Proponents of the protectionist trade theory argue that regulating imports will generate more jobs at home. They argue that increasing the consumption of domestic goods will increase the national production which will result in a better local job market. However, protectionism as a measure of saving jobs is very expensive – it increases the consumer costs for both domestically produced goods and imported goods. The high costs of saving jobs exaggerate the efficacy of protectionist means in achieving employment objectives. Protection advocates are usually more concerned about securing the jobs the existing workforce than preserving industry employment globally. (Naqvi and Kemal, 1991). Protectionists predict that by diverting demand to domestic businesses, quotas will enhance their profitability and prevent the closure of corporations. However, better prospects for profitability that attract investment may prompt a change in business location or acquisition of more automated technology. Therefore, a protection trade policy may encourage automation resulting in the reduction manufacturing jobs and an increase in service jobs.
Automation plays a vital role in the increase of manufacturing output. Technological progress facilitates the growth of output. One of the key ways that automation increases productivity is by reducing the number of labor hours required to create a unit of output. The increase in labor productivity translates into better in average wages, thus enabling workers to afford more goods and services and have some leisure time. Automation should be welcomed for its potential economic benefits. Transformation as a result of technological progress may open up new opportunities for the economy, society, and individuals (Greenaway et al., 2016). Therefore, there is a need to formulate strategies for educating and training people for the new labor market. People need to be equipped with skills that enable them adapt to the changes in the nature of work.
Production ought to be rearranged in ways that increase utility. As a result, there is a need to put in place policies and economic incentives that shape the direction and effect of technological change. Formulate policies that facilitate the compatibility of automation with high levels of employment, productivity and shared prosperity (Suranovic, 2010). Steps should be taken to modernize the social safety net, including putting in place new programs such as wage insurance, and emergency aid for families in crisis. Also, to strengthening critical supports such as medical aid, assistance for needy families, nutritional assistance programs, and unemployment insurance.
Nonetheless, the big question about jobs is “What has led to the tremendous fall of manufacturing jobs- is it automation or trade liberalization? The largely true answer is that both have contributed to the reduction of manufacturing jobs (Gómez-Galvarriato, 2009). Automation has the potential to disrupt livelihoods of many people. For decades, industrialization has led to the shedding of the workforce in manufacturing. On the other hand, protectionists argue that the dramatic fall in manufacturing jobs can be laid at the door of trade liberalization. They argue that economic globalization is responsible for changing the production and employment structure of open economies.
Gómez-Galvarriato, A. (2009) 'The Political Economy of Protectionism', The Decline of Latin American Economies: Growth, Institutions, and Crises, p. p.363.
Greenaway, D., Hine, R.C., O'Brien, A.P. and Thornton, R.J. (2016) Global protectionism, Springer.
Naqvi, S.N.H. and Kemal, A.R. (1991) Protectionism and efficiency in manufacturing, ICS Press.
Suranovic, S. (2010) International trade: Theory and policy, The Saylor Foundation.