Report shows 48% of Northern Ireland jobs at risk of automation
Low paid people with low skilled jobs are most at risk.
The IPPR Commission on Economic Justice has just published Managing Automation. The commission, whose members include the Archbishop of Canterbury, has calculated that that £290 billion of wages annually are associated with jobs which have the technical potential for automation in the UK economy. This represents 33 per cent of all wages and earnings.
This covers technology currently available, and excludes future breakthroughs. The jobs that are most at risk are those that require low skills. Therefore those regions which have comparatively high skills base, London being the top, are less vulnerable to job losses, where 39% of all jobs are at risk. Those with low skills bases – Northern Ireland and the North East of England are most at risk at 48% of all jobs.
Mass unemployment is not inevitable – the extent of job losses depends on a number of factors: the pace at which new technology is adopted, the availability of alternative jobs and the capability of those displaced to retrain. Also new technology will not, in the short term at least, entirely replace people, instead it will take away some of the work – just like the calculator replaced the need for finance staff to do long arithmetic.
In Northern Ireland the debate about how we manage this has not even begun. Perhaps this is because for most of us automation is not a present reality. This will change during the course of the next 12 months as automation gathers pace. We can expect it to be a growing theme in news outlets in 2018 once mainstream media grasp the implications.
One reason for the general lack of awareness is the UK is lagging most developed economies in utilising automation. The IPPR ascribes this to poor management in so many of our companies. It is also the reason why our productivity lacks so far behind almost all of our competitors. According to the IPPR this is essentially down to a lack of investment.
Indeed the current model of choice for many Northern Irish employers is to compete by paying the lowest possible wages and where possible keeping staff on zero hours contracts. For many, for the moment, that may well cost less than investing in technology and automating tasks currently being carried out by humans. This will inevitably change as the costs of automation reduce or in some cases because the company folds, unable to compete with more advanced competitors.
One way or other a reduction in human labour is inevitable. Some, and the IPPR are amongst these, argue that this will not result in mass unemployment, instead people will re-train for employment that machines cannot undertake. This would be a good thing for affected workers as it would mean less people doing dull, repetitive tasks.
The argument here is based around historic precedent which show that past innovations have resulted in higher productivity, which in turn has led to higher wages and higher spending which creates more jobs in other parts of the economy. New technology also creates new jobs, which require new skills and new training.
The problem however is that the current shift will affect low skilled, low paid workers who may lack both the finances or the education to upskill easily.
It is impossible to know for certain which of the scenarios is correct – a surge in unemployment, or else effective redeployment of the workforce, because there are too many variables. In either event there will be more people out of work, whether because they need re-training or because they are unlikely to work again.
One potential solution which we have written about before is to introduce a Universal Basic Income for all citizens to replace existing welfare provision. This would, according to proponents provide basic subsistence for all, giving people the chance to retrain and upskill or else get by in a world with less work. Many observers both from the left and right of politics believe this is the solution to a world where so many jobs will be displaced. Currently it is being trialled in Scotland.
Whatever the merits of the scheme it is hard to imagine the vast majority of citizens being content with the notion of just getting by in what will be an increasingly unjust economy run by the super-rich for their own benefit. Very few people do not want to work and many of us believe we have a right to work.
In any event the spanking new Universal Credit system which is faltering so badly may well be not fit for purpose before it is fully implemented. It is based on the principle that working should always pay – and the underlying assumption here is that people on benefits are not working, not because there are no jobs, but because it is not worth their while. This is all very well for an economy which has a surfeit of low paid jobs. But as that shifts, as it will quite rapidly, to one where much of that work is taken up by machines, then the challenge will shift, and an essentially punitive benefits system will be inadequate for needs.
The key to understanding how best to deal with automation is not to debate how goods and services are produced so much as how the benefits are distributed.
If a company’s productivity is increased, and PwC estimates that UK businesses as a whole will increase productivity through automation by 10% over the next ten years, then that means that companies can make more products or deliver more services for less which means more profit.
This shifts the balance in employment from labour to capital: ie whoever owns the robots will gain the reward. Left to market forces this will exacerbate the gap between rich and poor and create a situation where future generations – save for a tiny minority – will be trapped in perpetual poverty whilst the wealth get wealthier and wealthier. This is not just unfair – it is a recipe for civic unrest.
The IPPR comes up with several ideas of how to tackle that. The first would be for the government to embrace automation invest in it and help to promote its uptake, to boost productivity. Massively improving productivity Is all the more important, bearing in mind that the population is ageing and fertility rates are falling – therefore the tax take from a shrunken working population will not cover public spending requirements.
This would be linked to a compulsory profit share scheme for all businesses over a certain size which would ensure that workforces share in the benefits of increased profits – there is already such a scheme in France.
The working week would be reduced – this is not controversial – previous industrial revolutions have led to shorter working hours as a by-product of increased productivity. A hundred years ago a six day working week was the norm – four days should soon be the norm.
The IPPR proposes that all workers affected by automation with a generous re-training allowance. New skills will be required, and it will be important that government learns the lessons from the shambolic training programmes it has funded in the past.
Fourth would be to create a massive Citizens Wealth Fund – to invest in company shares and other useful assets so that the entire nation would share some of the benefits and consequent revenues from being an advanced, automated society. It states that a major goal of public policy should be to disperse wealth generated through technological change so it is widely shared.
This democratising of wealth generation is the think tank’s big idea – it argues that twice in the last century – after the Wall Street crash in the 1920s and again in the economic crisis of the early 1970s - existing economic models were not fit for purpose and we have reached that point again.
Finally there would be an official body that would oversee the ethics of automation and the use or artificial intelligence.
Key to the IPPR’s vision is the fact that it is people who decide how technology should be used, not the machines themselves – and what is upon is now is too big, too important and too far reaching to leave in the hands of giant technological companies and tycoons.
That is why the voice of civic society is so urgently required in the debate.
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