The vertiginous advance of the Industry 4.0 endangers the country in terms of employment.

The Uruguayan newspaper, El Observador, published an article that states that the country faces a double risk regarding employment. This urging problem is caused by current restrictions and the upcoming impact of the technological revolution.

The last monthly Survey on Economic Expectations, developed in June by El Observador among banks, other institutions and economists, provides insight.

Survey respondents tended to agree there is an acceleration of the Gross Domestic Product (GDP), above 3% in 2017 and 2018. Unemployment is expected to be around 8.4% by the end of 2017 and 8.1% in 2018. Expectations are higher than the government goals (7%) and the rates registered in April: 5.6%.

One of the main reasons for the greater dynamism of the economy not resulting into an improvement of employment and the operational costs for companies, due to wages, taxes and public services rates (particularly energy).

The logic way to solve this, without affecting wages, is for the government to seize the larger incomes generated by GDP growth and relieve tax and services burdens, which lead companies to be cautious from hiring staff. The country will experience the paradox of economic growth and employment decline during the next two years if it does not implement this strategy.

A study developed by PwC states that the Uruguayan economy has grown 5.1% during the past three years, but 33 thousand jobs were lost due to the increase in workforce costs and the loss of competitiveness due to production costs.

In addition, the risk doubles due to the need of improving active workers’ training for them to be able to face new information technology and communications changes, in areas such as robotics and artificial intelligence.

A report developed by the Planning and Budget Office (OPP) states that the sectors to be most affected by automation shall be agroindustry, cattle industry, real state, finance, and the forest, food and beverages industries, though many other sectors will also be affected.

Several local experts agree on the key role that education plays in preventing Uruguay from falling behind in the current and future world. They also claim that the current situation is quite serious, as a large share of young people lack reading comprehension, which limits their capacity to adapt to technological change.

Source: El Observador