Deindustrialisation Is Disrupting Global Economies

Deindustrialisation is causing global socioeconomic disruption

For almost three hundred years, we have lived in a largely industrial society. But today, thanks to technology and new ways of working, societies and economies across the globe are undergoing a process of change. Instead of becoming more industrial, a reduction in traditional labour roles is challenging established socioeconomic models. This process is known as deindustrialisation, and is likely to characterise future economies. But what implications does this have for the organisations and workers within them?

The development of deindustrialisation

Deindustrialisation was brought about by advances in transportation, communication and information technology – and globalisation. From a business perspective, a smaller world has led to bigger opportunities. Companies in the US, Japan, South Korea and other major producers have offshored manufacturing to lower their costs, employing workers at much lower wages. Throughout Asia, the creation of low entry level work has enabled individuals (and therefore societies) to get a foot on the economic ladder. Offshoring, however, has sliced the number of manufacturing jobs available in developed countries. Technological advances, particularly in artificial intelligence, robotics and 3D printing, have accelerated this trend. In some cases, robots can already perform tasks better than humans. The consequent lack of industrial roles has led to backlash against automation – and now, even the jobs created by offshoring are under pressure.

The end of work as we know it

Deindustrialisation certainly raises a number of concerns. What happens when there are few – or no – low skilled manufacturing jobs available? Mass unemployment, especially in developing societies, could crush economic growth. At the same time, deindustrialisation seems to go hand in hand with successful economies. According to a paper published in Economic Issues, employment in manufacturing has seen a steady decline in the world’s most advanced countries. The paper, however, was published almost twenty years ago. Since then, a lot has changed. Workers are no longer simply competing with other humans, but also with technology. Advanced robots kitted out with intelligent software can carry out manufacturing tasks much faster and more accurately than their human equivalents, and an artisan designer could never keep up with a 3D printer. So where do we go from here?

Dealing with deindustrialisation

Technonomy, as defined by DISRUPTIONHUB cofounder John Straw, refers to the changing dynamic between economies and technology. Technonomy is closely linked to deindustrialisation, demanding that markets adapt to innovation. Technology, which can be largely credited with fuelling deindustrialisation, has certainly driven economies and enriched societies. But dealing with deindustrialisation is a complex problem, especially for societies and economies that rely on manual labour. One potential approach is for governments to offer tax breaks or other incentives that encourage businesses to employ a certain number of humans. This won’t stop the tide of automation, but it will allow for socioeconomic adjustment. It’s arguable that companies themselves have a responsibility to prepare their employees for disrupted markets. Reskilling programmes, for instance, would give workers the opportunity to develop their abilities to complement changing structures and systems. In the best case scenario, the employee keeps their job while the business retains a valuable worker. Given the pace of automation, this is unlikely to be the norm. Even so, the businesses that ready their workforce for deindustrialisation are far more likely to survive than those that don’t.

Deindustrialisation poses a challenge to existing markets – and not just those in developed economies. The lower cost and higher accessibility of technology means that automation is seeping into the factories and manufacturing sites created to take advantage of cheap human labour. The result is a scramble for shrinking low entry level jobs, and a feeling of intense economic insecurity.

Now that we live in technonomies, global organisations are faced with finding a way for automation to progress without breaking incumbent economic structures.

To find out more, sign up for our free newsletter here.