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Tech Will Change The Job Market, But Not The Way You Think; By Anastasia Dedyukhina
Could a robot do your job? Insurance giant Aviva asked this question of 16,000 employees in early 2017. Everyone who said yes was offered to retrain for a different job. Aviva is not the first company that thinks its business might be computerised, although one of the first ones to actually consult staff about it and offer alternatives, as opposed to simply laying them off.
Up to 35% of the UK jobs could be automated in the next 20 years, according to Oxford University‘s Carl Frey and Michael Osborne. Automation will affect not only blue collars, but more ‘qualified’ jobs like doctors, lawyers, accountants, traders etc. – so typical middle class white collar jobs.
Should we start getting concerned about losing them to robots? Yes, but not for the reasons you may think.
Humans have always been concerned about tech taking away their jobs, but somehow the tech progress always created more jobs than it took away. For instance, emergence of ATMs killed a bank cashier’s job, but thanks to reduced costs of running a bank branch more of those appeared. Computerisation supporters say that with robots taking over repetitive tasks, humans will be able to do other, more creative things, or jobs that have not yet been imagined. Of course, millions will need to be retrained (expect huge growth in training and education market) and things may get a bit bumpy short-term. But we’ve done it all before, they say, and so there’s no reason to worry long-term.
However, there’s one problem with this argument, and it is that the tech industry is run by for-profit companies, whose main goal is to maximize profit and not to contribute to everyone’s welfare. A research by Lawrence Michel from Economic Policy Institute suggests that in the last 40 years productivity increased by 80.4%, but an hourly compensation of an average worker only grew by 10.7%. Fewer companies extract more wealth from the society by automating its operations. When Instagram was bought by Facebook for $1 billion in 2012, it only had 13 employees. While automation makes things cheaper and allows economies of scale, it ultimately benefits companies, not workers.
A possibility to replace humans with the machines also reduces the bargaining power of the remaining workers, according to MIT’s Andrew McAffee. If both an employee and their boss know that it’s getting easier, cheaper, and more feasible to replace humans with machines, it becomes more difficult and risky to demand higher wages.
Is ‘disruption’ a good thing?
Luddites might have got it right after all. They did not protest against technology per se, but rather against lower human salaries and replacement of qualified labour with cheap, unqualified one.
One might start appreciating their concerns looking at today’s Uber drivers, who earn less than a minimum hourly wage – one driver publicly said his net earnings after expenses were £5.03 an hour. Most drivers make just about money to pay the bills and the car rent, that’s in spite of working 12 hours a day and paying to Uber 25% of their earnings and all the costs. They are also not recognized as full-time employees by the company, and so don’t enjoy any of the benefits like health insurance or paid annual leave.
As more “disruptive” tech platforms emerge, we’ll see fewer people earning enough. Fiverr, a website offering services from thousands of freelancers for as low as 5 USD, “disrupts” creative industries by creating a competition between millions of creative workers around the world. Fiverr drives the industry prices down, but so does the quality of work. You can’t expect a professional in a developed country to live out of 5 USD gigs. So no wonder that in my experience, only 1 in 5 gigs I purchased there was of some quality.
‘Disruption’ might be a trendy word in the start-up world, but not all things need to be disrupted, especially in regards to people’s ability to maintain themselves.
What to expect
As tech companies gain more power, single individuals and the whole nations will get less of it. Already today Amazon announced a competition among US cities to become its second headquarter, asking for tax benefits and other perks, and has the whole line-up, including one city suggesting to rename itself to Amazon.
Computerisation and ‘disruption’ of many industries means not just that people will have to be retrained for new jobs. It inevitably will drive down the salaries and hourly rates of those still employed. There will be less job security and ‘gig economy’ will proliferate.
This also means there’ll be fewer companies willing to keep their employees on permanent contracts and in the office. Rather, we can expect a whole generation living by doing small jobs for various providers, likely not requiring much qualification. As these people will earn less money than their parents and grandparents did, they will likely have to share accommodation or downsize – expect a further growth of co-living and co-working spaces and small flats.
As more and more of us will be served by automated call centres, and semi-automated doctors and lawyers, a ‘human touch’ may become a real luxury, for which more people will be willing to pay money. So expect that industries serving wealthy individuals will still be employing a maximum number of people.
This is an adapted extract from Anastasia Dedyukhina’s new book Homo Distractus: Fight for your choices and identity in the digital age.