Will the information economy be a jobs economy?

15 August 2001 Will the information economy generate employment? This is the question the International Labour Office (ILO) asks in its World Employment Report 2001 on the theme of life at work in the information economy.

As Dominique Peccoud, Special Adviser in the ILO’s Bureau for External Relations and Partnerships explains, ‘the content of this year’s report is highly relevant and closely connected to Chapter II of the Science Agenda’.

‘The report insists on the need to involve highly skilled people worldwide in the information and communication technologies (ICTs) and their connected basic underlining sciences’, she observes. ‘They are pervasive technologies that can foster or hinder all other scientific developments’.

The ILO estimates that some 160 million workers are unemployed today, most of them first-time jobseekers. Of these, about 50 million are to be found in the industrialized countries, including Central and Eastern Europe.

‘About 500 million workers are unable to earn enough to keep their families above the US$1 a day poverty line. These live almost entirely in the developing world. And even among the non-poor, many workers lack basic job and income security.’ The ILO predicts that the numbers in this group will grow in many parts of the world.

For the authors of the report, ‘the most serious problem facing the labour force in coming decades will be the loss of human capital caused by HIV infection. ‘Losses are disproportionately high among skilled, professional and managerial workers’ they note. ‘The epidemic will not only reduce the stock of such workers, but also the capacity to maintain future flows of trained people.’

As to whether or not the global employment situation will improve, this will be essentially dependent on the world economy continuing to expand.

The report gives some sobering statistics on Internet access. ‘Barely 6% of the world's people have ever logged onto the Internet’ it notes, ‘and 85–90% of them live in the industrialized countries.’

According to the authors, ‘the level of national income is strongly related to ICT diffusion and is clearly the distinguishing feature of the divide between industrialized and developing countries. The cost and availability of telecommunications determines the extent to which the Internet is used and per capita access costs are most often higher in poorer countries. Coercive governments limit the extent to which information is exchanged and evidence shows a higher level of Internet usage where political and civil freedoms exist.’

The report is guardedly optimistic about the chances for employment growth where ICT is most in use. ‘Productivity growth is greatest in the core ICT sector itself’ it acknowledges, ‘where, in manufacturing, it has resulted in stunning increases in output with nevertheless declining employment. But the employment decline in manufacturing has been more than offset by the rapid growth of new markets and new employment in the service sector, with business and producer services and social services (health, education) claiming the highest share of growth.’

The report cites evidence showing that countries recording the greatest growth in ‘total factor productivity’ in the 1990s are ‘those where ICT has been used most widely in the economy. These are also the countries in which employment has grown the most’, the report goes on to say. ‘Employment ratios are highest in those countries where the use of ICT is most widespread [and] unemployment has declined most in the small number of countries where Internet use is most widespread, such as Denmark, Finland and Ireland. It is too early to conclude, but there are hopeful signs that the effect of ICT on employment is positive.’

Use of ICTs has created new patterns of job creation and job loss. Despite evidence of job creation, it is clear to the report’s authors ‘that jobs will also be lost through three main channels: obsolescence, automation, and "disintermediation".’

‘The highest rates of job creation, job destruction and job switching are occuring’, according to the authors, ‘among the most technologically innovative firms in sectors where overall employment is growing.’

Source: ILO. Extracts from ‘World Employment Report 2001: life at work in the information economy (ILO, 2001).