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Use of technology handy for companies growth, but will take steep job losses

Use of technology handy for companies growth, but job losses rise steeply

Interview with Mr. Barkatullah Lone – Chairman, GB International Economic Forum

Profile:

Mr. Barkatullah Lone is Chairman of GB International Economic Forum and a renowned young Economist of Pakistan. He is a Chartered Management Accountant and Chartered Certified Accountant from UK, Chartered Global Management Accountant from the USA, Gold Medalist Management Accountant and Public Finance Accountant from Pakistan plus he holds Master’s Degree in Economics and Law from Karachi University.

He has been associated with the corporate sector in Finance and Audit profession at various positions (CFO/GM Finance/Chief Internal Auditor/Finance & Accounts Manager) for the last many years. He has rendered his professional Finance/Audit/Accounting services in Pakistan as well as abroad. Simultaneously with his career, he has been appearing in various local and international TV channels as Economic & Financial Analyst for the last seven years. His articles on economy and finance are also published in various reputed magazines.

Association with Organization: Presently, Barkatullah Lone is associated with a reputed large Conglomerate Company (Expertise Contracting Company Limited) in the Eastern Province of KSA. He has joined this company with a vision to professionalize the business functions and to streamline the processes by embedding the business activities into integrated Information Systems. He has ample experience of converting the traditional owner based culture into a corporate culture in his ex-companies which he is envisioning to inculcate a corporate culture in the existing company as well.

Expertise Contracting Company has been one of the best Corporate Entity of Saudi Arabia in terms of Corporate Social Responsibility. Expertise Company has been the only company in the GCC Region which has successfully repatriated more than 2000 employees by chartering twelve flights due to COVID-19 pandemic recently. Expertise has always focused at the safety and the training of its employees for which it spends huge amount but never compromise on International Safety Standards. Employees working at Expertise feel themselves as part and parcel of company (as a family unit) due to which staff turnover is very nominal. But fresh professional blood is taken in every year to bring innovation and improvement in all functions.

PAKISTAN & GULF ECONOMIST had a conversation with Mr. Barkatullah Lone regarding the prevalent situation of COVID 19 and its impact on the human resources and the organizations. Following are the excerpts of the conversation:

COVID-19 pandemic is affecting public health and causing unprecedented disruptions to economies and labor markets, including for workers and enterprises in the all sectors. It has aggravated existing challenges, with many enterprises and workers suffering as a consequence. In response, corporate organizations, and other stakeholders around the world, are endeavoring to mitigate the impact of the pandemic with a view to protecting businesses and livelihoods, including through social dialogue and the promotion of international labor standards. Road transport sector is one of the sectors which is essential to social and economic development and guarantees movement across various countries. But in order to control the spread of COVID-19, many countries around the world have placed restrictions on domestic transit and/or closed border crossings for road freight transport services.

Urgent action by governments, the social partners and parties to road transport supply chain parties – including shippers, receivers, transport buyers and intermediaries – will be critical in addressing decent work challenges for these key workers to tackle the crisis effectively. If we look at automotive industry, it too has been hit heavily. Auto industry has experienced closure of operation, and a massive drop in demand. Just-in-time manufacturing processes have propagated the impact across the globe. Small and medium enterprises are among those hardest hit and millions of jobs are at risk.

Automakers play a key role in global economic growth but the closure of operations has hit the global growth too negatively. Food and Non-Food Retail workers have emerged as a new category of frontline services during this pandemic. While essential to guaranteeing food security, they are themselves at high risk of exposure to infection and play a key role in food safety. To ensure adequate numbers of food workers, they need access to and training on personal protective equipment and hygiene protocols, as well as working conditions that provide adequate wages and access to social protection, including paid sick leave.

Tourism is a major driver of jobs and growth. But COVID-19 has dramatically changed this. The impact on tourism business and associated jobs has been disastrous. Timely, large-scale and, in particular, coordinated policy efforts both at international and national levels are needed in consultation with governments, employers’ and workers’ representatives to address this big issue.

 

Use of Technology would spike in every job from now onwards as the information technology revolution has had dramatic effects on jobs and the labor market. Many routine and manual tasks have been automated, replacing workers. By contrast, new technologies complement non-routine tasks to be more productive. These effects have polarized labor markets while low-skill jobs have stagnated, there are fewer and lower paid jobs for middle-skill workers, and higher pay for high-skill workers, increasing wage inequality.

Advances in artificial intelligence may be accelerating computers’ ability to perform rationale tasks, intensifying concerns about automation of even high-skill jobs. Automating tasks has several advantages as it reduces variation since machines tend to perform identically every time. This lowers uncertainty and helps improve the quality of decisions, products, or services. Machines, and particularly computers, often generate large economies of scale. Firms can avoid the complexities of managing employees, including conflict, incentive problems, and absenteeism. Therefore, if the cost of automating a task falls far enough, firms are likely to automate that task.

In just few months, the coronavirus pandemic has upset the daily lives of employees around the world. And amid stay-at-home orders across the world, office workers have abandoned their daily travelling to work instead they work from homes. Many may find themselves in this situation for the long period, as businesses struggle to find a path forward while restrictions slowly lift. Below changes will take place in next couple of years:

  • Physical meetings will be reduced and will be replaced with emails and Online Meetings through Zoom or Microsoft Teams, etc. Employees will have to opt this option in order to follow the dogma of social distancing.
  • Business travel of corporate employees will reduce substantially for the next couple of years as the business meetings will mostly be held online.
  • Structure of office buildings will change in a way that Open layouts will change, and work stations could become spaced out, partitions could go up, cleaning stations stocked with hand sanitizer and antibacterial wipes will become the norm, and workers may seek out spaces for focused work.
  • Medical screening of corporate employees, such as temperature checks and antibody tests, will be conducted.
  • With many workplaces now being forced to operate remotely, long-term flexibility could be here to stay, allowing more women to remain in the workforce while balancing home and work life.
  • Business processes will be automated at massive scale due to which middle management positions could be laid off.

Reduction in cost by virtue of digitalization differs from industry to industry as few industry may save around 50% of its operational cost by digitization; for example, finance companies can save around 40% of cost by digital way of working whereas few other industry such as construction industry, only around 20% cost saving is expected. But overall, it is a fact that digitalization enable companies to save cost since it improves the speed of processes, eliminates the loose controls, shortens the work flow process and reduces human involvement. Digitalization, beyond all doubts, brings 180 degree change in the work place but this also causes un-employment as the middle and lower management staff are usually not required when the business processes are digitalized. Companies in all sectors spend huge amount in Information Technology not only to reduce the cost but also to remain competitive in the market with the other competitors.

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