Automation, work and the role of trade in services: Understanding transformations, exploring opportunities – Can trade policy help?

27 Sep 2017 15:30h - 17:00h

Event report

[Read more session reports from WTO Public Forum 2017]

The session focused on the impact of automation and digitalisation on the job market. In particular, the speakers were asked to pay particular attention to the role of trade in services as a possible vehicle for allowing new jobs to emerge while existing ones disappear.

The event was moderated by Mr Hannes Schloemann, Director at the WTI Advisors Ltd, who opened the session by reminding the audience that the focus of the discussion was specifically on services rather than goods. He launched the discussion by asking panellists thought-provoking questions regarding the future of employment, considering the fact that recent studies showed that ‘up to 25% of a CEO’s tasks can surely be automated’.

Mr Jens Riis Andersen, Associate Partner at McKinsey, addressed the question by illustrating the upcoming research study that McKinsey has conducted on nine European countries (mainly Scandinavian and Benelux countries together with Ireland and Estonia) in partnership with Google. The key finding consists in the fact that automation is indeed having a positive impact on the job market. Digitalisation is contributing to an increase of productivity and, as in case of past critical structural changes in the market, labour markets will eventually adapt and reshape. In particular, he argued that the discussion pertains mostly to the creation of a ‘new skills structure’: it is estimated that 16% of existing jobs will be replaced by automation (i.e. ‘lost jobs’); 6% of jobs will be replaced by ‘new digital jobs’ (i.e. jobs related to creating and using automation) and 11% of the existing tasks will not be related to digital tasks, but rather linked to services and investments in new growth.

Mr Lionel Fontagné, Professor of Economics at the Paris School of Economics, Université Paris I Panthéon Sorbonne, and Director of the Centre d’Economie de la Sorbonne (CES), approached the discussion reasoning on a possible ‘deindustrialised future of the economy’. His argument focuses on current data showing a reduction of good-production firms in favour of a service-based model. In France, 87% of manufacturing firms sell goods and services; one third of them sells mostly services, and a quarter sells services only. Moreover, he considered that it is the nature of trade itself to undergo change: trade will not be about individuals exchanging goods but rather machineries trading non-physical goods (most of the value traded nowadays lies in ideas and intellectual property rights for example).

Mr Hosuk Lee-Makayima, Director at the European Centre for International Political Economy (ECIPE), affirmed that thinking that automation will lead to unemployment is not an evidence-based opinion because the aggregated data of unemployment is slightly dwindling. By looking at the US economy, where a high number of jobs were estimated to be lost, he counter-argued that this actually represented an upgrade of workers’ skills and tasks as ‘those jobs were upgraded to services’.

Mr Magnus Rentzhog, Senior Adviser at the Swedish National Board of Trade (Kommerskollegium), recalled the concept of ‘servicification’ developed during the 2010 study of Swedish manufacturing. With this phenomenon, he meant not only that firms buy, use and produce more services in-house than before, but also that they sell and export them more and more. The answer lies in the fact that many of the services that are needed (e.g. cloud computing) are related to automation. 

Ms Marion Jansen, Chief Economist at the International Trade Centre, affirmed the need to continue to regulate because on the one hand, domestic regulations do not address specific issues (such as blockchain technology), and on the other hand, when these regulations exist they are difficult to internationalise. Moreover, she agreed that automation will cause a ‘reshuffling’ of the current job market configuration; however, this impact will be costly in terms of money and time.

Mr Hamid Mamdouh, Director, Trade in Services and Investment Division, WTO, concluded the session by reasoning on the applicability of existing trade policies. He believes that on the regulatory side, there is confusion regarding the categorisation of new services and processes. In particular, he stressed the importance of distinguishing between business models and products as well as goods and services. For example, he defines Uber as an innovative business model combining different products (e.g. transportation, insurance, payment methods).

by Marco Lotti