Rage against the machines: is automation a threat to jobs?

Sunday 29 October, 17:3018:45, Frobisher Auditorium 2Tech futures

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Numerous commentators have raised concerns about the effect of automation on jobs. In 2015, the Bank of England’s chief economist, Andrew Haldane, suggested that as many as one third of jobs in the UK – 15 million – could be lost to automation. Examples could include drivers replaced by autonomous vehicles and administrative staff replaced by intelligent assistants like Amazon’s Alexa. Moreover, where automation in the past affected low-skill jobs, smarter machines and artificial intelligence automation could affect a much broader range of jobs in the future, including many high-paid, high-skilled positions.

Fears about automation have been around ever since the Luddites, groups of masked men who smashed up textiles machinery in Yorkshire, Lancashire and the East Midlands between February 1811 and June 1812. The Luddites were not anti-automation per se, but they did recognise that the new machines could put them out of work, with little in terms of a social safety net to support them when they lost their jobs. The benefits of automation seemed to lie entirely with employers. Now, automation is being discussed in similar terms, with millions of jobs under threat but little prospect of good-quality jobs on the horizon to replace those lost. Pessimists fear increasing inequality between those lucky enough to have secure, automation-resistant work and those replaced by robots and other machines.

Yet is automation really a threat to prosperity? Far from creating widespread poverty, the rise of the machines in the Victorian era led to rapid improvements in productivity and living standards overall. Today, despite the expansion in the use of IT in the recent decades, more people are in employment in the UK than ever before. In February 2017, official figures showed 31.84 million – 75 per cent of 16- to 64-year-olds – were in employment. Just because we cannot yet envisage new areas of economic activity, bringing new kinds of jobs, doesn’t mean that they won’t emerge in due course.

Perhaps the real problem is not the spread of automation but the snail-like pace of such developments. Take robots: South Korea boasts the highest density of robots in the world, but has just one for every 20 manufacturing workers. Even China aims only to have 1.5 robots per 100 employees in 2020. Progress is being made, but robots are a long way from ‘taking over’. Instead, human beings – for example, immigrants on low pay rates or ‘gig economy’ workers doing modern piecework – are being preferred to machines.

What will be the real impact of automation in the next few years? If the impact of automation is small at present, why are so many commentators and politicians fearful of smart machines? Is a rise of inequality an inevitable outcome of new technology or is it a convenient excuse for wider negative economic trends?