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Negative effects of slow and rapid technological change

Today there's a popular concern or debate that technological advancement may replace a lot of the industrialized and other employees, creating widespread unemployment. For instance, in "1983 the Upjohn Institute for Employment Research predicted the existence of 50, 000 to 100, 000 industrial robots in the United States by 1990, producing a net loss of some 100, 000 jobs" (Distress Inevitable as Robots Replace Low End of Workforce, 1983), meaning the amount of advancing technology is directly related to the amount of unemployment. Technological (ICT) advancement changes or introduces more efficient and effective ways in the production of more goods and services. It will be argued below that the employees influenced by technological advancement are those people who have no skills on how to adjust to the technological change and partly lose their jobs in a completely competitive labour market. ICT is simply the utilization of software and machines, robots, computers, and so on in production. However, any better, faster, or even more efficient way of producing is a technological advancement; better knowledge will be enough, even with out a new tool or machine. Finally, the unwanted effects of slow and rapid technological change on employment and economy as a whole will be discussed. Our results show the result of ICT investment on unemployment and also how telecommunications investment positively impacts the creation of services and processes, but improve the demand for skilled workers.


The most constructive definition of "unemployment" is the shortage of supply to demand in the case of labour. It's the ability of someone who is willing and in a position to work at market wage rates but is denied the opportunity to do so. Upsurge in technology can be a cause of increase in unemployment. Technological advancement or upsurge in ICT may be described as any change in a production process resulting in higher standards of living through increased output from the same amounts of resources or through the use of fewer resources to create the same level of output. The type of unemployment applicable to this discussion is structural unemployment because of the replacement of staff by machines. The flow of the info and Communication Technologies (ICT) has risen, bringing up again the old classical debate about the relationship between technology and employment. Structural unemployment occurs when the jobs available in a certain area do not match the talents of those who want to be employed. As we will read later in the study, some assume that this kind of unemployment may exist throughout the economy because of rapid technological advancement. The type of the several long-term "technological path" can be of importance in explaining national and regional distinctions in employment and unemployment trends. Obviously, this does not mean that short-term views concentrating on prices (wages and interest levels) or on labour market regulation aren't important, but they are probably insufficient in providing a complete interpretation of employment evolution. Worries is the fact ICT technologies have damaged - or even eliminated - the positive correlation between growth and employment which was undoubtedly one of the main characteristics of the Fordist "golden age" (Rifkin, 1995).

The economics of technology and employment

Economic growth theories predict that economic growth is driven on investment in Information and Communication Technology (ICT). However, empirical studies of the prediction have produced mixed results, depending on the research methodology employed. The macroeconomic models which economists use to analyse business cycles contain practically no mention of technology. The main one exception to this model is "real business cycle theory, " which suggested that variations in unemployment could be understood in terms of personnel choosing between work and leisure, depending about how technology affected productivity (and thus wages) at any moment. Empirical support for this theory, which was important in the 1980s, has proven as weak as its theoretical basis.

Is there a connection between technical change and the demand for labour (Ricardian unemployment)? Changes in technology have ever sold damaged employment because some tasks are done more precisely and than people can do them. For instance, Henry Ford create main assembly lines, which increased employment in Detroit in the first 1900s. Lots of the employees worked there their whole lives. But, as the auto business changed (to begin with, they go longer), then your employees had to learn new technological skills or changed jobs, depending on situation. More computer enabled devices on cars, different materials (steel vs. fibreglass), etc make a huge difference. Early studies of the effects of computer investment found little or no correlation between it investment and productivity. More recent studies, however, indicate that computers and it may indeed be affecting the productivity of non management workers.

Technological advancement allow for economic growth which really is a necessity for an increased standards of living in an economy. This is a long-run effect, however, and in the short-term the introduction of new technology can result in unemployment. The impact on employment in several sectors is universal. There has been a noticeable change in the skills necessary for existing jobs and new jobs. There has been a shift popular towards more skilled employment in manufacturing and in other industries. There exists thus widening the gap between those people who have appropriate skills and those who don't. This ends up with unemployment due to mismatch.

Assume that current technological conditions imply full employment of both skilled and unskilled workers: for instance, 20 skilled staff and 100 unskilled workers are used in a given economy. Then, a skill biased technical change occurs: the same output is now able to be produced with 10 skilled personnel and 30 unskilled ones (the relative coefficient in the utilization of labour has increased from 1/5 to 1/3 due to skill bias). Now, even if an unlimited demand expansion is assumed, the monetary expansion can result in the full utilisation of skilled labour (20) and under-utilisation of the unskilled (60); as a result, 40 unskilled staff remain unemployed. In other words, a limited way to obtain skilled labour implies unemployment among unskilled workers (Bartel, 1987).

