Behind the numbers: jobs in our changing economy are at the mercy of powerful, competing forces

28 Sep 2018 Ryan Miller    Last updated: 28 Sep 2018

Industry leaders are optimistic about the potential for automation, predicting it will create more jobs in the next few years than the tens of millions it will displace. Is this optimism meaningful?

The next four years will see a net growth of 58 million jobs worldwide due to the 4th Industrial Revolution, according to new estimates.

The World Economic Forum said new relationships between people and machines will see 75 million jobs disappear while 133 million more will emerge.

Its Future of Jobs Report focuses particular on big business and major industries, meaning these estimates may not apply to small- and medium-sized businesses, let alone the public and third sectors, but nevertheless it envisions gargantuan changes in global working conditions in what is a relatively tiny timeframe.

Currently machines account for 29% of the total hours worked in major industries (compared with 71% performed by people) but, by 2022, the paper predicts machines will carry out 42% of hours worked.

By 2025, machine hours are set to have overtaken human hours, with the split estimated at 52% vs 48%.

The major drivers of this change in the coming years are set to be the spread of high-speed mobile internet, cloud computing, AI, and greater use of big data and analytics. Other aspects of the 4th Industrial Revolution, such as robotics and automation more generally, will have a lesser impact in the short-term.

On the face of it, this is amazing news. The major risk attached to new technology is that workers, en masse, become obsolete and, accordingly, the gains from work and productivity go more and more to owners, leading - in the worst-case scenarios - to some sort of rentier dystopia.

Jobs growth, rather than shrinkage, would seem to run counter to that. However, this optimism does not come without significant caveats.

Findings

There are too many key findings to go into in significant detail over the course of one article. That is an indication of the complicated dynamics of our changing economies.

Here is a short summary of some of the observations (the report itself is easily accessible and readable online, for anyone who wants to go into more detail):

Not all modern tech is having an impact at equal pace - information transfer and analysis will have a huge impact in the next few years, with mobile internet, cloud technology, big data analytics all significant reasons for the growth in automation. AI is also a big factor.

However, while robotics are not so important for the period until 2022 "a broader range of recent robotics technologies at or near commercialization—including stationary robots, non-humanoid land robots and fully automated aerial drones, in addition to machine learning algorithms and artificial intelligence—are attracting significant business interest in adoption." This means business sees growth potential in robotics, but it is not likely to be realised in the next four years.

Employees still matter - 59% of the respondent companies expect to change the composition of their value chain by 2022, and nearly half expect to modify their geographic base of operations. "When determining job location decisions, companies overwhelmingly prioritize the availability of skilled local talent as their foremost consideration, with 74% of respondents providing this factor as their key consideration. In contrast, 64% of companies cite labour costs as their main concern."

The importance of workers' skills shows the importance of workers full stop.

Work is changing, in every way - nearly half of companies expect a reduction in their workforce "based on the job profiles of their employee base today" while 38% expect to extend their workforce to "new productivity-enhancing roles", while over a quarter of firms expect new roles to be created thanks to automation.

What will also change are the interactions between human workers and machines within the working environment.

Overall, people will need to develop new skills - perhaps in perpetuity. Flexible working could become the new normal, for good and bad.

While the paper says that "one set of estimates" finds that 75m jobs will go but "133 million new roles may emerge that are more adapted to the new division of labour between humans, machines and algorithms."

This is the net positive outlook that emerges from he report, an outlook the WEF itself says is not ironclad:

"While these estimates and the assumptions behind them should be treated with caution, not least because they represent a subset of employment globally, they are useful in highlighting the types of adaptation strategies that must be put in place to facilitate the transition of the workforce to the new world of work. They represent two parallel and interconnected fronts of change in workforce transformations: 1) large-scale decline in some roles as tasks within these roles become automated or redundant, and 2) large-scale growth in new products and services—and associated new tasks and jobs—generated by the adoption of new technologies and other socio-economic developments such as the rise of middle classes in emerging economies and demographic shifts.

Continuous professional development - a mantra of the modern corporate world - is going to go into overdrive in the next few years.

There is a danger that a chasm will emerge between the employable and the not-so-employable. The WEF says:

"Employers indicate that they are set to prioritize and focus their re- and upskilling efforts on employees currently performing high-value roles as a way of strengthening their enterprise’s strategic capacity… In other words, those most in need of reskilling and upskilling are least likely to receive such training."

Summary assessment

In trying to parse its own findings, the WEF does paint what is, ostensibly, a sunny-side-up picture.

But it also amounts to a statement that certain things need to fall the right way for this positive future to happen, rather than some sort of jobs-drought nightmare:

There are complex feedback loops between new technology, jobs and skills. New technologies can drive business growth, job creation and demand for specialist skills but they can also displace entire roles when certain tasks become obsolete or automated. Skills gaps—both among workers and among the leadership of organizations—can speed up the trends towards automation in some cases but can also pose barriers to the adoption of new technologies and therefore impede business growth.

The findings of this report suggest the need for a comprehensive ‘augmentation strategy’, an approach where businesses look to utilize the automation of some job tasks to complement and enhance their human workforces’ comparative strengths and ultimately to enable and empower employees to extend to their full potential. Rather than narrowly focusing on automation-based labour cost savings, an augmentation strategy takes into account the broader horizon of value-creating activities that can be accomplished by human workers, often in complement to technology, when they are freed of the need to perform routinized, repetitive tasks and better able to use their distinctively human talents.

However, to unlock this positive vision, workers will need to have the appropriate skills enabling them to thrive in the workplace of the future and the ability to continue to retrain throughout their lives. Crafting a sound in-company lifelong learning system, investing in human capital and collaborating with other stakeholders on workforce strategy should thus be key business imperatives, critical to companies’ medium to long-term growth, as well as an important contribution to society and social stability. A mindset of agile learning will also be needed on the part of workers as they shift from the routines and limits of today’s jobs to new, previously unimagined futures. Finally, policy-makers, regulators and educators will need to play a fundamental role in helping those who are displaced repurpose their skills or retrain to acquire new skills and to invest heavily in the development of new agile learners in future workforces by tackling improvements to education and training systems, as well as updating labour policy to match the realities of the Fourth Industrial Revolution.

Methods and conclusions

The WEF said: "The analysis that forms the basis of this report is the result of an extensive survey of Chief Human Resources and Chief Executive Officers of leading global employers which aims to give specificity to these discussions."

Core data was taken from 313 different responses (i.e. from different companies) which altogether represent more than 15m employees today.

The survey took place across 12 industry clusters in 20 different countries: Argentina, Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Mexico, Philippines, Russian Federation, Singapore, South Africa, Republic of Korea, Switzerland, Thailand, United Kingdom, United States and Vietnam - collectively representing about 70% of global GDP.

This comprises a serious effort by the WEF to engage with industry and get a flavour of their plans for the next few years.

The baseline findings of the report are estimates that should be treated with good faith - but still treated as estimates.

The key truth that emerges from this report, just as it does from all previous research into the possible effects of the 4th Industrial Revolution, is that there are a number of factors that will crash into each other as economies change at bewildering pace.

These range from the utopian - machines able to achieve enormous productivity and create things that *could* be of huge benefits to all and sundry - to the dystopian, where a tiny ownership class lords it over everyone else in an effective and impenetrable private monopoly.

What remains to be decided is how they all fit together. Several reckonings are on the horizon. Everyone should be made aware of what is at stake. The future is unwritten and, right now, the bottom line could still be almost anything at all.

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