Telemigration to affect the service sector
Interview with Richard Baldwin by Manuela Mirkos
The Globotics Upheaval: Globalisation, Robotics and the Future of Work is the title of a new book by Richard Baldwin, professor of International Economics at the Geneva Graduate Institute and President/Director of CEPR (Centre for Economic Policy Research) in the UK.
The Globotics Upheaval is a “manifesto for future-proofing our jobs and prosperity” wrote the Sunday Times and “offers valuable insights into the long-term impact that globalization and AI will have on workers”. (Science magazine). We caught up with professor Baldwin to discuss the next stage of globalization and find out what, if anything, can be done to mitigate the backlashes particularly in developed societies already facing protectionist trends, resurgent nationalisms and increasing inequality.
“While it is generally easier to ship across borders things that we make rather than things that we do, digital technology is changing this by making it possible to ship services. And this will change globalization as well. It is what I call telemigration: people sitting in one nation and working in offices in another. Think of it as telecommuting gone global.
Globalization 4.0 is what I call the third unbundling. It is what will happen when digital technology allows arbitrage of international wage differences without the physical movement of workers. While previous stages of globalization were mainly a concern of people who made things for a living, the next stage is going to hit the service sector.
Globalisation has lifted millions out of poverty and continues to be seen in emerging markets as a great opportunity. Why do you think there are reasons to worry about the next stage?
“On the flip side, if you are offering a globally competitive service or expertise, this new form of globalization will expand your client base.
But telemigration will be disruptive to office workers in developed countries as past globalizations have been to factory workers in advanced countries. Machine translation is another important phenomenon happening very fast and getting increasingly better. When you think about that, you see hundred of millions of talented low cost foreigners able to join the service market because they now speak a good enough English or French or Spanish. It is like a talent tsunami.
I worry that this will displace many white collar jobs at a pace that people will have trouble adjusting to and there may be a backlash.”
Digital technology will have an even bigger impact on our lives than it has had so far. It will also play a central role in the next stage of globalization…
“I think digital technology is driving both globalization (RI or remote intelligence) and automation (artificial intelligence) and both are displacing jobs in advanced country offices and workplaces. But each has their limits. Telemigrants can’t be in the same room and AI is only good at things were we have a structured database. The jobs of the future will be doing the things AI and RI can’t. We’ll see a blend of artificial intelligence and remote intelligence but I don’t think we’re anywhere close to taking humans completely out of the equation. Soft skills, empathy, dealing with creative or unknown situations, managing teams of people... robots won’t be able to do these things for a long time, nor will we want them to.”
In which way do you think the next stage of globalization might have a different impact on rich countries and emerging markets?
“It will bring a new export boom for the emerging markets and represent a continuation of their miracle; but I expect more globalization disruption for most people in the advanced economies.”
These changes are happening very fast: is it reasonable to think we can slow them down? Or at least what should governments do in your view to protect those more at risk of having their lives disrupted?
“Governments now have technologies to control people, capital and goods crossing borders, but do not have very good tools to control services crossing borders. There is not enough awareness yet. You cannot predict social backlashes, but I think they will come very quickly. I think we need to be prepared for the challenges that will appear in more developed societies and while we should certainly embrace the opportunities, if the process goes too fast, we might need to apply the brakes. Governments can use regulation to slow some of it down, for example with employment protection legislation.”