World Bank: new technology, expansion of labor demand, acceleration of Super enterprises' rise

World Bank: new technology, expansion of labor demand, acceleration of Super enterprises' rise

World Bank: AI Technological Progress, Expanding Labor Demand, Social Protection and International Tax Adjustment

Reporter Xin Ji called Shenzhen Report

On October 15, the World Bank Group in Shenzhen issued the World Development Report 2019: Change in the Nature of Work (REPORT). Technological change has replaced repetitive "codeable" work with a variety of new occupations. In Europe alone, it is estimated that there will be 23 million new jobs in this century.

"Machines are competing for jobs" has always been a concern, especially the rise of artificial intelligence (AI), making "AI substitutes" become the focus of public opinion. The report argues that, although technology may replace workers employed in certain jobs, technology in general enlarges the demand for labor. The number of robots around the world has increased rapidly, causing panic over the loss of jobs. However, technology has opened up a path for creating jobs, increasing productivity and providing effective public services. Innovation has changed the standard of living, and the fear of innovation is groundless.

New technology speeds up the rise of Super enterprises

According to the report, one of the characteristics of the current wave of technological progress is that technological progress enhances the interpenetration of corporate boundaries and accelerates the rise of superstars.

Simeon Djankov, chief economist of the World Bank, said the world had gone through four industrial revolutions, the first led by Britain, the second by Germany, the third by the United States in computing, and the fourth by online platforms. Among them, China can use electronic devices for all payments, this form of payment in the United States and Europe is not very prosperous, China's development in the field of financial technology ahead of other countries.

According to statistics, 10% of the world's enterprises create 80% of the profits, superstar enterprises determine a country's exports. A study of 32 countries found that, on average, the top five exporters accounted for one-third of the country's exports, with nearly one-second of the country's export growth and one-third of its export diversification due to the top five exporters. There is no doubt that large enterprises play an important role in promoting economic growth, but the emergence of digital technology companies brings faster scale and lower costs. It can create value by creating network effects among customers, producers and providers, and facilitating interaction in multilateral models. For example, Jingdong financial used its data obtained from Jingdong Mall for loan evaluation model.

Digital technology promotes rapid innovation and growth, breaks the traditional mode of production, and blurs the boundaries of enterprises. New business models, such as digital platforms, have jumped from local start-ups to global giants at dazzling speeds, often with very few tangible assets or employees. The new platform based market connects people with unprecedented speed. This "no entity scale" provides millions of people with economic opportunities wherever they live.

Technological progress and expansion of labor demand

The report points out that in considering the scope of the challenges required to prepare for future work, it is important to recognize that many pupils today will be engaged in jobs that do not exist today as adults.

The report makes it clear that the proportion of industrial employment in developing countries has remained stable despite strong predictions of job losses due to technological advances. In some countries where robots are most widely used, such as Germany, South Korea and Singapore, the employment rate is still high.

Over the past century, machines have replaced workers in many tasks, but overall, technological advances have created more jobs than eliminated ones. For example, Jingdong Finance did not employ a large number of traditional credit officers, but created more than 3,000 risk management or data analysis related jobs to improve the digital lending algorithm.

However, technology is not only changing the way people work, but also changing their working conditions, creating more non-traditional jobs and short-term "odd jobs". This makes some jobs more accessible and flexible, but also raises concerns about income instability and lack of social protection. Two billion people are employed in the informal sector, without the protection of stable wages, social welfare or educational rights, and the new work model further exacerbates the predicament that existed before a new wave of technology.

According to the report, to adapt to changes in the nature of work, social protection needs to be adjusted, including universal access to the lowest level of social security. China's expansion of rural endowment insurance is an example of providing minimum living security for rural residents. Full coverage of social protection is costly, but in some countries it can be achieved through labour market regulation reforms, and globally through long overdue tax policy reforms. As companies move beyond national boundaries and material assets, it is easier to shift profits to low-tax jurisdictions, which means billions of dollars in tax evasion. The report calls for updating the international tax system and giving full consideration to the globalized digital economy.

As digital businesses with relatively few tangible assets grow and grow, withholding taxes become more meaningful. Current tax patterns show huge disparities, especially between poorer and richer countries. High-income countries receive a larger share of national output through direct taxes, while middle-income and low-income countries rely more on excise and trade taxes.

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