This is the third in a series of ten posts on the threat to jobs and growth from technology and online distribution, and what we might do about it.
- The first part summarises the argument
- The second introduces the challenge.
- The third looks at the threat to jobs from automation.
- The fourth looks at the threat to jobs from online competition.
- The fifth looks at what economic problems this might cause.
- The sixth looks at the social and moral problems it might cause.
- The seventh looks at some of the arguments against a policy response: are we really sure this is a problem? Doesn’t technology always create as many jobs as it destroys? Surely there is nothing we can do?
- The eighth explains why more education and training isn’t the solution to technological un and underemployment.
- The ninth explains why more self-employment and entrepreneurship isn’t an adequate solution either.
- The tenth looks at other solutions, and proposes a new one.
Right now unemployment in the UK is relatively low.
But the lesson of history is that as technology gets smarter and cheaper, it takes on work which people used to do.
The waves of automation have always started low, washing away only some of the worst paid and least skilled jobs – the lamplighters and ‘knocker uppers’ of history. But as the tide rises, it begins to wash away the more skilled, better paid jobs too – software replacing accountants, for example; self driving cars, ships and planes replacing taxi drivers, captains and pilots.
Optimists will reply that technology has always created as many jobs as it has destroyed.
It’s an important argument and I look at it in post 7.
In this post, I want to focus on one of the reasons that this time might be different from the past: today’s technology is increasingly capable of substituting not just for manual work, but for mental work as well.
Why might automation threaten more jobs now than in the past?
The best known paper on this is by Professor Michael Osborne and Dr Carl Frey. They argue that in the past, most of the jobs threatened by automation were the ones which involved following rules. The call centre operator who asks you what you want and puts you through to line one or two depending on your answer, for example.
But today’s algorithms can do more than that. They can increasingly recognise patterns. They can ‘see’ and ‘hear.’ They are increasingly dextrous.
This, say Frey and Osborne, enables them to perform a broader scope of manual tasks.
They categorised 702 different kinds of jobs, from recreational therapists and foresters, to music composers and substance abuse counsellors, by how susceptible they are to automation. Their sobering conclusion was that 47% of the jobs in the US economy today could be automated.
The Bank of England took their methodology further. As I mentioned in the last post, it calculates that that would mean 80 million jobs lost in the US and 15 million in the UK – half of the total jobs in the UK economy today*. A third of all the jobs in the UK have a 66% chance of being automated away.
If you offer financial advice you might feel safe too. But you’re competing with automated, algorithm-based portfolio robo-advisers and artificially intelligent asset management, which are already managing $50 billion worth of assets. Barclays’ former chief executive expects half of all the jobs in the UK finance sector to go over the next ten years.
You’re a journalist? Associated Press have already automated much of their reporting of business results, and more will follow. In a recent survey in Sweden, 37% of readers thought an automated sports report was written by a real journalist. The technology is only going to improve.
You work in retail? The British Retail Consortium expects the sector to shed 37,000 jobs a year to automation.
You’re in construction? Here’s a video of a robot brickie.
You’re a lawyer? You may see many law firm jobs disappear as discovery – the initial work of gathering evidence from other party or parties – is automated.
You’re an accountant? The Bank of England puts the chance of your job surviving ‘in the short to medium term’ at 5%.
You operate a police patrol? There are now robot public guards in Dubai and San Francisco. “This way we can provide better services without hiring more people,” is how Colonel Khalid Nasser Alrazooqui, head of Dubai’s smart unit, puts it.
(You’re a teacher, personal trainer, or priest? Fair enough. You’ll be fine).
Here is the Bank of England’s calculation about how vulnerable different types of job are.
Ever helpful, the BBC have set up a handy tool to tell you how likely your job is to be automated away.
Subsequent research building on Frey and Osborne’s method found that across OECD countries, 57% of jobs could be at risk. And the figures for other countries are much worse: 69% of jobs in India, 77% per cent in China, a mind-boggling 85% in Ethiopia.
In short – this time might be different because many technologies will be deployed at the same time, and many of them will replace brain workers.
There is no precedent for this.
Many people will just feel in their gut that such a collapse in employment is impossible. After all, it is not as if the global economy is about to be blindsided by a systemic flaw that had gone unnoticed before.
I think this was a respectable position until the financial crisis did exactly that.
But automation is not the only threat to jobs. In the next part I’ll look at the threat from online competition.
*And of course, automation is not the only aspect which could affect jobs. A quarter of all jobs in the US, for example, are also offshorable.