Economy must adapt to make for more equal future of work

01 February 2018 Authored by Consultancy.uk

Automation is encroaching on all forms of work at a rapid rate, however, as it stands, little is understood of the impact technology may actually have on the world of work in the long run. In new analyses released at the World Economic Forum, three key indicators, the change of pace of technology, peoples’ capacity to reskill and labour mobility, have been considered, top map out numerous possibilities for tomorrow’s world.

The future of work is increasingly in doubt, with technology trends suggesting that masses of both high and low-skilled workers could become redundant in the coming years. The effect and pace of automation and digitalisation on the work is already impacting numerous industries – from manufacturing and retail, to food and drink, but the worst could still be to come. Last year, some reports suggested that as few as 19% of jobs which became fully automated would be replaced with new roles in other aspects of business – amid a global realignment of labour relations.

Without a radical restructuring of the economy – including solutions such as a universal basic income, to provide society respite from either mass unemployment, or drastically reduced living standards and wages – the world risks realising a wide range of dystopias. New analysis released at the 2018 Davos summit, in collaboration with strategic partner Boston Consulting Group, explores the future of work, examining three variables – the pace of the rollout of technology, the rate of reskilling of workers, and labour mobility. The analysis does not look at the future of economics, nor at changes to company structures, taxation or deeper changes to human society as such – areas which must be properly examined to build a comprehensive picture of the future of work – however, among the findings, the document still reveals several troubling, potential outcomes. 

In practice, the multiple scenarios described in the white paper are likely to play out simultaneously. However, in no circumstance are these outcomes a foregone conclusion. The authors stated, “We have currently a window of opportunity for taking action, provided we collaborate on and coordinate these actions. It is imperative that governments, businesses, academic institutions and individuals consider how to proactively shape a new, positive future of work—one that we want rather than one created through inertia.”

Work autarkies and mass movement.

Worst case scenarios

The first scenario, Work Autarkies, projects slow technological development, focused largely on replacing low-skilled labour. According to the study, a lack of development of new skills for the displaced workforce, and a lack of labour mobility due to looking internally for labour, mean that companies are likely to find it difficult to attain the high-level skills they require for maximal growth. This scenario is perhaps the closest to the current state of play in the global economy, with companies in the ageing populations of the West particularly concerned with a growing talent shortage, while generally dragging their feet when it comes to upskilling staff they already have.

A second, similarly recognisable, scenario sees higher levels of mobility, but slower technological development and skill development. Those who have participated in the growing gig economy will understand the significance of this, as a growing ‘precariat’ of workers see their wage bargaining power eroded by the impermanence of their employment. The effect is that lower skilled workers increasingly compete with one another for jobs, as part of a global low-skilled labour pool, for which they move into regions with demand, while high skilled labour floods markets, similarly driving down high skilled wages. This scenario, while presently recognisable, does also rely on the continued, or in many cases now, increased capacity for labour to move across borders – something which, even in the free movement zone of the EU, is becoming less and less popular with national governments.

Robot replacement

Another scenario featured in the World Economic Forum document, considers what may happen if workforces are hollowed out almost completely, as robots take over almost all aspects of work. The result of this would almost certainly be considerable unrest, as mass unemployment arises. To offset the negative impact on societies, which remains the basis of human life, companies’ profits are redistributed to meet the need of societies. Interestingly, this was something echoed by the Labour Party Shadow Chancellor John McDonnell, who used his attendance at the 2018 economic summit to warn of a “political and social avalanche,” unless the global economic rules are rewritten in coming years, while referring to the global elite gathered in the Swiss ski resort as the “Davos few”.

Robot replacement and polarised world

Furthering this, the report also warned of a potentially polarised world, in which rapid technological development reduces the need for much of labour, resulting in increased unemployment, while the jobs that do remain are competed for by a highly skilled individuals, living in a few megacities. The effect of high mobility and low labour requirements is mass inequality, with most of the world returning to subsistence farming, with “a few serving the mega-rich.”

The report was more hopeful about another potential outcome: that of empowered entrepreneurs. While this option anticipates a global closing of borders, as the flow of talent is restricted – something which, again, is already on the cards in post-Brexit Europe – the paper expects this would lead to entrepreneurs increasingly turning to local markets, creating new services and products in the process – while accessing the global market through online platforms when necessary. While technological development will have been steady, making a number of jobs redundant in low-skill markets, a higher level of education will have created a more skilled workforce which can sell its labour to these now-localised entrepreneurs. However, the report does not cover what this may do to wages – as restricted labour movement could either lead to a workforce more capable of demanding boosted wages, or a closed shop, where employers are able to cut pay and conditions in the knowledge they have a captive workforce to pick from.

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