September 06, 2007

Automated World

The ILO's Key Indicators of the Labour Market indicate that agriculture is no longer the economic sector that employs the most workers worldwide. Peter S. Magnusson observes:

Worldwide, in 1996 agriculture employed 42%, industry 21%, and services 37%. In 2006, the numbers are 36%, 22%, and 42%. So in the period, services has overtaken farming on a global scale.

Magnusson draws attention to the fact that the number of people working in manufacturing has remained steady. Workers in growing economies are skipping the manufacturing stage and going straight to services. In order for people to move out of agriculture and into something else, you need two things:

1. Some means of making sure that you still get the food

2. Something else for these people to do

Improved farming techniques (technologically improved, that is) takes care of the first point. A growing economy takes care of the second. The familiar pattern throughout history has been one of workers going from farming to producing some other goods. Services comes later. However, the world economy doesn't seem to need any more people working in manufacturing than it already has, at least on a percentage basis. So workers are going straight into services.

So worldwide we have more food with fewer people working to produce food, and apparently more wealth overall with fewer people working to produce stuff. Automation is driving these changes. It will be very interesting to see where these numbers are in another 10 years. Will agriculture continue to drop? Will industry hold steady at about 21-22%?

We shall see.