Or how digitization divides the labour market.
Dichotomy. For weeks France was plagued by actions by the “yellow vests”. People who organized themselves through social media and initially protested against higher petrol prices. In the meantime we saw comparable actions in other countries. What happened here?
This action is a well-known occurrence in a long series that has resulted from the transition from classical industrial society to a digital one. In this digital society highly educated people increasingly work in big cities and, moreover, thanks to technology, not location-bound, while people doing manual labour depend on others in the choice of their workplace. They are highly dependent on a car or other transport to get to places where they can do their work, while the first group can use public transport in large cities or can work from behind a computer. This dichotomy between two categories of people in society occurs all over the world and is growing due to digitalization. In the US, large groups of workers are losing their jobs when car factories close, in France entire villages are deserted. More in general, people doing manual labour in traditional companies, are in a losing position. First because manual labour is partly replaced by robots or automation. Secondly because in the digital society many traditional products are replaced by digital equivalents. Thirdly because many factories, used to making local products, are no longer needed or replaced by global companies producing for the world market. While the world is more and more becoming one marketplace, the labour markets are equalizing and otherwise heavenly shaken up due to the need of totally different products and production methods.
Understanding digitization. Digitalization is the cause of more and more people doing manual labour being expelled from production processes, while the economy is flourishing. This is a mystery to many economists, who still expect that a growing economy will also lead to lower unemployment or higher wages. In the digital economy, however, a growing economy is partly accompanied by fewer labour options for large groups of people. In addition, the smaller group of highly educated and well-paid people will be in great demand. In fact, that process has only just started, but will irrevocably continue in the coming years as more traditional products and services are replaced by digital services.
It is about time that politicians and economists understand that worldwide a gigantic digital transformation is taking place. This digital transformation has a much greater impact on society than the disappearance of retail shops which are replaced by online webshops. The digital economy functions completely differently from the classical economy. This leads to a labour market functioning differently, with, for example many more self-employed people. There will be a greater divide between groups that do manual work and others who perform intellectual work not linked to a particular place. Also a more international labour market, considering people can work from behind their computers, with a high demand for people with IT skills.
Growing migration. Non-local international work is currently being reorganized and optimized at a rapid pace. Where in the past all kinds of companies outsourced activities to cheap labour countries, now more and more work is done from behind a computer, making it irrelevant where the employee is located. A growing group of employees doing brain work has less need to organize their work in large central offices. Work is, as it were, delivered at home. This is in sharp contrast to the work of the people who perform classical manual labour. Their work is by definition city or region bound and they are therefore much less internationally oriented. Migration also plays a major role for this group of people. After all, about 3.5% of humanity is now adrift and is looking for work in countries where they find work or the pay is better than in their home countries. This means that worldwide this labour is levelling in terms of labour costs. It is why classical manual work in many countries is threatened by digitalization and automatisation on one side and on the other side by migration of cheap labour.
The future manual labour. Consequently a dichotomy of humanity is what is currently occurring worldwide. And different working conditions are needed for both groups. The internationalization of numerous laws is important for people who perform digital brain work in order to enable them to operate internationally. And because their work is location independent, they want to live comfortably in a pleasant place. How different that is for the people who do manual labour. Their work is by definition meant to serve the elite who perform intellectual work. They will have to do their work wherever their manual labour is requested. Where the elite want to live or work, manual labour is needed, but at the same time the expensive residential areas can only be paid for by the elite. Manual workers have to travel daily by car or public transport to go to their cheaper homes on the outskirts. Meanwhile, the perspective for people who have to do manual work are dwindling. In a digitalized society manual labour will always be needed, but the number of people needed will inevitably decrease.
New solutions are required. This is the underlying cause of the protest of the Yellow Vests. Digitalization is leaving heavy marks on our society and the labour market. A dichotomy of society is taking place and will increasingly lead to two different groups of people in society with different perspectives and consequently other needs. It is about time that policymakers and economists come up with new social-economic concepts for the digital society. In France President Macron will have to prove he has understood the situation and is challenged to propose solutions.