Background Paper – Global Governance for The Future: Digitalization and Decent Work
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Digitalization or industry revolution 4.0 is fast becoming a new mantra or buzzword in economic development. Like a wave, the industrial revolution 4.0 affects all corners of the world. Its popularity has been driven, in large part, by the increasingly sophisticated and integrated technology which requires the global community and economy for transformation. Ready or not, Indonesia – like other developing countries – has entered this era. The Indonesian government officially issued the document titled “Making Indonesia 4.0” to show the world that Indonesia is not behind the global trend seven though, in its implementation, there are still many structural barriers both in terms of physical infrastructure and quality of human resources.
Technologies, including integrated digital technology, which are applied in the process of producing goods and services have transformed most management and production organizations to be more efficient, reaching many more consumers and making much higher profits. The more sophisticated the technology is, the less it needs human labor. Accordingly, highly skilled human labor will remain in high demand. In this regard, there are questions about the issue of employment opportunities and decent work, especially for countries with a surplus of unskilled or low skilled labor. How can policies that promote sophisticated technology address employment absorption? How can the production process of high-tech goods and services also guarantee decent work?
This paper tries to explain the reality of digitalization and analyze its opportunities for decent work. Digitalization as a global phenomenon in the value chain and global production chain has a tendency to convey patterned effects where the biggest profits are centralized among the owners and consumers, while workers are negatively affected. Following the structure and chain of global production, the biggest beneficiaries are the countries and firms which own technologies. Therefore, to balance the benefits of the industrial revolution 4.0, a global governance effort based on local data regarding the reality and impact in developing countries is needed.