Priorities for the Japanese Economy in 2018 (January 2018)

Job Substitution≠Job Disappearance: Employment and education policies in the era of AI and robotics

KONDO Keisuke
Fellow, RIETI

The debate over the job substitution by artificial intelligence (AI) and robots continues to be a contentious one. The "New Industrial Structure Vision," mapped out by the Ministry of Economy, Trade and Industry (METI), forecasts a dramatic change in the employment structure caused by technological advances and sets forth the future direction of Japan for economic growth strategies with new technology (METI, 2017). What is important is that technological innovations being spurred by AI and robotics bring significant benefits, rather than negative effects, to our everyday life. Of course, we cannot fully enjoy the benefits of technological innovations if we continue to sit on our hands. Individuals, companies, and the government must take action and execute strategies and policies from a forward-looking perspective.

Job substitution due to technological innovations and a society beyond it

Technological innovations related to AI and robotics are already starting to cause substitution of some human jobs, and the job substitution is likely to continue in the future. "Substitution" in this context does not merely mean that existing workers are substituted by AI and robots. It also means that AI and robots will perform jobs that would be assigned to human workers if the technological innovations related to AI and robots did not occur.

The talk of such job substitution may cause many people to fear that there will be no jobs left for human workers. However, we must keep in mind that it is an extreme case that job substitution would entirely deprive human workers of jobs. A high-impact incident tends to become dominant in people's minds even if the probability is extremely low.

Why is it necessary to create technological innovations that intend to save human labor in the first place? Answering this fundamental question, Yoshikawa (2016, p. 87) discusses that machines have been introduced with respect to certain jobs as a labor-saving measure as a result of wage rises caused by labor shortages due to strong demand for workers in the economy as a whole. In recent years, the viewpoint of securing worker safety likely has been a factor. Mechanization is also considered to improve the working environment in workplaces requiring long working hours caused by labor shortages or involving risks for human lives. The original objective of technological innovation is not depriving human workers of their jobs but making people's lives better by improving their working environments through supporting some tasks in our occupations.

We must recognize that job substitution is just one of the phases of technological innovation. Of course, technological innovation could replace labor to an excessive degree as an unintended consequence, but a more fundamental question that we must consider is what may await us after such job substitution.

Looking forward over the next 10 to 20 years, only some tasks in our occupations will be substituted by AI, robots, and other innovations. In a society where such job substitution has made progress, AI and robots will handle tasks that humans do not necessarily engage in so that humans can concentrate on areas where we can best exercise our capabilities.

In the future, we will be able to concentrate on tasks that only humans can do while receiving support from AI and robots. In some occupations, all tasks might be substituted by AI and robots. However, note again that this will be a rare case in the next 10 and 20 years. This likely scenario will occur only to liberate human workers from long working hours, which are being caused by labor shortages, or to ensure worker safety in dangerous workplaces.

We should consider how our tasks can be best exercised in combination with human capabilities and technological innovations, To make successful use of AI and robots, it is necessary to acquire additional new skills. Therefore, individuals with high aspirations may invest in themselves to gain advanced knowledge, and the government also needs to offer policies that encourage individuals to do that. In order to perform economic activity more effectively, companies also must consider how to augment human tasks making use of AI and robots.

Employment and education policies in the era of AI and robotics

When considering future employment and education policies, we must bear in mind the growing importance of doing our jobs while making use of AI and robots. Rather than worrying about the risk of losing jobs to AI and robots, we must consider that competition between those companies and people who can make effective use of AI and robots and those who cannot results in inequality. This is the issue to be tackled by the government.

An increase in the number of people capable of making effective use of technological innovations such as AI and robots will benefit the entire society by realizing higher productivity. Acquisition of new skills is expected not only to improve productivity of each individual but also to raise the overall productivity of the society through their interactions. When such network externality is largely expected, the government's policy intervention is desirable.

It is necessary to discuss not only what should be learned by people who are already in the labor market but also what should be taught to children who are the future workers. The fundamental policy challenge is that even though the importance of the problem may be well understood, it is unclear specifically what solution should be applied in which way.

For example, in response to calls for emphasis on recurrent education, researchers tend to recommend the promotion of graduate school education. Of course, acquiring graduate school degrees is important, but it is not the only means of recurrent education. It is also possible to acquire new knowledge in flexible ways, beyond conventional styles based on academic degrees or vocational qualifications. Therefore, the government should take policy measures that can support many other possibilities. In addition, the Japanese government has decided to introduce programming education (i.e., logical thinking in programming, not program coding) in elementary schools from 2020. Although it is important to make it mandatory for children, there is still ample room for discussion as to what should be taught in which way.

In the process of policymaking, cooperation among experts in various fields is essential. In addition, it is also important to design institutional systems that make it possible to conduct ex-ante examination as evidence for policymaking and ex-post evaluation of policies. Future policy discussions must be held from the perspective of the quality of employment and education policies in the era of AI and robots.

December 27, 2017
  • Ministry of Economy, Trade and Industry (2017) "New Industrial Structure Vision." (Only in Japanese; Accessed on December 18, 2017).
  • Yoshikawa, Hiroshi (2016), Jinko to Nihon Keizai [Demography and the Japanese Economy], Tokyo: Chuokoron-Shinsha, Chuko Shinsho No. 2388. (Only in Japanese)

January 26, 2018

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