Perfect storm of disruption could axe London’s workforce by a third

24 April 2018 Authored by Consultancy.uk

Automation identified as key disruptive force threatening capital’s workforce, with Brexit pains and low wages compounding manual workers’ woes. But educated employees in the financial sector are expected to thrive in a resilient and innovative city ecosystem, a new report suggests.

In a recent speech, Bank of England Governor, Mark Carney, warned that a “massacre of the Dilberts” could see almost a third of all jobs in London lost to automation. The head of the UK’s financial institution made the surprising reference to the iconic American comic strip – charting the misadventures of white collar office jockey Dilbert – in the same week a comprehensive 74-page report on automation detailed the threat automation poses to the capital's workforce.

Authored by the Centre for London think-tank and produced in partnership with EY, the report is titled “Human Capital – Disruption, Opportunity and Resilience in London’s workforce”. The headline-grabbing conclusion that a third of all positions have a ‘high potential’ for automation chimes with McKinsey & Company projections of the AI and robotics impact on the UK jobs market.

Benefiting from a knowledgeable EY advisory team, the Centre for London report stresses the opportunity inherent in disruption and praises the London's resilience in adapting to recent global change. In the foreword, Caroline Artis, London Senior Partner at EY, says that the breathtaking rate of change ushered in by technological innovation will present a complex challenge for the city. This challenge must be met with equivalent innovation — of public policy and regulations, and business models — if London is to prosper.

Share of jobs in London with low, medium and high automation potential

“The next decade will see an acceleration in the pace of technological change like no other and all businesses should be prepared,” Artis said.

A global city and Europe’s financial capital, London employs one sixth of the entire UK workforce, with 5.6 million employees helping generate economic activity worth £400 billion per year. The report found that almost a third of all jobs have a high likelihood of being automated in the near future as mobile robotics and machine learning continue their assault on the status quo.

Skills divide

Lower and medium-skilled workers are projected to bear the brunt of the disruption. An estimated one million people toiling in the retail and wholesale, transport and storage, accommodation, and food industries have the most reason to be alarmed. The construction sector is facing twin threats from automation and Brexit, with more than one in three labourers hailing from other EU countries.

Automation potential in London, per industry

The Brexit connection to automation hardly featured in the combustive pre-referendum debate. But the report identifies migration and low wages as disruptive elements joining automation in brewing up a perfect storm set to strike London’s unskilled workforce. Not only are lower skilled workers more likely to lose their jobs, they face a much steeper climb to acquire new ones compared to those in the financial sector.

Technology will create millions of jobs just as it will dispatch millions more to the ash heap of history. But the industries projected to be in low future demand are typically the same as those most threatened by automation. Similarly, workers in construction, retail and administration are less likely to possess a degree or specialist education and thus a golden ticket to the future economy.

Educational attainment of finance and insurance workers, 2016

By contrast, the joint EY/Centre for London report strikes an optimistic tone when evaluating the capacity of London’s large professional class to adapt to disruptive market forces. Corporate managers and directors, scientists and engineering professionals were among a broad range of actors considered to possess the skill sets needed to flourish in an innovative new jobs environment. It should be stated, however, that recent McKinsey research suggested that AI’s job creation potential was oversold and that white collar workers also face the firing squad.

This depiction of the resilient, agile and educated worker set to survive automation and thrive in an unpredictable digital economy also conflicts with Mark Carney’s analysis. The Bank of England Governor’s warning about a “massacre of the Dilberts” may need rephrasing. If EY Senior Partner Caroline Artis is correct, the massacre will be of the ‘Joe Bloggs’ who man the capital’s warehouses and drive its taxis.

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