Job Displacement And Automation

There was a spike of automation anxiety in the late 1920s and early 1930s when machines were starting to take over jobs on farms and factories, then again in the late 1950s and the early 1960s, to a point US President JF Kennedy listed automation first as job challenge – and yet, we didn’t run out of work.

People are employed now than at any other time in history. Until the nineteenth century, agriculture employed at least three-quarters of the world’s workforce.

It is easy to see jobs which are being replaced by machines, but hard to realize jobs created by technology.

New technology has coupler ways it generate jobs – there are direct jobs of people who design, develop, sell and maintain the technology, and whole new industries that built from certain technologies.

More importantly, the part we are usually blindsided to, is the indirect effect of labor saving inventions – when companies can do more with less, they can expand, open new locations, or even add new products; furthermore, they can lower prices to compete, which means consumers can buy more of their products, or consumers can use the savings to buy other things.

Therefore, new jobs are made when new technologies emerge, when businesses expand, and when consumers save money to support other businesses where jobs will have a cause effect of increasing.

However, it does not mean the jobs will appear right away, will be in the same location or pay the same wage as those were lost.

Economical logic here is that automation does displace work, while jobs are taken away, they are those that are created, so the number of jobs overall seems not to change drastically. So, many studies are biased to one narrative, scaring people about jobs that will be lost, but not direct and indirect jobs that will come to light as a result.

Jobs Dilemma

Over the last decade, the European Union they have lost 15% old manual jobs, and they have created 15% new economy jobs; even though it seems to have hit an equilibrium, the people who lost their jobs did not have the skills to migrate to new jobs.

In the next 20 years, Africa’s population will grow to 1,7 billion people, at the moment Sub- Saharan Africa is producing 9 million jobs per annum, with population growth, we need to produce 20 million jobs per annum to absorb the young demographics who will be coming into the jobs market.

Consider this too, 60% of jobs today, will see 30% and more, of their tasks being automated by 2030 – this will be done by determining what requires pattern recognition, what can be done by sensors and robots etc.

Let alone the fact that 50% of the work today can be automated by technology that’s already available, that’s equal to $15 trillion of wages.

In the 1980s, it took about 25 employees in manufacturing for output of $1 million, today it takes 5 employees for the same output, soon it will be zero in a manufacturing plant.

Artificial Intelligence and its Impact to the Jobs Market

Now, Artificial Intelligence (AI) anxiety is here, it is different from what we have ever seen nor experienced before.

The Chinese have a proverb: “When the price of rice is high, Heaven decrees new rulers.”

Disruptive creation applies in this case that AI will take away jobs, but will also create jobs as automation did. Like we anticipate the bounce of the ball, which skills will be required tomorrow. If you don’t have digital skills, you might become an observer of the new economy – LinkedIn has taken note that many professionals have been upskilling themselves with technology related studies, which more people ought to do and companies should encourage.

Job displacement has been demonstrated in the introduction of ‘Spreadsheet software’ reduced bookkeeping jobs and increased ‘financial analyst’ ones – labor economists have demonstrated Information Technology contributed to broadly reducing the share of middle skilled occupations, thereby pushing many from lower skilled to higher skilled jobs.

Repetitive, routine and rules based jobs are in danger of being extinct like Customer Support, Radiologist, Reporter, Research Analyst and Truck Drivers; even those in accounting, law and medicine among many.

Creative and complex jobs are safe for the foreseeable future, such as CEO, M&A Experts, Artist, Economist and Scientist. A lot of caring work and interpersonal work will be relevant to humans for many years to come until we come to ‘Artificial General Intelligence’ (AGI) era,
where machines will be doing almost everything we do.

We ought to look for areas where AI can work with humans, those will be key to keep jobs for other professionals.

Introduction of Universal Basic Income

Universal Basic Income (UBI) is part of the answer, but with governments that barely agree on anything, it is certainly not a pressing issue enough for them to start putting measures in place, or begin talks. In fact, I see them doing it as a desperate reaction, which is the exact opposite of what we need because lots of people losing their jobs at once is a recipe for disaster if we are not forward thinking.

Mark Zuckerberg in his speech at Harvard University, said we should explore having a Universal Basic Income – Elon Musk further said about UBI, “I don’t think we have a choice”.

UBI was first brought to mainstream attention by Milton Friedman in 1962 in his book Capitalism and Freedom. After decades of silence on the subject, UBI talks are back in recent years on the back of the fear that AI and automation will massively displace jobs from the labor market.

Scandinavian countries in Europe have high income tax, therefore when companies using AI fully, make tons of money, the government should then consider increasing corporate tax, but incentives them not to migrate to other countries, or also increase import tax and tariffs.

Countries like Sweden, their healthcare and education are subsidized by the government – yes they will be less need for humans to work, but GDP will continue growing, governments need to be wise as to how to distribute the wealth to ease the burden of their citizens’ livelihood.’

In Conclusion

Michael Dell said something fascinating, that if you look at the world, countries that are the most ‘robotocized’ have the lowest unemployment rate.

Today Data is considered the New Oil, New Gold. There is a shift from Physical Assets to Data Assets – look as Google which collects tons of data online, and any Airline you may think of, Google has a market capitalization of over $800 billion compared with any airline that has more physical assets in comparison.

We need more companies geared towards extracting value out of data, or out of collecting it – we also need more professionals to work with data, because the backbone of AI is data; for that’s what companies such as ours use to train AI systems to do anything we want them to do for clients or internal projects.

Let me pose questions as ‘food for thought’ – what happens to the human factor and human connection as opposed to being served by robots? Can we entirely replace humans and live on Universal Basic Income, while we do what everyday?

One thing is for sure, AI can and will change the world for the better, with a future where productivity will be at an all-time high, disease cures will be discovered etc.

Written by Paul Mashegoane – CEO of AI Group

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