Labor and social rules for Industry 4.0 

By now, it is abundantly clear that the world of business is rapidly changing under the Fourth Industrial Revolution, simply referred to by human resource managers as “industry 4.0”. In turn, the way work is organized and  managed is also rapidly changing.

The big question, however, is – can we have a Fourth Industrial Revolution that works for all, as a Microsoft think paper put it? Or, can we have guaranteed minimum basic income and universal social protection for all, as floated by the World Bank in its 2019 World Development Report on the “Changing Nature of Work”? And yes, can humanity secure social justice in the digital era, a challenge posed  by the International Labor Organization (ILO) to its tripartite social partners?

The reality is that these triple issues of inclusion, social protection and social justice in the  digital era are somehow relegated to the background by the numerous media accounts on how business and jobs shall be “disrupted” or “displaced”, on what are the new robots invading the work place such as the 7-11 robot cashiers in Korea and the robot waiters developed by Nepal’s techies, and on the stream of estimates on the  “automatables” in various countries. A study by McKinsey Global Institute asserts that 40 per cent, out of  50 per cent  of  all occupations in the United States, are “automatable”.

In Southeast Asia, a 2016 ILO-ASEAN  study involving five ASEAN countries (Cambodia, Indonesia, Philippines, Thailand and Vietnam) claims  that many sectors in the economy  are highly vulnerable  to the endless  advances  in  automation,  digitization, apps development  and cloud  computing.  In manufacturing, the  auto, electronics, textile-clothing and  footwear industries  are at risk due to robotization, 3D printing and CAD/CAM processes. These  industries  are  witnessing the  rise  of co-worker robots or “cobots” at  the work place, robots  that can  sew or stitch things  together or  “sew-bots”, and robots  that can do various  functions  going  around  the shop floor or  “locobots”.

The  problem here is  that  these  industries happen  to be the  major industries that have  been fueling  ASEAN economic  growth under the  GVCs of  multinationals.  These  TNCs  now have  the option  to withdraw investments in  a labor-intensive facility in  the region  and  bring back low-cost manufacturing to  their  home  country such  as  what Adidas  did  when  it set up  shoe manufacturing plants in Germany and  in  Atlanta last  year.    Is the  Philippine  DTI  still bent on pursuing its  declared  program  of scaling up participation  in the GVC system of  the world? Is  PEZA,  which  has  covered  most of  the call  center-BPO firms under its “ecozone” program, coordinating with  DOLE  and  other agencies on  how  to deal with those  to be affected by the likely decline  of the voice segment of  the call center-BPO sector because of  breakthrough innovations  in  software automation,  interactive AI, cloud  computing and  do-it-yourself technology.

Now back to the inclusion, social protection and  social  justice issues. What can  policy makers, employers,  trade  unions, CSOs and  other  stakeholders in  society do in the area of  social and labor policy?  At the  moment, there  are black holes in the  labor policy regime  of  many countries.  For example,  there are  unsettled questions on the  status  of  drivers in  ride-hailing transport companies such as  Grab and  Go-Jek.  Are they “independent contractors” or employees,  who  deserve  minimum basic pay, social security and other  benefits due  to  a wage  worker? How about the  thousands of online  freelancers such as  the  Filipino  “skype tutors” who teach Japanese  families  English  from  the  comfort of  their homes?  What is  the appropriate compensation  rate?  And yes, how about the  taxes that  have to paid  to the government?

The  questions  are endless.  But  as  wisely suggested  by the  proponents  of  technology revolution  for all, it is important for humanity to reflect on  the history of  how  labor and social  legislations  developed  in the  earlier industrial revolutions.  In  the first industrial revolution, circa 1750-1850,  workers’ rights were  ignored  and  the early working  conditions  were horrific  – work hours of 15-16 hours,  child  workers as young as 5-6 years old, many  workers  dying in their 20s or  30s, and  so  on.  The situation  gave  rise  to  numerous workers’ strikes and  uprisings, mostly spontaneous and  directed  by underground  “socialist” labor organizations. But after the bloody Paris Commune of  1871 and  the Chicago city-wide strike  for eight-hour labor law in 1886, European governments gradually learned  the  need  to lower working  hours, raise the  working  age, recognize unions and  develop a system of  dispute settlement.   A stable capitalist  society needed  a stable  social  order  based  on  certain  social  and  labor  rules.

In the  Second  Industrial Revolution, which  saw  the  transformation of  the  factory system into mass production system (courtesy of  the new  conveyor belts  and  the Tayloristic time-and-motion  studies), more wage worker were hired, joining the  growing  army of  blue-collar workers.  As services  and  other  sectors developed,  new collars  were  added – the  white-collar office  and service  workers.  But like in the  First  Industrial Revolutions, the  struggle for  higher wages,  better benefits  and  protective  labor  laws  never stopped in virtually all  capitalist countries.  In Russia, returning peasant-and-worker-soldiers, defeated  by the  Allied  forces,  joined  the  Bolshevik Revolution of  Vladimir Lenin to oust the  Tsarist regime  and  establish  the  “First Workers’ State” in the  world in 1917.  This  prompted the United  States  and  the  United  Kingdom to include  the  establishment of  a labor-standard-setting ILO  as  part of  the 1919  Treaty of  Versailles ending World  War I.

Later, western governments  learned  that  investing on workers’ rights  and social  dialogue  helps  strengthens  the  economy and society. This  is what  Franklin Delano Roosevelt did  in the  1930s to help engineer American  recovery from  the  1929-33 Great Depression through a “New  Deal” program recognizing unionism and  workers’ bargaining rights as  well as massive government stimulus spending on  various  infra and  social  projects. This  is  also what Western  Europe, Japan, Canada and  Australia/New Zealand did after World  War II when they institutionalized  “welfare capitalism” and closer union-management partnership, twin  measures  that  were partly a response  to the  expansion  of  the  “socialist camp” in  Eastern Europe and  parts  of  Asia (China,  Vietnam and  Korea).  These also became  part of the post-WWII social contract in the  OECD  countries and the  system of  tripartism promoted  by  ILO for all  Member States.

The  problem is that the  social contract and  tripartism in the  United States, Europe and  many  countries have been  eroding since the  1980s.  The 1980s up to the turn of  the  millennium were decades that saw huge technological advances because  of  the  ICT Revolution, which is the  central  feature of  the  Third  Industrial Revolution.  These decades also happen to be decades  of  “free trade” thinking, alias “Washington Consensus”, in national and global trade and  economic policy. Free trade and the ICT Revolution are  considered  major factors in the  globalization of  economies everywhere.  But at the  same time, they  are  also  blamed  for  the  deepening social and  economic inequality everywhere.

Now  that  humanity is  in the  cusp of a  new  era  of technology, alias the Fourth Industrial Revolution, can policy makers continue  to  ignore the exclusion  of  the  many and the  lack of social justice  in many places? Shall they wait for  the  Technology Revolution to be  transformed  into a Social  Revolution?   A review and institutionalization of appropriate social and labor rules in the digital era are in order.


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