The Shadow Economy and The Future of Jobs

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The Shadow Economy and The Future of Jobs

Intelligent physical robots and artificially intelligent software or digital robots are expected to replace 35-47% of jobs in the advanced economies – based on studies conducted primarily in North America and Western Europe. These regions typically lead the fourth industrial revolution which raises the ultimate of the future of jobs. However, at present, there is an excessive focus on the developed economies and the lack of distinctive differentiation of the different populations – socially, economically and politically.

Long range forecasts points to the contribution of close to 60% of world GDP by 2030 by today’s developing and emerging countries. An inherent driver of these markets is the shadow economy. The shadow economy is defined as the work done for cash without the need to pay taxes nor strictly comply to regulations.

The context of labor is completely different in these countries. For instance, the shadow economy accounts for almost 18% of the GDP in India. These jobs are major contributors to the economy, among the many various forms of shadow labor. As a percentage of GDP, the shadow economy ranges from 25-60% in South America and approximately 13-50% in Asia. These countries are human labor intensive and for reasons beyond the availability of automation knowledge.

However, at present, there is a lack of studies and experts who are truly able to address the future of the developing and emerging countries. Most of the experts and thought leaders on the topic are western-education and from industrialised, rich and democratic societies. Therefore, the questions are – what is happening in the rest of the world, where the majority of the earth’s population live; how are they different and how we can help their transition to the fourth industrial revolution?

Source: St. Gallen Symposium