On Saturday 26 October, basic income marches took place in cities across the world. Of the 27 cities that participated, the majority are located in wealthy countries, whereas only four cities from middle to low-income countries participated – Istanbul, Bogota, Sofia (Bulgaria), and Kumbungu (Ghana). Considering that the overwhelming majority of cities that participated were from wealthy OECD-countries like the US, Sweden, Germany, and South Korea, the question comes to mind: is a basic income at all feasible and desirable in countries of the Global South?
In other related news, which went under the radar of the German media, was the establishment of the Freiburg Institute for Basic Income Studies (FRIBIS) on Monday. It’s the first institute in Germany with the sole purpose of exploring the potential of basic income as a legitimate solution to the many challenges that humanity is facing these days. In addition, the institute has the aim to analyse possible ways to implement a basic income.
The risk of automation
A 2017 study by Carl Benedikt Frey and Michael A. Osborne looks at the impact of automation on labour markets worldwide. It is astonishing how much higher the risk of job loss due to automation is for countries of the Global South and BRICS.[1] While the risk in OECD countries is already quite high at 57%, according to the authors, non-OECD countries are presumed to be even more susceptible. Ethiopia has a risk of 85%, China 77%, South Africa 67%, Nigeria 65%, Argentina 65%, and so on. If we believe these figures to be at least somewhat accurate it becomes obvious that technological progress will impact non-OECD countries more than OECD countries.
The main reasons for the higher risks associated with automation in non-OECD countries is that countries in the Global North have already achieved a high degree of robotisation, and secondly, the outsourcing of manufacturing jobs to the Global South began to take place decades ago.
Taking into account the ‘robot density’ across countries, the assumption that the Global South is at a higher risk of job loss due to automation is supported. While the global average in manufacturing was 85 robots per 10,000 workers in 2017, wealthy countries have a higher average of robots in use. South Korea leads the top 14 countries, with an average of 710 robots per 10,000 workers (2017). China is ranked 14th with an average of 97 robots per 10,000 workers. In particular, non-wealthy countries are far behind in robot density as well as some European nations . At the same time, low robot density doesn’t necessarily point to a disadvantage. Some countries might simply be more focused on other sectors and not manufacturing.
Global income and wealth inequality
There are many factors behind income and wealth inequality. But there is a consensus that the distribution of gains from technology is a driver for inequality and that its impact will increase over the millennium compared to other drivers (like the decrease of taxes on wealth, wage sacrifice by workers, outsourcing, etc.). When taking a look at inequalities around the world it easy to see that on average countries of the Global South display higher income inequality than many countries in the Global North (with certain exceptions, e.g. the US). In many countries in the Global South, those in the top 1% of the income ladder are earning more than 15% of the overall national income. With regards to notoriously incomplete data on levels of wealth, this form of inequality is even higher than with income. Gabriel Zucman, world-renowned researcher in economic inequality, underlines in his annual review on wealth inequality (2019) that:
The top 10% owns more than 70% of the total wealth in China, Europe, and the United States combined; the bottom 50% owns less than 2%; and the middle 40% (which could be described as the global wealth middle class) owns less than 30%. Wealth concentration would probably be even higher if Latin America, Africa, and the rest of Asia were included in the analysis, as most people in these regions would be in the poorer parts of the distribution. Wealth is substantially more concentrated than income.
High wealth and income inequality restrain the development of societies and make countries lag behind in essential fields like health, education, labour skills, well-being, trust in society, etc. This in fact hinders human development in general.
Why basic income should be considered in the Global South
Wealth and income inequality are on average much higher in countries of the Global South. The risk of jobs being automated away in the face of rapid technological progress is also higher. Both of these points suggest an urgent need to counter the consequences of inequality and to find a way to deal with the risk of automation. Basic income as a solution would have to be country and context-specific. As countries in the Global South are quite different from each other and often times highly diverse even within one country, it is key to adjust basic income schemes to local conditions/traditions, labour markets, and cultural contexts for successful and sustainable implementation.
An important aspect that could make the implementation of basic income programmes more feasible is that many countries in the Global South don’t have full-fledged welfare systems that would have to be abolished after the introduction of a basic income. This makes the roll-out of a basic income easier, as there are fewer well-functioning social services that would be under threat of dissolvement.
A reasonable basic income in countries of the Global South could help people live a decent life and enable them to receive a bigger share of national wealth and income. A basic income could decrease poverty in the face of extremely unequal wealth distribution. It could enable people in the wake of technology-induced job reduction to more securely take up re-skilling or move to other professions or activities. Thirdly, it could be an enabler for upgrading existing nascent welfare states.
Although, basic income is not the panacea for all challenges to societies, it needs to be carefully studied by governments in the Global South and North alike. Every nation is well-advised to review its education, labour, and welfare policies in order to reap the gains from rapidly advancing technological progress. Basic income could provide a breathing space for people to readjust their skills and to use their resources in a self-empowering way to get closer to their real potential.
[1] The risk of automation is describing that it is technically feasible to replace a task or a job by a robot. That doesn’t mean that this is practice will be done, because this depend on business decisions, policy decisions and also on the cost of automation (think the cost of a robot and his maintenance vis a vis a human employee).
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