Manufacturing, retail, and administration are at the forefront of changes in the world of work. Various economic studies show that technology is not only replacing some jobs but also has the potential to widen the wage gap. The question is, who bears the cost of this transition most heavily, and how prepared are labor safety nets to face these changes?
JAKARTA, JurnalPost.com — Robot arms in factories are now capable of assembling components tirelessly. In retail centers, self-service checkouts are replacing some conventional queues. Meanwhile, in offices, chatbots answer customer questions in seconds, and software can process data that previously required a number of administrative staff.
Technology brings efficiency, but its benefits are not always distributed evenly.
Various labor economics studies show that workers whose skills align with technological developments tend to gain better job opportunities and wage levels. Conversely, workers with tasks that are easily automated face the risk of income stagnation or even job loss.
Three Sectors at the Forefront of Automation
In labor studies, jobs most vulnerable to automation are often called routine jobs. Their characteristics are tasks that are repetitive, procedural, and can be translated into clear rules.
Autor, Levy, and Murnane in a 2003 study explained that computers and machines tend to replace humans in such jobs. The decline in the cost of computer technology since the 1970s has also accelerated this shift.
In the manufacturing sector, industrial robots have been used for various jobs such as welding, painting, and assembly.
In the retail sector, self-checkout kiosks and warehouse automation reduce the need for labor in several activities previously performed manually.
Meanwhile, the administrative sector faces automation in the form of data entry, record-keeping, document management, and first-tier customer service through software and chatbots.
The development of generative artificial intelligence expands the scope of these changes. Technology now not only handles routine physical work but is also beginning to enter cognitive tasks such as writing, information processing, and data analysis.
A number of studies in Southeast Asia also place sectors such as retail and textile manufacturing as fields with a relatively large proportion of the workforce facing the risk of automation.
The Two Faces of Technology and Wage Inequality
Technology has two sides in the labor market.
On one hand, automation can lower production costs, increase efficiency, expand output, and create new types of jobs such as data analysts, software developers, and artificial intelligence specialists.
However, on the other hand, technology can replace humans in certain jobs.
Acemoglu and Restrepo in a 2019 study showed that in the period from 1950 to 1987, the effect of worker replacement by technology and the creation of new tasks were relatively balanced.
However, after 1987, the labor displacement effect was said to be stronger than the creation of new tasks, especially for workers without a bachelor's degree.
The impact is also visible in the wage structure.
In a study published in 2022, Acemoglu and Restrepo estimated that about 50 to 70 percent of the changes in the wage structure in the United States over four decades were related to the decline in the relative wages of workers who perform many routine tasks.
Since 1980, the real wages of men without a high school diploma are said to have fallen by about 8.8 percent, while women in a similar group fell by 2.3 percent.
Conversely, groups of workers with higher education, including postgraduate graduates, enjoyed income increases.
This phenomenon is often explained through the concept of skill-biased technological change, which is a technological change that provides greater benefits to workers with high skills.
When the demand for skilled labor increases, the job opportunities and wage levels of that group also have the potential to increase.
Acemoglu also warned about the phenomenon of so-so automation, which is automation that replaces some human work without producing truly significant productivity gains.
One example is self-checkout kiosks, which in practice shift some of the cashier's work to the customer.
However, the relationship between technology and wage inequality remains a subject of debate. Economists David Card and John DiNardo in a 2002 study assessed that the theory of skill-biased technological change has not been fully able to explain all patterns of wage inequality.
Spotlight on the Numbers
50–70 percent
Changes in the wage structure in the United States over four decades are estimated to be related to the decline in the relative wages of workers concentrated in routine tasks, according to Acemoglu and Restrepo.
170 million versus 92 million
The World Economic Forum in the Future of Jobs Report 2025 estimates that about 170 million new jobs could be created by 2030, while about 92 million jobs have the potential to be replaced.
16 percent
The earnings of workers who lost their jobs were still recorded as being about 16 percent lower five years after losing their jobs in one study of the workforce in Washington State, United States.
560 euros
A total of 2,000 unemployed people in Finland received a basic income of 560 euros per month in a basic income experiment in 2017–2018.
The Wounds of Job Loss Do Not Heal Quickly
One of the biggest risks of technological change is rising structural unemployment.
Unlike unemployment due to a temporary economic slowdown, structural unemployment occurs when the skills possessed by job seekers no longer match the needs of the labor market.
In such conditions, economic growth does not necessarily solve the problem.
