If increases in wages are linked to increases in productivity, then workers’ wages may also

rise (or, at least, their employment prospects may be more secure). Second, increases in
productivity diffused throughout the economy have an effect on prices. Increases in productivity
tend to lower the cost of production, precisely because more output can be produced with the
same amount of inputs. Since cost reductions tend to be translated into price reductions,
increases in productivity eventually tend to reduce prices. Indeed, the introduction of assembly
lines made a substantial contribution to the affordability of consumer durables such as the car.
The increase in income per head and the reduction in prices allow consumers to be better off.

Prices and Industrial Change

How can we look at price changes over time in industries in which the product undergoes
many changes, especially in early stages? We use the concept of the price index. Indices are
used a lot in economics. They are basically a simple way of measuring change.
Price index is a measure of the average level of prices for some specified set of goods
and services, relative to the prices of a specified base period. The most widely used method of
constructing an index is based on the notion of the percentage. An example is provided below.
Suppose that the price of a product is Php 500 in 2000 and Php 750 in 2001 and Php
1000 in 2002. In this simple example, our market basket consists of only one product. Selecting
year 2000 as the base year, we can express the prices in years 2001 and 2002 relative to the
price in year 2000 as follows:
The price in year 2000 (base year) is equal to 100 percent
𝑃 750 𝑃 1000
𝑃𝑟𝑖𝑐𝑒 𝑖𝑛𝑑𝑒𝑥, 𝑦𝑒𝑎𝑟 2001 = ( ) ∗ 100 = 150, 𝑦𝑒𝑎𝑟 2002 = ( ) ∗ 100 = 200
𝑃 500 𝑃 500

Changes in Industry Structure

Industry structure refers mainly to the way in which power is distributed among firms. This
can be described by factors such as the number of firms in the industry and the distribution of
market shares.

Unit 02: Sustainability of Productivity

Objectives: By the end of this lesson, the student will be able to
1. discuss the impact of game changing technologies on work and employment,
2. summarize the concept of platform economy.

All economies fluctuate in a business cycle. For a few years, growth is quite rapid, output
and incomes rise, and unemployment falls. This is the ‘boom’. Then the cycle turns. Growth slows,
and in a true recession the total output of the economy falls. This is the down-turn of the cycle.
The industry life cycle focuses on those economic mechanisms that cause firms to be born (to
‘enter’ an industry), to grow, and to die (to ‘exit’ an industry).

Industry Life Cycle

The industry structure refers to the characteristics of an industry, such as the number of
firms operating in it, the distribution of power between them (whether some are very large and
others very small, or whether they are all very large), and the degree to which new firms find it
easy to enter the industry).
Mechanisms affecting industry structure include the dynamics of entry/exit, technological
change and falling prices. The industry life cycle is characterized by the following phases:

(examples are set in the year 2018 for reference)

1. A pre-market or hobbyist phase, in which the product is produced more as a hobby or
luxury than for commercial purposes. (e.g. self-driving electric cars)
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 2. An introductory phase, in which the product begins to be produced more for commercial
purposes than for hobby reasons. (e.g. self-driving cars)
3. A growth phase, in which the industry grows rapidly due to the emergence of a
standardized product. (e.g. electric cars - Tesla Model S)
4. A mature phase, in which demand slackens and fewer technological opportunities are
available. (e.g. ford focus car)

Game Changing Technologies

See Work-in-the-Digital-Age-1.pdf pages 133-140

● Advanced Industrial Robotics - Involves machines which are designed to perform
industrial tasks automatically, with high programmability and the capacity to interact with
their environment thanks to the use of digital sensors, usually seen in manufacturing or
production lines.

● Additive Manufacturing - Involving digitally controlled devices to add layer on layer of

material(s) to create objects from 3D digital models. This is usually done in the industrial
sector such as architectural, medical, dental, aerospace, automotive, furniture and jewelry.

● Industrial Internet of Things - the use of connected sensors attached to different objects
throughout the production process to feed live data to central computers, usually seen on
the factory floor.

