Future of Employment

Stuart Hall, Tyzack works out the future.

Future of Employment

UK & Europe

The pace of technological change, shifting demographic patterns and economic globalisation are radically re-shaping the future of employment globally. This is something we have been witnessing since 2000, with the acceleration of a technological revolution, a radical transformation more comprehensive and more encompassing than anything we have seen before. 

We are already experiencing the impact in staff reductions as a result of technology such as supermarket self-checkouts, ATM machines and robotics in the manufacturing sector, and whilst few doubt that the changes we’re experiencing hold great promise, the patterns of employment, production and consumption resulting from them are certainly creating major challenges.

So what does the future hold for employment in the 21st century?

One way of answering this question is to look back in time and examine where we have been, move forward to where we are today and analyse the changes that have taken place to enable us to project the future.

In the 1980s, cutting-edge technology included electric typewriters and telex machines. All involved the human touch and job advertisements reflected this.

Today, this technology is obsolete. Job adverts also reflect that, with some of the fastest growing occupations today being computer engineering and support, data analysis, nanotechnology, artificial intelligence and robotics. There is a growing belief that if human involvement is not essential, technology can do a more efficient job.

A more concerning issue, however, isn’t so much the changing nature of employment but the widening gap between employment and productivity. This provides us with some real clues as to what the future may look like.

Following the end of WWII, employment and productivity closely tracked each other. Increases in employment corresponded to increases in productivity. In economic terms, productivity – the amount of economic value created for a given unit of input (for example an hour of labour) – was a crucial indicator of growth and wealth creation. It was seen as a measure of progress.

As businesses in all sectors generated more value from their employees, countries became richer which, in turn, increased economic activity and created even more jobs. Everyone benefitted.

However, at the end of the 1990s and into the early 2000s, things started to dramatically change. As economies became more dynamic, particularly in developed countries, employment and productivity no longer mirrored each other. The gap between the two widened: productivity continued to rise strongly but employment levels stagnated (Table 1).

It would be reasonable to assume that the developments in technology are largely responsible for both the healthy growth in productivity and the decline in jobs. Indeed, recent research undertaken by the World Economic Forum (WEF) involving 15 economies covering about 65 per cent of the world’s total workforce, suggests that around 5 million jobs will be lost by 2020 as a result of developments in genetics, artificial intelligence, robotics and other technological change.

Whilst the discussion surrounding technology doing the jobs traditionally performed by people often relates to robotics and automation, it runs much deeper than that. Today we have the Internet of Things, big data, inexpensive data storage, cheap computing power, and advanced analytics amongst others that are impacting on jobs. With digital processes talking to other digital processes and creating new processes, this is enabling organisations to perform an increasing number of activities more cost-effectively. The knock-on effect is not only the loss of an increasing number of human jobs, but it is also creating the potential for greater economic costs.

However, despite widespread agreement that technology will make huge advances in the coming decade, the impact on jobs is not universally negative. There are no engineers designing and building steam engines anymore but that has not attributed to the overall rate of unemployment.

Since the industrial revolution, history shows that disruption is not the same as displacement. People produce technology and since technology becomes obsolete at an ever-increasing rate, it will require skilled people to continue new developments whilst maintaining existing systems.

So the key issue here is that technology will require new labour forms, not less.

 

Looking Forward

 

It is probable that some industries, particularly in manufacturing, will be affected more by technological change than others. However, every industry and most occupations will undergo a fundamental transformation. Yet, even though levels of unemployment are expected to rise, so, too, will the opportunities. The evidence points to new technology creating new and different kinds of jobs.

The challenge now for most business leaders and governments is the widening skills gap. The WEF suggests that five years from now, 35 per cent of the skills considered important in today’s workforce will have changed. This issue is not generalised but can clearly be identified by specific industry, region and occupation. If technological change is going to result in talent shortages, increasing unemployment, growing inequality and diminishing markets, then it is incumbent on everyone – individuals, businesses and governments – to address this.

Individuals will need to take a proactive approach to their career development through continuous learning. Senior executives will need to establish training programmes that address not only their short- and long-term corporate objectives, but also the career aspirations of their employees. Governments must create an environment (both through the education system and in employment) that encourages and assists companies and individuals to achieve their objectives.

We are now experiencing a paradigm shift that is transforming all industries and shaping the future of how things are made and how we live. Yet on a positive note, the shift will push a growing percentage of the workforce towards creativity and entrepreneurship, a position where human beings have a clear comparative advantage over machines.

Society has always evolved, and will continue to do so. Some jobs will be displaced but others will be created. And out of this will come further opportunities. There are many attributes – such as empathy, creativity, judgment, critical thinking – that are uniquely human, something that technology may never be able to duplicate. As such, jobs requiring these skills will remain relatively immune from encroachment by automation. We simply need to be awake to the technology-driven transformations taking shape and act on them accordingly.

 



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