Jobs may be available, but people who have lost their jobs may not be able to fill them because they lack the appropriate skills or face geographical and social barriers.
The impact of job loss can also last a long time.
A study of workers in Washington State showed that the earnings of workers who lost their jobs were still about 16 percent lower five years after the event.
Panel data studies in the United States even show that groups of workers who experience displacement take a very long time to catch up to the income levels of comparison groups.
The impact touches not only individuals but also families. Job loss can affect children's education, family psychological well-being, and long-term economic security.
UBI: A Cushion, Not a Panacea
Amid concerns about the impact of automation, the idea of universal basic income or UBI is being discussed again.
This concept offers regular cash payments to citizens without specific conditions as a form of minimum income guarantee.
Proponents of UBI believe the policy has the potential to reduce poverty, simplify aid bureaucracy, and provide space for workers to learn new skills when facing labor market changes.
The trial in Finland in 2017–2018 was one of the most discussed experiments.
About 2,000 unemployed people received 560 euros every month. Participants were reported to have higher life satisfaction levels and lower stress levels compared to the comparison group.
However, its influence on increasing the number of days worked was relatively small.
Similar experiments in a number of countries have also not shown major changes in labor participation.
The main criticism of UBI relates to the large fiscal requirements. In addition, providing a basic income does not automatically solve the problem of labor skill mismatch.
For middle-income countries like Indonesia, a more targeted approach is often seen as more realistic, such as retraining, wage subsidies, job search assistance, and strengthening social protection.
The Job Loss Guarantee (JKP) program, which began in 2022, could be one of the foundations of protection for workers affected by layoffs through cash benefits, labor market information, and training.
Gig Workers: Flexible but Vulnerable
Technological change also gives birth to new work patterns.
Remote work, the gig economy, and digital platform-based jobs are increasingly known as part of the modern labor market.
These work models offer flexibility and are relatively easy to access. For some, gig work is even the first entry point into the world of work.
However, flexibility comes with vulnerability.
Gig workers face income that is not always certain and limited social protection.
On many digital platforms in Indonesia, workers are placed as partners. Consequently, participation in a number of social security programs is not always equal to that of formal workers.
Work relationships in the platform economy are also increasingly complex due to algorithmic control.
Although legally workers are called partners, platforms can determine order distribution, rates, incentives, and even sanctions through digital systems.
A number of countries are starting to look for new regulatory models.
Spain, for example, introduced the Rider Law which strengthens the assumption of an employment relationship for certain platform drivers or couriers.
In Indonesia, one idea that can be considered is a social security contribution mechanism that is integrated directly with every work transaction so that worker protection does not depend entirely on voluntary payments.
Preparing Workers, Not Fighting Technology
Stopping technological progress is not a realistic option.
The main challenge is how to ensure that the benefits of automation and artificial intelligence are not only enjoyed by certain groups, while other groups bear the entire cost of the transition.
Workers need to strengthen skills that are complementary to technology, such as digital literacy, analytical thinking, creativity, communication, problem-solving, and social skills.
The government needs to have a clearer map of jobs that have the potential to shrink and jobs that are expected to grow.
Labor data, including labor force surveys and social security participation data, can be utilized to design more targeted training programs.
The business world also has a responsibility in the transition process through the provision of internship programs, retraining, and improving worker competence.
On the other hand, educational institutions, ranging from universities and vocational high schools to job training centers, need to continue to adjust curricula to market needs.
Collaboration between the three parties is important because no single institution has all the information, resources, and authority to face changes in the world of work alone.
Government without information from industry risks designing programs that do not meet needs. Industry without support from educational institutions may have difficulty obtaining skilled labor. Meanwhile, educational institutions without reading market changes have the potential to produce graduates who are not absorbed.
The World Economic Forum estimates that the number of jobs created globally by 2030 will still be greater than the number of jobs lost, with a net growth of about 78 million jobs.
However, the challenge lies in the transition process.
Not all workers who lose their jobs can automatically move to new professions. Some need training, income support, access to education, and time to adapt.
History does show that every wave of technology gives birth to new types of jobs. However, the transition period can be long and cause significant social costs.
Therefore, the main question is no longer whether automation and AI will change the world of work.
The question is how prepared workers, the government, the business world, and educational institutions are to face these changes—and how fairly the benefits of technological progress will be shared.
References: Autor, Levy, and Murnane (2003); Acemoglu and Restrepo (2019, 2022); Card and DiNardo (2002); Future of Jobs Report 2025 World Economic Forum; and the results of the 2017–2018 Finnish basic income experiment.
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