Future of Employment

The Future of Employment - 3 Things You Need to Know

Automation a Threat or a Blessing?

January 11, 2018, Bruno Jacobsen

When talking about the future, we must mention the future of employment. From the very beginning of our existence as a species, we have been working. First, we worked to find food. Then we learned how to grow it and store it, we began specializing and working to make money. We could then exchange this money for food or goods or whatever we pleased. And we haven't changed much since.

But with the 4th industrial revolution, the future of employment could look very different. With the arrival of automation and improvements in AI, what will happen?

The Future of Employment: 3 Things You Need to Know


1 - People have debated this for centuries, but this time it could be different

The future of employment has been a hot topic for a while. The threat of automation itself has been present for many decades. Back in the days, people used to worry that automation was going to take manufacturing jobs away. As "machines took over" people would be left unemployed.

Much of this did happen. Where possible, automation of manufacturing became a real thing. In the US alone, in 1960, manufacturing represented 26% of all jobs. Today, it represents less than 10%. Automation is not the only culprit of this, of course, but it is undeniably a major factor.

But today unemployment in the US sits at around 4%. In the UK, it's 4.3%. In Australia, 5.5%. In Canada, 5.7%. All these are multi-year lows. There is still underemployment, and many of the jobs now done suffer from low wages. But people have gotten jobs as new industries emerged that created new opportunities.

So why is it different this time?

It's happening faster than ever before. According to James Manyika of McKinsey, in the last few years we've seen a remarkable level of progress. As he puts it, some people argue that we have seen more progress in the last 5 to 10 years than in the entire 50 years before.

And it's not only about the level of progress. It's the type of progress too. Before, robots and artificial intelligence could do things that seemed advanced enough. But we always got the sense that there was a realm of capabilities they couldn't reach. No matter how advanced, AI could not be creative like we could. Could not think like we do. And could not learn like we do.

That's what we thought then. But all that has changed.

Today, these are no longer human-only traits. AI has been able to compose classical music and write stories. It is becoming increasingly capable of identifying a myriad of things - from photos to music. And, it can learn too (and well and fast), as we saw when it beat a Go World Champion last year.

So, yes, it could be different this time. As technology improves, we are moving further away from "it's going to automate some jobs." Some are instead more likely to ask: "could it lead to never-seen-before unemployment levels?"

But we'd still need evidence that this would be the case. If we go by the past, the future is more likely to be bright than dark.


2 - Governments could regulate labour market in the future

If we reach a stage where the future of employment really does seem to under threat, governments may intervene.


One option would be to introduce regulation that limits the type of employment that can be automated. A government could, for instance, decree that 20% of activity X must be done by humans. If they catch a company not obeying this, they punish it. While this seems like a possible option, it's not the preferred one.

Such a decree could bring several problems. First, companies could just leave to a country that is friendlier towards automation. Second, it is not a very well tested solution, and would result in low wages. And third, in the struggle between government control and technology, technology tends to win.

A second option would be to provide tax incentives for companies that employ humans. This wouldn't make it mandatory, so companies could still choose not to. For instance, imagine that employment in manufacturing was on the verge of dying. If a company could save US$ 1 billion in taxes by employing 1000 people, it just might. To do so, productivity would have to remain at the same level and wages couldn't go over the savings. This company would also have to guarantee that it does not fall behind in adopting technology necessary to compete with others.

Another option would be a "robot-tax." We've already discussed this in the blog. The idea, made famous by Bill Gates, could help. If you replace a tax-paying person with a robot that doesn't get a salary, governments get less tax money. And the government would still have to support the same number of people. Of course, how exactly we would implement this is up for debate.

It's also up for debate whether it would work. The argument that a government would receive less tax income isn't infallible. If companies' productivity improves, the economy as a whole can grow faster. This in turn could lead to a wealthier government.

On top of that, even in the future this is unlikely to be pursued. First, there are many difficult questions. What exactly counts as a robot in an automated factory or in a company? Which types of robots would be taxed? How do we determine the amount of tax? Second, we have been automating things for over a century and, at this moment, unemployment rates are low. It would require a big change for any such tax bill to pass.

The robot-tax does not seem immediately very likely. If any of these (among many other) options mentioned above is taken, it might be the second. In directing their economy, governments may be more willing to show the carrot, not the stick. Hence incentives before laws.


3 - The future of employment could mean an opportunity to pursue your own dreams

In the future, we'll still probably have enough jobs. But, assuming nations become wealthier, and work is no longer necessary, it could also mean a future of free time. Imagine a future where everyone follows their passion. How would that be?

Unrealistic for now, maybe. And whether it's a good thing or a bad thing, we can't say for sure at the moment. But if all pieces fall in the right place, it could happen.

According to a study, in the US, over the past 5 decades, leisure time for working men has increased to 6-8 hours per week. For women, the number is 4-6 hours per week. That's 5 to 10 extra weeks of vacation per year.

It's possible that leisure time will increase further, as we automate many of our tasks. In a world where this is taken to the extreme, free time could even make up the majority of our time. What would you do then?

If you want to pursue arts, you could pursue arts. If you want to start a business, you could do that. And if you want to study sciences, you could also go that way.

This would, however, ask for some sort of universal basic income (UBI). We've also discussed this in the blog, here. Under the UBI, citizens would receive a sum of money every month, year, or just once, when they come of age. It would likely be the minimum they need to "survive," keeping them out of poverty.

What would be the consequences? It's hard to predict. Some argue that it could result in increased creativity, research, and entrepreneurship. Others argue that it could decrease productivity and that it would be too expensive.

Some small experiments are currently being done (for instance, in Finland and Kenya). Some proposals have been overwhelmingly defeated, like in Switzerland. But as these are smaller experiments, the results can't be directly extrapolated to all countries. So it's hard to predict what the true of effects of the UBI would be.


The bottom line on the future of employment

So, what's the bottom line?

As we've seen, this concern is nothing something new. But it is a little different this time. So far, though, until something like an AI singularity occurs, we should be OK. In the worst case, governments might intervene. Some already have.

But the more extreme scenarios here presented are still at least a few decades into the future. It's a good time as ever, though, to start thinking about the approaches we want to take. Not only as individuals or nations, but as a global society.

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