At a recent conference in London, hosted by think tank Chatham House, economists, entrepreneurs and politicians discussed freely how automation will change the nature of future jobs, under the world-famous Chatham House rule, which provides a degree of anonymity.
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Automation may sound like a futuristic concept to most, but it is not a new concern. Fears over the influence machines in the workplace arose with the first industrial revolution of 1760 – 1830 (steam power), the second from 1870 – 1914 (electric powered mass production), and most recently, the third beginning in 1980 (the rise of computers).
Traditionally automation has been defined as “being able to do something again and again without human intervention,” says Doteveryone CEO Rachel Coldicutt.
However, automation now includes the idea that machines could be programmed to make more machines to replace jobs. A report published by consulting firm McKinsey in 2015 estimates that in the present “Fourth Industrial Revolution,” change is happening ten times faster than in the first.
Automation is set to become a bigger topic than globalization as it could affect two thirds of jobs globally, (World Development Report 2016: Digital Dividend) and is a bigger driver of inequality (IMF report). Former U.S. President Barack Obama said in his departing address that the next wave of economic dislocations “will come from the relentless pace of automation that makes a lot of good, middle-class jobs obsolete.” (New York Times).
In the past, revolts against industrialization have sometimes seen workers take extreme measures. British weavers, known as The Luddites, revolted against machines replacing them in 1811, destroying the equivalent of almost $2m worth in months (Smithsonian).
The World Inequality’s 2018 report found that left unchanged, global inequality will continue to increase as it has in recent decades, it is possible history will repeat itself – particularly when the poorest will be most affected. Let’s hope not, as for The Luddites, it ended in executions and exile (Quartz).
At the Future of Work 2018 conference, 20 guests covered how automation will affect working lives, how workers might have to change careers several times as well as the need to return to education as jobs are replaced, the gig economy, and potential solutions to the problems arising from automation.
Audience members asked panels of experts whether Universal Basic Income (UBI) was the solution to the problems posed by automation but, much to their disappointment, they dismissed the idea that governments should give out free money.
Despite support for UBI from business entrepreneurs like Facebook’s Mark Zuckerberg, Space X’s Elon Musk, and Microsoft’s Bill Gates (Business Insider), panelist Bruce Reed told WikiTribune: “I don’t see UBI as an answer to inequality. It is at best a life-support system for people who are falling behind.” The director of McKinsey Global Institute, James Maniyika, was just one the speakers who dismissed it as devaluing the social importance we get from work.
One aspect of automation is the prospect of robots taking over jobs, and humans working with them. WikiTribune questioned panelists on the idea of governments levying robot owners, as advocated by Gates (Quartz), as a way of making up for taxes which would otherwise be collected by taxing employees salaries. South Korea has already announced it will introduce the world’s first ‘robot tax’, to try to slow down automation’s impact (Korea Times).
Economist Carl Benedikt Frey, who worked on the much referenced (Futurism; Business Insider) joint Citibank – Oxford University 2016 study, told WikiTribune: “Taxing of robots is a terrible idea because, in the end, the improvements in living standards depend on productivity growth, so without productivity growth, wages cannot rise.” And Reed said: “It’s not so easy to design a tax on robots because much of the automation isn’t what we think. [It] isn’t R2-D2.”
The 2016 study Frey worked on reported that 47 percent of U.S., 69 percent of Indian and 77 percent of jobs in China are at risk of automation respectively, however a 2018 OECD paper puts the U.S. figure at about 10 percent, saying that because the previous report grouped jobs with the same title together it exaggerated automation’s impact.
One key area of automation-related research has involved looking at its effect on the number of people’s working hours. Experts revived the much-touted prediction that working hours would reduce, even if not to a 15-hour working week, as predicted in 1930 by economist John Maynard Keynes.
Joshua Krook writes in The Conversation that Keynes thought this would be possible due to increases in future productivity, but that it turns out “the benefits of productivity have gone straight to the top.” He cited a 2014 Economic Policy Institute report, which found that between 1978 – 2013 CEO pay increased by 937 percent, while the typical worker’ pay rose just 10.2 percent.
Nevertheless, Toby Walsh, Professor of Artificial Intelligence at the University of New South Wales, wrote in The Guardian: “Before the Industrial Revolution, many worked 60 hours per week. After the Industrial Revolution, work reduced to around 40 hours per week. The same could happen with the unfolding AI Revolution.”
With automation expected to cause people to have a greater number of careers, and having to retrain more frequently, as entire professions or aspects of their work become automated, panelists widely supported a safety net of universal basic services, such as free healthcare and education. McKinsey’s 2017 report found that, in roughly 60 percent of occupations, at least one-third of the work could be automated and up to 375 million people worldwide may need to change careers by 2030, because of artificial intelligence (AI).
This is not to say there will be mass unemployment. “The evidence of history tells us that, in theory, in the end we’ll have more jobs than get destroyed,” Future of Work commissioner Naomi Climer told WikiTribune. However, she said that “tech owners are beginning to amass vast amounts of wealth,” so she would like to see government policy that incentivizes cooperatives, like UK businesses John Lewis or the Coop.
Labour MP Liam Byrne agreed, telling WikiTribune: “We’ve got to make sure we have the institutions in our country to spread productivity, so it’s not hoarded by the big super giants of new capitalism.”
Who will be most affected?
Most automation is forecast to occur in developing countries, due to the fact that many manual jobs have already been automated or relocated in developed countries. While those working in sectors such as transport could largely be replaced with driverless cars, one of PwC’s 2018 studies says job losses from automation are likely to be largely offset in the long-term by new jobs arising from automation. However, those in low-skilled, low-paid jobs such as administrative and manual occupations, as well as those in higher skilled financial jobs, are likely to be hit hardest.
“In the past, automation happened primarily for blue collar [manual] jobs, and at a slow enough rate that society could adapt. However, today, automation is happening for even some kinds of white collar [professional/administrative] jobs, and is happening faster and faster, hollowing out the American middle class,” Jason Hong, computer science professor at Carnegie Mellon University told WikiTribune.
Similarly, in the UK, “the shock we’re not prepared for is not only the huge change to service jobs, but the shrinking of the middle class … [but] there is definitely a potential to mitigate quite a lot of that through education,” Coldicutt told WikiTribune.
Without changes in training, unemployment will increase and wages will fall according to McKinsey. However, the consulting firm predicts that by 2030 there will be at least 300 million more people aged 65 years and older than there were in 2014. Because of this, jobs related to medicine and healthcare will be created, and currently lower paid jobs, like carers, will become more important.
Even jobs not formally recognized, like being a carer for an elderly parent, could become paid. Its reports also say low-medium paid jobs in unpredictable environments, such as plumbers, or roles which require human interaction, like teachers, will become more valuable. Economist Frey says: “I don’t think that it’s all about technical education, so acquiring social and creative skills are just as important, so there is still a future for people in the humanities.”
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However, University of Nevada, Las Vegas, sociology professor, Simon Gottschalk, told WikiTribune: “Increasingly, intelligent machines like robots will, I am quite sure, soon be able to perfectly simulate human emotions and other uniquely human skills, and will perform them better.”