News Article

WMiC - Issue 19 - The future now, employment in the age of robots

Posted on 7 December 2017 (Permalink)

I robot - automation for the people

It is something of a national conundrum, that while employment is buoyant nationally, economic growth remains relatively flat. In the coming years, however, it is thought that the strides being made in artificial intelligence (AI) and automation will contribute to substantial gains in productivity. A report earlier this year by PWC suggested that UK GDP could be more than 10% higher in 2030 as a result of AI. Nonetheless, at the same time, there are concerns in some quarters that unlike previous industrial advances, job losses may outstrip job creation. An analysis in PWC’s March 2017 Economic Outlook suggested that “up to 30% of UK jobs could be potentially at risk of automation by the early 2030s”. This figure is echoed in a Greater Birmingham Chambers of Commerce report suggesting that “over 30% of the jobs that currently exist in Birmingham will be destroyed over the next 15 years” replacing “people with machines”. The report adds that “we have only seen perhaps one per cent of the impact of new technologies”.


Social care resistance

However, not all sectors are equally susceptible to automation. While there is undoubtedly scope in social care, its inherently personal nature suggests it can only go so far. Indeed, PWC found the risk of job losses was highest in sectors such as storage, manufacturing and wholesale, but substantially lower in sectors such as health and social work. Looking more closely, they found that health and social work jobs “are far less automatable than in wholesale and retail trade”, noting that the “sales workers that comprise the majority of employment in the wholesale and retail trade sector have twice the job automation potential compared with personal care workers in the human health and social work sector”. In considering potential job losses, it is also worth bearing in mind, that many of the changes brought about by technology will relate to replacing specific tasks rather than whole jobs. As such, jobs that are less routine or predictable may well prove less amenable to automation.


Given the potential scale of the change, a report by Future Advocacy recommended that the Government should adapt the education system to “maximise the opportunities and minimise the risks created by AI”. Among other things, the report goes on to say that this should go beyond “extolling” STEM subjects and coding to “make specific proposals to provide forward-looking and future-proof training in creativity and interpersonal skills, which will be less automatable in the longer term”.


A question of geography - here, there but not everywhere

As well as affecting different sectors in different ways, the Future Advocacy report points out “it is not yet clear how those benefits will be shared”, as they will differ between “different geographies, genders and socioeconomic classes”. The report suggests, for example, that “Britain’s former industrial heartlands in the Midlands and the North of England” will have the highest levels of automation. While this may bring higher levels of productivity, it may also bring significant job losses. Bearing in mind the relatively low employment and high unemployment rates in the West Midlands, the risk to living standards and local 

economies is a real one. Across the country, the analysis found that the potential loss of jobs by 2030 varies from 22% to 39% between parliamentary constituencies, with North Warwickshire having the third highest level of exposure. As a result, Future Advocacy say there is a need to “develop smart, targeted strategies to address future job displacement”, going on to say that “the importance of targeting these interventions to those most a risk cannot be overemphasised”.


A change is going to come

It is fair to say there is some disagreement between economists as to whether this technological change will ultimately create more jobs in the economy as such changes have done in the past. Even so, these jobs will not be the same, nor necessarily in the same part of the country. The West Midlands has experience of economic restructuring. The Institute for Fiscal Studies highlighted in July that in the past 40 years the West Midlands has fallen from being one of only four regions where median income was above the average for Britain, to the region where it is the farthest below average.

With or without this extent of automation, the labour market is changing. Last year, for example, an analysis by the now defunct UKCES showed substantial losses occurring between 2014 and 2024 in administrative and secretarial work and in primary industries and manufacturing. With strong growth foreseen in health and social care, perhaps there is scope to make sectors with growing labour demands more attractive and accessible to those traditionally employed in other sectors. Clearly, in trying to look ahead at the changing shape of the economy, there is plenty for those putting together local industrial, skills and employment strategies to consider.