Scary headlines belie the complexity—and the potential opportunities—of technological shocks in the labour marketby George Magnus / November 17, 2014 / Leave a comment
It has been hailed as the biggest change in the way the world works since the Industrial Revolution. While the latter allowed us to transcend the limitations of muscles, digital technologies are allegedly doing the same to the limitations of our minds. New technologies in manufacturing, the application of robotics in the provision of both goods and services, 3D printing, and artificial intelligence are not only developing rapidly, but also outstripping our expectations in many ways. They lead to greater efficiencies in everything from manufacturing to medicine, lower costs and prices, and more sophisticated and diverse products. So what’s not to like?
In a nutshell, they are extraordinarily disruptive, as new technologies always are. But this time, something is different. Instead of complementing or supplementing human endeavour, technology is displacing or substituting for it. In other words, instead of man exploiting machines and becoming more productive in new jobs as a result, machines are making us and many occupations permanently redundant. This is because machines can now do things that even a decade ago were thought to be the sole preserve of humans, notably pattern matching and complex communications. Just think about the development of driverless cars, modern pathology, in-home elderly care, report-writing, research and data tasks that have even displaced bankers,lawyers and accountants, on-line education and teaching, and simultaneous translation.
A recent report, for example, argues a third of UK jobs may disappear over the next 20 years. Instead of scary headlines though, we need to understand more about the nature of the current technological shock. The most visible example of this phenomenon is the difference between the benefits enjoyed by capital and its owners, and the weakness of labour incomes and, for many, poor quality of employment. There has been a breakdown in the relationship between wages and family incomes, which have stagnated in recent years, and GDP, output, profits, and employment, which have recovered from the 2008/09 crisis and continue to advance. It is, of course, wrong to attribute this dichotomy entirely to technological change. The fingerprints of globalisation, the lingering consequences of the financial crisis, demographics and public policy are all visible. Nevertheless, the digital technology revolution is playing a significant role.
In the labour market, even in the…