


The rise of the robots [AI and automation]

Rapid advances in robotics and automation technologies in recent years have coincided with a period of strong growth of lesser-skilled jobs in the UK [Low Pay Commission Report Spring 2016]. There is growing debate in the economics community and academia about whether technological progress threatens to displace a large proportion of these jobs in the longer term. Examples where automation is starting to gain traction internationally include warehousing, haulage, hotels, restaurants and agriculture: all industries which are frequently reported by our Agency colleagues to be heavily dependent on lesser-skilled labour. In the UK, driverless cars are currently being trialled on the roads of Milton Keynes and ‘hands off’ self-driving cars are expected on the motorways in 2018.



So how might automation in the Fourth Industrial Revolution differ fundamentally from that in the past, preventing technological progress from being labour augmenting, at least in the short to medium term? Perhaps the main difference is the speed of technological progress and its adoption. The technologist Hermann Hauser argues there were nine new General Purpose Technologies (GPTs) with mass applications in the first 19 centuries AD, including the printing press, the factory system, the steam engine, railways, the combustion engine and electricity. GPTs by definition disrupt existing business models and often result in mass job losses in the industries directly affected. For example, railways initiated the replacement of the horse and carriage, with resultant job losses for coachmen, stable lads, farriers and coach builders. Most of these GPTs took several decades to gain traction, partly because of the large amounts of investment required in plant, machinery and infrastructure. So there was sufficient time for the economy to adapt, thus avoiding periods of mass unemployment.

Speed of impact on self-driving

It is not just the impact of complete self driving trucks and cars that would determine the speed of impact on jobs. It is also ride sharing which replaces higher paying driving jobs with lower paying jobs. There is also platooning of trucks. One lead driver can be followed by about seven trucks to create a truck train with software connecting them instead of physical connections. Those initial innovations could rapidly reduce the number of driving jobs and speed the displacement.

SOURCES – Bloomberg, Bank Underground


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