and steam power. Building on the foundation of water and steam power, the Second Industrial Revolution created mass production with the use of electricity and electric power 1870s. The late 1960s marked the start of the digital revolution, also known as the Third Industrial Revolution, which heavily relied on electricity production from the Second Industrial Revolution. From here, the world entered an era of automated production with the use of electronics and the integration of digital technologies into everyday life. What we see, overall, is that subsequent revolutions have been able to provide easier and more efficient ways of producing more, enabling societies to improve their quality of life and to meet the demands of a growing population.
However, unlike the first three industrial revolutions that evolved at a relatively linear rate (meaning that economic growth and technological innovation have increased at a steady and proportional rate), the Fourth Industrial Revolution is evolving exponentially, at a pace with no historic precedence.
The Fourth Industrial Revolution is characterized by a fusion of technologies that is blurring the lines between the physical, digital and biological spheres. It affects and influences every industry and every country in real time, heralding the total transformation of global systems of production, management and even governance. According to Klaus Shwab:
‘In the future, technological innovation will also lead to a supply-side miracle, with long-term gains in efficiency and productivity. Transportation and communication costs will drop, logistics and global supply chains will become more effective, and the cost of trade will diminish, all of which will open new markets and drive economic growth’
Economists are of the opinion that this new revolution would result in great inequality due to its potential to disrupt the labour market. This is as a result of the substitution of human labour for automation and AI, which could exacerbate the gap between ‘return to capital and returns to labour’. This means that the deciding factor of production would be talent and skills rather than capital. This would inevitably result in increased social tension due to the financial segmentation of employees into ‘low-skill/low-paying’ and ‘high-skill/high-paying’ workers essentially eradicating anything in-between. For example, teller personnel are slowly being replaced with Automated Teller Machines (ATM); which would in the future carry out more functions as would banking websites and apps, to cater for otherwise over-the-counter transactions so only professional and skilled banking related services such as Customer Care would require skilled human labour.
There is, however, another angle to this. It can be argued that the replacement of workers by automation and AI in the long run would herald an era of job security and productivity. In other words, employees would become more secure in the fact that their job roles are more specialized and as such carve a niche to cater for particular needs and demands. The revolutionized industries would, in future, effectively utilize the creativity and innovation of skilled professionals and improve their output by assigning monotonous roles to robots. New technologies create new methods or improve on existing ones, for servicing needs or manufacturing goods, thereby improving production capacity and service delivery output.
THE NEW CULTURE OF WORK
With the inexorable shift from simplified digitalization to the complex integration of combined technologies into every aspect of life, new and emerging business models are set to replace traditional organizational structures.
Although the concept of gigging is not new, the digital economy through digital platforms has made ‘gigs’ much easier and indeed mainstream with Uber, Taxify, AirBNB as notable examples. The digital gig economy now makes it possible for individuals to be ‘self-employed’, sometimes even while maintaining full-time salaried employment. It transcends the limitations of time and space as companies can get workers to provide services at any and all times from anywhere in the world. The tech skills market also promotes flexibility of job choice which, indeed, encourages specialization amongst individuals. With access to the Internet, which is growing per minute, any individual can acquire specialized digital and soft skills which are in high demand and offer those services remotely on a work for hire basis.
The digital gig economy is undoubtedly increasing the number of self-sufficient individuals globally especially among young persons living in the global south. For example, companies in the United States and Europe employ digital skilled workers from Nigeria who work remotely. It costs these companies less than on-site labour but due to exchange rates, such individuals end up earning more than their peers working locally. The affordability of freelance remote workers is especially important for the early business sector where startup companies often have to make the most out of little or no capital.
Critics, however, believe that the digital gig economy does not guarantee protection of the rights of workers and argue that these independent contractors are not eager participants in the system as they do so out of necessity. For instance, tech startups are infamous for seeking steady supply of free agents especially from global south and classify them as ‘independent contractors’ to avoid providing the basic employment rights and evading legal responsibilities like health insurance, and minimum wage. However, this makes it possible for startup companies to survive the harsh conditions of the competitive market they’re entering by being able to do the hard minimum in regulatory requirements as a way to survive. They would in future require full-time, on-site staff and therefore meet their legal responsibilities.
Another criticism is the perceived inability of young workers to articulate and plot their career trajectories. Employing skilled workers has not only become possible for small businesses because of digitization, it has also become easier all round as there are fewer legal responsibilities for both the employer and the employee and removes time and location restrictions. Employers can get more done with fewer full-time staff by outsourcing digital work to freelancers, hence less legal responsibility and fewer redundant staff on full time payroll. Employees would also be secure in their full-time jobs with more sources of income or at least options for additional funding if and when necessary. Sometimes gigging and side hustles interrelate and intertwine.
For instance, an IT professional working in a bank may occasionally pick up a job on a digital platform to supplement income or to test the waters with the intention of building a Consulting business. It has been estimated that 43 per cent of full-time employees dedicate between six to fifteen hours a week to their side hustle sometimes even within the same industry as their full-time job. Businesses can also save resources such as workspace and even training costs as most such jobs require skills individuals have to personally acquire in order to get such jobs in the first place.
While policymakers admittedly need to work on addressing the labour concerns of the digital economy, the advantages far outweigh the disadvantages. Remote work as a result of the digital platforms available allows people to have more free time for personal commitments, to invest in their side jobs, hobbies or grow their business. This can only be a good thing.
RECOMMENDATION FOR STAKEHOLDERS
Graduates and undergraduates have increasing opportunities to take more online courses to develop their skills and capabilities, in order to carve a niche in response to particular demands. Employers also need to conduct periodic training and retraining for their full-time staff to ensure that their labour force is empowered to tackle the fast-approaching complex digital era of the Fourth Industrial revolution.
The government also have a responsibility to provide policies and infrastructure to protect and promote the rights of the growing number of freelancers and independent contractors, to avoid abuse of power by employers and multinational corporations. Startup companies have the leeway to employ as many free-agents as possible in their first two to five years of starting. However, providing that companies that can afford full-time staff such as multinational companies employ a ratio of full-time staff to free agents maybe for 1:5 or 1:10, depending on the company needs and financial ability. Therefore, those that can afford it do not take advantage of the free agents by using the otherwise good system of the digital economy to avoid the legal responsibility of full-time staff altogether.
The government needs to revise the educational system to prepare graduates for the evolving digital economy to avoid preparing students for jobs and roles that will be obsolete upon graduation. This is already the case as graduates are trained with redundant and obsolete syllabi that they then have to unlearn upon graduation and replace with online courses.
The digital economy has changed the rules of the game for all stakeholders in the labour market. Countries in the global south like Nigeria need to not only recognize the new rules but use them to their advantage. Africa has a growing youth population unlike European and American youth population, which is said to have peaked, according to the United Nations.
Considering how much the Fourth Industrial Revolution is digitally and technologically based, employees who can survive and thrive are those who can easily be retrained and learn new skills. This would imply that countries with high youth population would be at an advantage as they can easily adapt to this fast-paced revolution – and Nigeria, with an increasing youth population has a comparative advantage.
The government and other stakeholders in the labour market, like employers and employees, have to work hand-in-hand to navigate the new rules of the digital economy and enact policies to protect all stakeholders and participants in order to optimally utilize the new digital platforms. In other words, internal policies within organisations have as much of an important role to play as public policy.
Because of globalization and technology, Nigerians and citizens of similarly underdeveloped countries have a unique opportunity to gain the higher hand. Nigeria has a high youth population, which, if properly positioned, holds the potential to transport the country to world power status⎈