Automation is set to worsen the North-South divide

Cities in the North and Midlands will be hit hardest by automation. In November last year, the Chancellor Phil Hammond was the subject of much derision when he claimed that “there are no unemployed people in Britain.” That gaffe meant that nobody paid any attention to his preceding comments—a shame, as they were perceptive on the big changes set to revolutionise jobs in Britain over coming decades. Hammond spoke of the need to embrace automation and technology, noting that twenty years ago there was great concern about the future of short-hand typists and similar occupations, but that these jobs have been largely offset by the rise of new roles. His point is that automation and globalisation are nothing new—they are continuations of trends which have caused political upheavals since the Luddite protests of the 19 ^th century. This history is traced in a new Centre for Cities report, which looks at how British cities have responded to the disruptions brought by automation and other changes in the past century—and the implications this has for their future prospects. The report shows that 100 years ago, British cities were heavily exposed to job losses from automation and globalisation, as they are now. Back then, it was occupations such as laundry workers, streetlamp lighters and domestic servants which were at risk, and which have all-but-disappeared as a result. Yet these jobs were more than offset by new roles in emerging industries such as ICT and marketing which helped to ensure that the overall number of jobs in British cities rose by 60 per cent between 1911-2016.

A deepening North/South divide

This would suggest that the Chancellor is right to be optimistic about Britain’s prospects of adapting to the changing world of work. But here’s the rub—while most cities have seen jobs growth over the last century, there have been stark differences in the types of jobs that have been created in different places. In broad terms, cities in the South have been successful in attracting new jobs in high-skilled, high-paying sectors – and have therefore adapted well to technological changes In contrast, places in the North and Midlands, which were badly hit by the impact of automation and globalisation on manufacturing and other traditional industries in the 1970s and 1980s, have largely replaced these jobs with routinized roles in call centres, retail and warehouses. These patterns have two implications for the future. Firstly, the high share of low-skilled jobs in Northern and Midlands cities means they are more vulnerable to upcoming changes to the world of work than places in the South. In cities such as Mansfield, Sunderland and Wakefield, around 1 in 3 jobs are likely to disappear by 2030 as the economy continues to evolve—compared to around 1 in 8 in places like Reading and Oxford. The second is that while all cities will see jobs growth in future, in Northern and Midlands cities that’s more likely to be low-skilled jobs, while Southern cities are more likely to attract high skilled jobs—therefore deepening economic disparities across the country.

It's time to act

It’s clear, then, that automation and globalisation will bring new opportunities, but that there will also be winners and losers—and national and local policy-makers need to act now to ensure that places in the North and Midlands in particular don’t miss out. More than anything, that means taking steps to improve skills in places outside the South of England. Mansfield, for example, has the lowest share of residents educated to degree-level of any UK city. It is also the city most exposed to job losses resulting from automation, and the jobs it is likely to attract in future are also more likely to be low skilled. To address these issues, we need to improve school standards in cities across the North and Midlands, and to reform the education system to give young people in these places the cognitive and interpersonal skills they need to thrive in the future. Alongside this, national and local leaders should put more focus and investment in lifelong learning and technical education, to help adults adapt to the changing labour market, and to retrain those who lose their jobs because of these changes. This should be as much a priority as funding for higher education. Finally, it’s clear that the usual one-size-fits all approach to running the country from Westminster isn’t helping places and people address the challenges they face—and will become increasingly inadequate in the future. The Government can best help places to adapt to the changing economy by giving them more of the powers and resources they need to tackle the challenges they face. This is a path it has already started to take in recent years, but it must go further and faster to ensure that the economic and political divisions evident in recent years do not intensify in the decades to come.