The advance of technology is the biggest reason workers are earning a shrinking slice of the income pie, according to a new study by the IMF.
Labour’s share of national income declined in 29 of the world’s 50 biggest economies between 1991 and 2014, the IMF said in a study released on Monday.
Analysis suggests “technology is the largest contributor to the change in labour shares in the large majority of countries”, it said.
The second main component of income is capital. When wages grow more slowly than productivity, labour’s share of income falls as the owners of capital reap gains at a quicker pace. That often worsens income inequality because capital tends to be concentrated in the hands of a few, the IMF said in a blog accompanying the research.
The IMF’s finding is significant because economists have been debating what is to blame for decades of sluggish wage growth, especially in the West. The US president Donald Trump has blamed trade with countries such as China and Mexico for hurting American workers and hollowing out the nation’s manufacturing sector. The IMF study suggests technology is a bigger driver.
About half the decline in national labour shares can be traced to the impact of technology, according to the study, which is part of the World Economic Outlook. The full outlook, including the fund’s forecasts for global growth, will be released April 18 in Washington.
The study notes the rapid advance of information and communications technology has accelerated the automation of routine tasks, causing firms to substitute capital for workers.
Global economic integration has also played a part in labour’s declining share of income, the IMF said. The impact of changes in policies and institutions appears to be limited, although it is difficult to say how much of the slump has to do with the decline of labour unions, according to the fund.
The IMF has warned before of the threat from from the growing use of robots. A paper by fund economists in September drew on science fiction as well as economic analysis to show the likely “profound negative implications” for income distribution of increased automation. It even depicted an extreme scenario, or singularity, “in which capital takes over the entire economy to the exclusion of labour.”
* Bloomberg
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Coming soon
Torno Subito by Massimo Bottura
When the W Dubai – The Palm hotel opens at the end of this year, one of the highlights will be Massimo Bottura’s new restaurant, Torno Subito, which promises “to take guests on a journey back to 1960s Italy”. It is the three Michelinstarred chef’s first venture in Dubai and should be every bit as ambitious as you would expect from the man whose restaurant in Italy, Osteria Francescana, was crowned number one in this year’s list of the World’s 50 Best Restaurants.
Akira Back Dubai
Another exciting opening at the W Dubai – The Palm hotel is South Korean chef Akira Back’s new restaurant, which will continue to showcase some of the finest Asian food in the world. Back, whose Seoul restaurant, Dosa, won a Michelin star last year, describes his menu as, “an innovative Japanese cuisine prepared with a Korean accent”.
Dinner by Heston Blumenthal
The highly experimental chef, whose dishes are as much about spectacle as taste, opens his first restaurant in Dubai next year. Housed at The Royal Atlantis Resort & Residences, Dinner by Heston Blumenthal will feature contemporary twists on recipes that date back to the 1300s, including goats’ milk cheesecake. Always remember with a Blumenthal dish: nothing is quite as it seems.
Quick pearls of wisdom
Focus on gratitude: And do so deeply, he says. “Think of one to three things a day that you’re grateful for. It needs to be specific, too, don’t just say ‘air.’ Really think about it. If you’re grateful for, say, what your parents have done for you, that will motivate you to do more for the world.”
Know how to fight: Shetty married his wife, Radhi, three years ago (he met her in a meditation class before he went off and became a monk). He says they’ve had to learn to respect each other’s “fighting styles” – he’s a talk it-out-immediately person, while she needs space to think. “When you’re having an argument, remember, it’s not you against each other. It’s both of you against the problem. When you win, they lose. If you’re on a team you have to win together.”
Our legal consultant
Name: Dr Hassan Mohsen Elhais
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