The Covid-19 pandemic has transformed our lifestyles in so many ways. The revolution in the conduct of business and the increased role of technology are the most crucial ones. Changing patterns of earning and spending have resulted in people and businesses being more reliant on digital means. Technology-driven businesses survived and thrived during this global pandemic. Evaluating the patterns of the past year, one thing is clear that these changes are here to stay.
Post pandemic, a massive compression of technology adoption and adaptation is happening in Asia, but Pakistan, still amongst the least technology-friendly states, is lagging. Is the enabling environment in Pakistan holding back this technology adoption and adaptation? Is dearth of capital chasing technology innovation in Pakistan holding back emergence of ideas and innovations and entrepreneurs, or is it the absence of ideas and skills and ‘real’ education?
Here is an attempt to provide some thought pathways for Pakistan to adopt and adapt to post Covid-19 technology gains.
For arriving at these pathways, we must review post Covid-19 and other emerging trends underpinned by technology.
Remote work is here to stay changing the geography of jobs and therefore living preferences. With the outbreak of Covid-19, offices, firms, and industries had to encourage their employees to work from home through online systems. Today, it is observable that virtual meetings are held through apps like “Zoom” and “MS Teams” and more. Since remote work is becoming increasingly common, the geography of jobs is also going through a transition. Now that everything has become accessible through the internet and technology, the demand for staying in cities has been decreasing rapidly. Due to this, the property prices in the urban areas, particularly those in the developed states, are on the continual decline as well.
Last mile delivery, remote shopping, and e-commerce have gotten a boost and these trends will not back off. People have now become acclimatized to the new normal. By adapting to the changing patterns, people now prefer having most tasks done while staying at home and using emerging digital customer service trends pervading e-commerce. During the pandemic, retail and financial and food services have undergone change. Instead of having to go to the malls, people now prefer shopping online. Due to restaurants being shut down, food is ordered online through apps like “Foodpanda”. Grocery stores have also shifted their business to being more e-commerce oriented. Even the Karachi icon Agha’s Super Market Store attempted e-commerce before completely dying down due to a late transition post pandemic.
Demand for resilient skills and not university graduates in traditional fields is changing the demand for learning. Cognitive skills and critical learning are very crucial to survive in the contemporary world. Grasping the understanding of socio-behavioral patterns and utilizing them to deliver services through critical thinking is the emerging need in all spheres of commerce and life. The share of employment in occupations intensive in non-routine cognitive and socio-behavioral skills is on the rise since 2001—from 19 to 23 percent in emerging economies and from 33 to 41 percent in advanced economies. People with critical thinking and cognitive skills with a better understanding of the socio-behavioral patterns are preferred in the employment processes. These adaptable skills enable people to transfer more easily from one task to the other. This in turn is changing the nature of demand for education and skills—learning of different nature is being sought.
Digital platform jobs are raising opportunities for jobs in connected rural areas. Technology is challenging the traditional boundaries of firms and global value chains. The geography of jobs is changing due to the pandemic and the emerging digital platforms. New business models involve dependency on digital means and can thus evolve rapidly from local startups to global behemoths, often with few employees and tangible assets. These digital platforms tend to form and run clusters of businesses in underdeveloped rural areas. Even in the places like Vietnam, Bangladesh, Nepal, Kenya the economies are moving to rural areas due to digital platform jobs.
Digital platforms have rationalized the hype about the gig economy. The gig economy refers to a labor market dominated by freelance work. Though there has been much talk about this, the takeover of the gig economy is a rather gradual process. Freelance work today is less than half a percent of the total economic labor force of the world—Freelancer, Upwork, and Zhubajia have a total of 60 million users. What is happening is that before the gig economy came about, organized platforms or e-commerce platforms have started coming around. There is a limit to what an individual contractor can do unless they are a part of a team. The team is where the innovation happens. Virtual clusters have been formed and continue forming. Instead of the gig economy, we now have platform firms which are dominating the markets.
Pandemic or not, technology has already been shaping the way future services are delivered—the pandemic is simply shrinking the timeline.
Manufacturing shop floors are now dominated by robots—replacing people and jobs. The major manufacturers around the world have amalgamated their commitment to artificial intelligence and technology in their business agendas. Mercedes, Toyota, Nissan, etc. are implementing the idea of artificial intelligence and technology in their product lines and factory stores to survive in the emerging business trends. In the next ten years, the global economic patterns are expected to transform completely. Since mid-2020, nearly three million industrial robots got into operation. That is more than the total number of robots that got into operation between 2014-2020. Due to increased dependency on technology, it is evident that robots are the future—pandemic or no pandemic!
Reshoring could potentially impact global value chains. Global economic institutions are debating whether global value chains will survive? A lot of people feel threatened due to the pandemic and related chaos. Immense work is being done to draw out ways to get out of this turmoil. A continual vast-scale expansion of the businesses like Amazon and Alibaba has been observed recently where brick and mortar stores are unable to compete. The trend of carrying out businesses over the internet has been more immune to potential lockdowns. Thus, investing in automation and reshoring production can prevent the value chain disruption greatly. Travel restrictions have impacted the trade patterns greatly. Many states, including China, are working on reshoring. Businesses reliant on imported inputs are facing a crisis due to disruption in global value chains. Amendments in the trade policy are required and many multilateral institutes like World Trade Organization, World Bank Group, and World Economic Forum are pondering upon how to deal with this matter.