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 ● Electric Vehicles - vehicles whose main system of propulsion depends on (externally
generated) electricity rather than fuel. (e.g. Tesla)

● Industrial Biotech - the use of biological processes of living organisms for industrial
purposes, drawing on recent scientific insights such as systems genomics and
metabolomics. Uses enzymes and microorganisms to make bio-based products in sectors
such as chemicals, food ingredients, detergents, paper, textiles and biofuels.

Advanced Industrial Robotics, Additive Manufacturing and Industrial Internet of Things

involve innovations in the manufacturing production process, and have a very wide applicability
across most manufacturing sectors.

Electric Vehicles and Industrial Biotech concern innovations of specific products (and
related processes), and have a more narrow applicability to particular sectors

Effects of Game Changing Technologies

1. Increasing centrality of (digital) information – information as a key source value

2. Mass Customization – flexible production process with interconnecting objects
3. Servitization – technologies involve the gradual replacement of manufacturing as
traditionally understood by a type of economic activity that is closer to the traditional
concept of services
4. Increased Labor/Resource Efficiency – more efficient use of materials and energy in
production

Effects of Game Changing Technologies on Work and Employment

1. Upgrading of occupations
2. Higher level of ICT competence
3. Decline of repetitive and routine industrial work brought about by digital factories

11
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 While there are innumerable positives that can be drawn from these Game
Changing Technologies, it is imperative that we also take a look at the adverse
effects that these technologies cause.

Like many other things, there are always two sides of the story. On one end,
productivity numbers received a massive boost thanks to new technologies. On
the other end, there is a question of whether the same numbers are not telling the
whole story.

While new technologies, even new applications being downloaded, have made an
impact, some of them have caused other people to rely too much on technology
and not develop their own skills anymore. Technology, in some ways, has become
workers of our time instead of serving as a tool to help us.

Quite possibly, the worst effect of it is the accessibility of such technologies. With
only a fraction of the people in the world having the chance to know how to take
advantage of these new technologies, what happens to those who are not as
fortunate?

It matters that we look into all the effects of technology. It is only through looking
at the other side that we can actually discover how to improve what we currently
have and develop new technologies that would benefit everyone.

The Platform Economy

See Work-in-the-Digital-Age-1.pdf pages 163-174

A platform is a business that connects people through technology, making an ecosystem

that allows value to be created and exchanged. This works by matching users to each other in
order to make financial or social transactions that create value.
Platforms don’t own the resources that create value, they can grow much faster than
pipeline businesses. These businesses make up a platform-based economy. Some key features
of a platform will include:

● Using sophisticated logistics software for matching and payment

● Providers on the platforms are independent contractors
● Very low barriers to entry for providers on most platforms
● Trust is achieved via crowdsourcing of ratings and reputational data.

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 Platform Model

The platform model shows three (03) components:

● platform - controller of the channel or platform and arbiter of the participants in the platform
● consumers/customers - buyers or users of the outputs offered through the platform
● producers/providers - supplier of the outputs sold through the platform

References

● NEUFEIND, M., RANFT, F., AND O’REILLY, J. (2018) Work in the Digital Age: Challenges
of the Fourth Industrial Revolution. Rowman & Littlefield International Ltd
● The Open University (2016). Information Technology: a new era. Walton Hall, Milton
Keynes, MK7 6AA. https://www.open.edu/openlearn/people-politics-law/politics-policy-
people/ sociology/information-technology-new-era/content-section-1

GRADED Activity 1
Part 1: Unit 1(10 pts)
1. What do technologies look like when they are still being discovered?
2. How did the life of people change back then?
3. Are we going through a similar change right now?
4. What’s in store for the future?
5. Have we actually progressed as a result of the technologies that we have discovered
throughout time? Explain in 2-3 sentences.
Part 2: Unit 1(10 pts)
1. Which technology of the past do you think had the most impact in the way of life of people
today? Discuss in 3-5 sentences.
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means, electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.