At Cusp of Fourth Industrial Revolution, Countries Need New Regulation on AI, Labour Standards

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Muzi Li, Public Engagement, World Economic Forum, Tel.: +86 139 1046 6369;

  • Fourth Industrial Revolution will globalize services, which developed economies have so far resisted
  • New policies, regulations needed to manage transition better
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Tianjin, People’s Republic of China, 20 September 2018 – The conversation on the future of work and the disruption and dislocation it will create has not adequately examined the services sector, which has thus far remained closed in developed countries that have succeeded in keeping services out of the purview of trade agreements. However, the Fourth Industrial Revolution will create direct wage competition among workers around the world, especially once machine translation allows people to speak good enough English to enable “telemigration,” said Richard Baldwin, Professor of International Economics at the Graduate Institute of International and Development Studies, in a session at the Annual Meeting of the New Champions today.

“Quality-adjusted low cost of labour is the comparative advantage of emerging markets,” Baldwin said, adding that there will be a “convergence” when these workers sell their skills all over the world. There would be places, say California, where new jobs might be created, but these would not necessarily be the best jobs, which could emerge anywhere. Governments and businesses must manage the transition well, however, and a good example is Denmark. Instead of adopting “shelterism” using privacy, health and environment laws to stave off competition and disruption, Denmark is helping retrain workers and offering income support while keeping it easy to hire and fire, he said.

One essential step for managing transition is regulation, Baldwin said, adding that there is an urgent need for an international treaty on artificial intelligence. “Taxation will be an enormous issue,” he said, with questions arising such as where to tax an online workforce. “That will require treaties,” he said, “It could easily be a large problem very fast.” Most trade treaties now prescribe labour standards but international freelancing is the “wild West,” against which a backlash might happen as it did with clothing sweatshops, he said.

Individual countries are taking measures to benefit from Fourth Industrial Revolution. Bahrain has built sturdy infrastructure – both hard and soft, by liberalizing its telecommunications market, putting in place a data protection law, and skilling its workforce – which led Amazon to select Bahrain to locate is first data centre in the Gulf region. It is also preparing to host “data embassies” where countries can store their data in Bahrain but where countries’ respective laws would apply.

It is similarly working towards liberalizing its financial services sector to attract fintech companies to compete with banks to provide financial services to the unbanked. The vast infrastructure it has built will attract more businesses, too, said Simon Galpin, Managing Director, Bahrain Economic Development Board, citing, for example, gaming – Chinese and Korean companies could set up bases in Bahrain to adapt games for the large Saudi Arabian market.

Guatemala, on its part, opened up its telecom market a few years ago, and has seen e-commerce and the gig economy take off. It still faces quite rudimentary challenges such as enhancing digital literacy among its people and bringing in online payments companies, said Marisabel Ruiz, Chief Executive Officer and Founder, SHEVA, which imparts digital skills among women in Latin America.

Inclusion would also need bias-free AI and machine learning applications, and the only way to do that would be to homogenize datasets taken from various sources, said Ian Weightman, Senior Vice-President, Technology, IHS Markit. Inclusion would also require openness and sharing of data, he said, and hopefully companies will understand the benefits of sharing data rather than requiring governments to legislate.

The World Economic Forum’s 12th Annual Meeting of the New Champions is taking place on 18-20 September in Tianjin, People’s Republic of China. Convening under the theme, Shaping Innovative Societies in the Fourth Industrial Revolution, nearly 2,000 business leaders, policy-makers and experts from over 80 countries will participate and explore more than 200 sessions over the three days of the meeting.

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