Employment is the grist of political campaigns. But to what extent can politicians influence unemployment brought on by advances in technology as opposed to economic mismanagement. Advances in digital technology and robotics will radically change the future of work. But what are we doing to prepare for this?
Renowned economist and soothsayer NYU Stern Professor Nouriel Roubini sounds a warning in a recent article in Project Syndicate where he asks “Where Will All the Workers Go?”
In recent decades the changes the way we work, brought on by technological forces, has been rapid and dramatic. Yet experts predict even greater changes to work are inevitable as technological improvements in robotics and automation, driven by computing power and artificial intelligence, boost productivity and reduce the need for human intervention. In the short term this can bring significant economic gains for companies, but employees are also customers so the long term outlook should concern both companies and politicians.
According to Professor Roubini “Unless the proper policies to nurture job growth are put in place, it remains uncertain whether demand for labour will continue to grow as technology marches forward.”
It is perhaps surprising, except in periods of recession, that in the developed world employment levels have not been more severely hit already, particularly as manufacturing jobs have migrated to low wage economies. The saviour has been the growth the service sector. But there is no guarantee that gains in service sector employment will continue to offset job losses in industry. In fact technology is making service jobs vulnerable too – to be first offshored to emerging countries and eventually replaced entirely by efficient machines.
Roubini quotes the example of a patient in New York having an MRI scan sent digitally to India, where a highly skilled radiologist reads it for one-quarter of the cost of a New York radiologist, when soon computer software will be available to read scans faster, better, and cheaper still.
Technological innovations around the online access and delivery of ‘knowledge’ will also affect professional services, education and health-care. Governments, too, are shedding labour, both to save costs but also to deliver more open and accessible ‘e-government’.
The outlook for the blue-collar worker, even in emerging economies, is even poorer. Roubini quotes the example of Foxconn, a manufacturer of iPhones and other consumer electronics, which plans to replace much of its Chinese workforce of more than 1.2 million with robots. “The factory of the future may be 1,000 robots and one worker manning them. Even the shop floor can be swept better and cheaper by a Roomba robot than by any worker.” says Roubini. Other developments such as voice recognition software which threatens thousands of call centre jobs, 3D printing technologies, and driverless trains and cars are job reducers of the future.
Less work can mean more leisure and better work-life balance. The end of Hard Times and Mr Grandgrind could be hugely beneficial. But if mishandled this new ‘industrial revolution’ will lead to great income and wealth inequality, economic stagnation and social and political instability.
We have of course been here before. The nineteenth century industrial revolution, which created unprecedented unemployment and poverty, but vast wealth for industrialists, was the precursor of the economic and political reforms that led to improved working hours and conditions, and the social safety nets that shape twenty-first century lives. But these reforms were hard won, pitched as they were against intransigent ‘winner-takes-all’ attitudes of class ridden societies. Today we may need a similar level of reform (read change).
Prof Roubini concludes by saying “The gains from technology must be channelled to a broader base of the population than has benefited so far. That requires a major educational component. In order to create broad-based prosperity, workers need the skills to participate in the brave new world implied by a digital economy.” And beyond that he says we may need “to provide permanent income support to those whose jobs are displaced by software and machines. Here, too, we should attend carefully to the lessons of the past.”
Read the full article in Project Syndicate