The key to learning the pathways towards future resilience lies in those who survived best through the pandemic—be that resilience against the current or future pandemic or a war or any other natural or created global disaster. Those businesses that were resilient, were the ones that were either already adaptive to technology or had adopted it quickly in their business plans, were the ones that survived the best during the pandemic. Such businesses were able to harness technology to simulate operations and automate manual processes. Businesses that had amalgamated the use of technology had productivity advantages as well. The past year has made it evident that spending is now going to technology-driven businesses. They were able to immediately gear up to work remotely, collaborating through technology. Thus, in times when several businesses were going through loss and many being shut down, these businesses with digital advantage were able to maximize their productivity and sustain company culture. Furthermore, having a digital advantage also prompted businesses with an agility advantage. By providing them with data-driven insights, the ability to make faster decisions and faster action. Usually, cultures halt the process of adaptivity to change, but because such businesses had cultural flexibility, it made it easier for them to adapt to the changing course.
These emerging and evident trends have immediate lessons for Pakistan and its government to help commerce and society to adapt to this increased role of technology.
Invest in human capital and that does not mean merely sending them to educational institutions. Rather introduce to them the concept of life-long learning. Provide them with opportunities to gain knowledge, polish skills, and train cognitive skills—the narrative of higher education degrees as panacea for progress needs to be rethought.
Innovative education is the need of the hour. It is important to rethink the ways how the youth is being educated. Having a piece of paper (degree) in the hand must not be the only precondition of getting the job. Just look at how Google education program is questioning traditional ‘knowledge for commerce’ institutional approaches. People must be given chances to acquire cognitive and socio-behavioral skills. Competence must be evaluated based on skills rather than based on a degree that one holds. Education for livelihoods is veering apart from education for purely knowledge and learning.
Provide the populace with social protection. This is a two edged sword and helps cut through inequity while providing avenues to mainstream technology—whether targeting or adopting universal basic incomes. This links directly to creating appropriate fiscal space and ensuring nobody escapes tax—yet another policy that will need main streaming technology to implement. Government must introduce new tax structures that involve advancing IT and artificial intelligence to enhance appropriate taxation rather than the current inequitable presumptive and use based tax net.
Government must ensure affordable and accessible internet connectivity for all. Today, this is better than providing physical access through roads and much cheaper. The job creation potential of universal internet and broadband access is incredible. This can also enable emerging Pakistani digital platforms to grow and also for global digital platforms to use Pakistan as a base.
Immense emphasis must be placed on minimizing rural energy poverty. One hundred and forty million or nearly half of the people in Pakistan have either no or partial access to power, even though the government claims achieving ninety percent electrification. All the services that we are going to have to deliver are not going to happen by building new schools and universities but rather through making technology accessible. Since it is difficult to go to everyone’s doorstep to provide them with services, it is crucial to ensure easy access to electricity and the internet.
Governmental authorities must consider steps to reduce labor market rigidities. People must be allowed to move and transition jobs, reform financing arrangements, and labor market norms. Conversely too much informality in the employment sector due to labor market rigidities thwarts formal accounting and transition and mobility of jobs as prospective job seekers and those employed. For job market to respond to signals it first has to be formal.
Adapting to the changing patterns, the government must introduce IT-enabled governmental services. IT demand development must be encouraged to move jobs from one generation to the other. Government as the largest formal employer in Pakistan provides the natural platform to lead in technology adoption and adaptation by IT enabling governance.
Government should get industry to focus on establishment of data centers which are at the core of all future technological adoption and adaptation. Pakistan’s northern areas provide the natural environment to enable sustainable power driven green data centers for the growing local and global cloud storage and computational needs. There are three good reasons why data centers must be established in the northern areas of Pakistan. First, because they require abundant clean energy. So, you need a lot of renewables and the northern areas have a lot of water and hydropower potential, in addition to other renewable power sources. Secondly, they require a cooler climate which northern Pakistan provides. The third requirement is literate and youthful human resources—abundant in Gilgit-Baltistan, and Chitral.
Developing new cities that are clustered, high-rise, small, innovative, youthful cities. Pakistan has an acute dearth of middle sized and small cities given the size of its population. Coupled with this is the trend to spread development horizontally thereby making it difficult to provide services efficiently. Investing in vertical city centers and new cities attracting the youthful population will enable innovation and entrepreneurship—albeit with a new local model of governance for these cities. This will help to shift the geography of jobs and will work as a catalyst to boost development and prosperity.
For Pakistan to ensure its stability in the emerging technology-reliant world, it is important to adapt to the digital means. Pakistan needs to start working over the free provision of internet services, encouraging innovative education and making technological usage common.
Note: Written with support from Yemeen Hasan (yemeenhasan@gmail.com).
World through a Pakistani Lens 