Effect of Technological change in Africa

Even though, the creation and flow of ICT products and services plays a significant role in social development, productivity and economic growth generally speaking as seen in developed countries. The rate of relocation of displaced employees is very low in African countries. Evidence from recent studies implies that African countries are not lucky to have huge amounts of educated skilled workers who can certainly be relocated to other sectors when replaced by the computerized nature of ICT. The impact of the automation of ICT shows a reduced ability for poverty reduction related to a rise in unemployment rate due to limited job opportunities.

Technology advancement is a significant factor for financial development in African countries. However, the crisis ICT has brought to African countries cannot be understated. Just how risk is seen in Africa in conditions of unemployment is very high because job losses are on a growing rate. A report released by the US (UN) shows that African countries were growing at about 6% and reducing unemployment at about 1. 5% before ICT. After ICT, the growth rate is projected at 1. 5%. This reduction in the growth rate from 6% to 1 1. 5% shows a primary interaction to how employment has been negatively affected by the introduction of ICT. The methodology of the analysis explains the indirect effects of technical change and the unpredictable job opportunities that can be opened by new ICT products. Since from its start, in fact, the monetary theory has described the existence of economic forces which can spontaneously compensate for the decrease in employment due to technological progress.

Furthermore, a 2008 projection from the UN indicated a possible 2. 6% growth in global IT spending in Africa (Annual Report, 2009). Although, this will lead to more opportunities in the ICT market, it'll definitely cause an increase in unemployment in 2009 2009. Moreover, it would bring about lower investment in ICT human resource development in both public and private sectors and shifts from long-term cost saving ICT projects to short-term-cost saving measures.

African governments must take big steps such as adjusting ICT related rules and policies to cope with the impact of unemployment; developing convenience of converting ICT related outcomes into tangible social and monetary benefits and working with academia and industry to build up more powerful and low cost ICT infrastructures, applications and services. Also, they must offer non-stop hold up in the area of competent building but focus on greatest use of IT funds (ways to get more for less).

Empirical evidence

Given the framework described in the last sections, the net employment impact of ICT technologies may be different in various "national systems of innovation". For example, in a report on the period 1960-1990 (Vivarelli, 1995) the U. S. economy turned out to be more product oriented (therefore characterized by a positive bond between technology and employment) than the Italian economy where different reward mechanisms cannot counterbalance the labour-saving effect of prevailing process innovation.

Machines Are OVERTAKING The Work

There is no point of people cleaning cars in a car wash manually using their hands when machines could get it done for these people.

In every field of human attempt, intelligent machines are making advancements by reducing workers. Jet planes are flown by computer, you don't have for a guide, and the result is more advanced than any human attempt. The arms systems that defend warships need to respond so quickly that any human intrusion disables their efficiency. The whole system operates without the use of a single person.

No Industry is Safe

ICT is a threat to newspapers, the music industry, television set broadcasting and even the movie industry. Immediate up to date news on many and diverse subjects are available, along with pictures, at the touch of an keyboard via the internet.

Music can also be copied onto computer files and played without the need for records or cds, declining the CD creation and publication industries. Industries now share the same insecurity as personnel as they don't know how long they will be required.

From an empirical perspective, the question is to see whether technology has implied an over-all tendency for the saving of work. It is important to stress that exercise should be conducted in terms of total gross annual hours of work, since the focus of the analysis is the full total need of work which is requested by confirmed monetary system. Thus, because of this aim, both unemployment and employment statistics are obviously misleading because the first is biased by the relative dynamics of labour supply and labour demand, while both of them do not look at the general trend towards a continuing loss of working time per employee. This general trend has nothing in connection with the marketplace compensation mechanisms which have been discussed up to now and it obviously involves a bias: if, for instance, labour-saving technologies has implied a loss of 20% in the labour coefficients and the gross annual per-capita working time has decreased by the same percentage, the comparison in terms of employment (variety of employees) would erroneously lead to the conclusion of an neutral employment impact of innovation. Hence, for the purpose of assessing the impact of technological change on the full total need of work, the total amount of hours of work in a given economic system should be used as the proper employment indicator (annual per-capita average working time times the number of full-time equivalents employees).


Yes, ICT can have adverse quantitative effects on employment, but it addittionally has its qualitative effects. The theory is that new technologies imply a change in the relative ratio between skilled and unskilled employees with the demand for labour shifting towards the skilled, those who is able to adjust to change. Thereby creating the labour market to either imply lower wages for the unskilled or cause higher unemployment rates. Indeed, it is necessary to start out from an "open minded" theoretical approach and from reliable data and then try to patiently discover, represent and estimate all the various direct and indirect ramifications of technological change. As far as the available evidences are concerned, contrasting results can emerge according to the different levels of analysis.

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