Five reasons to stop fearing automation

8 October 2018

The end of work as we know it? The case for an optimistic view on labour market change

We cannot stop the march towards automation revolutionising our societies – nor should we want to.

Technology involves changes in the way we work that run so deep they shed the notion of work itself in a new light, as evidenced by the debate surrounding basic income as an alternative to paid employment. Before jumping to the conclusion that machines are stealing our jobs and threatening our livelihoods, we need to take a closer look at the complex interactions between technological progress and job market dynamics. A recent report by the London School of Economics (LSE) on ‘The Evolving Role of ICT in the Economy’, commissioned by Huawei, is doing just that. As a fact-based contribution to the emotional debate surrounding the future of work, it is a much-needed reality check. Here are some of its key findings.

1. It is not jobs that get replaced, but rather tasks. There is a danger of overestimating the impact of automation: an OECD report based on this approach estimates that, on average, 9 % of jobs face a high automation risk. This is clearly much lower than the 47 % estimated using an occupation-based approach.

2. Technology is related to the displacement of existing jobs, but also leads to the creation of new ones. The growth of professional and managerial occupations over recent decades is evidence of this.

3. While automation and technology effectively replace workers, they also feed into economic mechanisms that can boost employment and wages.

  • The productivity effect: demand for labour in non-automated tasks may increase as the cost of performing routine tasks falls
  • Capital accumulation: automation triggers more investment, which increases labour demand since more workers are needed to work with the new machines
  • Deepening of automation: when automation affects tasks that are already automated, margins increase, creating labour demand
  • 'Reinstatement effect’: automation creates new, labour-intensive tasks because labour is needed to operate more sophisticated machines, and because technology can create new classes of jobs entirely.

4. Skills training and regulation can help bridge the gap created by technology-induced labour market changes. Research highlights that automation affects mostly middle-skill routine jobs, meaning that high-skill analytic tasks and manual interpersonal tasks are still difficult to replace. Specific examples for this are the large number of unfilled ICT jobs at one end of the spectrum, and the rise of the gig economy (think Uber and Deliveroo) on the other. To help workers, employers and economies adjust, the provision of adapted training to fill vacancies, and the creation of a regulatory framework for ‘gig’ employment could be key.

5. Based on recent employment trends, there is no evidence for an imminent ‘new wave’ of employment loss due to automation. Past evidence indicates that structural transformations in employment take place during recessions, so the most likely starting point for a ‘second wave’ of automation affecting a new class of jobs would be another downturn. This highlights that job losses due to automation are the result of, rather than the reason for, economic slowdown.

While these findings give no reason to downplay the importance of the effects that machine-learning and other ground-breaking technologies will have on future occupations, we need to embrace these effects in order to reap their benefits.

As a global ICT leader, my company, Huawei, is not only working on the technologies driving the digital revolution, but is also determined to play its part in helping societies catch up and adapt. Through our skills initiatives, such as the Seeds for the Future programme, for instance, we work to help address the gap between curricula and job market requirements. Together with our partners in Europe, we aim to shape an environment in which people, technologies and societies can thrive. A conference on 'Digitalisation & Work' – organised by CSR Europe and Huawei on 11 October in Brussels – will discuss the evolving role of ICT in the economy, and its impact on productivity and employment. It will also present the LSE report and present its findings in more detail.

See video from Digitalisation & Work conference organised by CSR Europe and Huawei