Technology and automation has created more jobs than lost

01 March 2016 Consultancy.uk

Over the past fifteen years, technology has seen to the loss of a range of low paid jobs in the UK, with a relatively large increase in higher paying positions. According to projections in a new Deloitte article, there is an upward trend in job creation due to automated technologies. Deloitte claims that this technology-driven shift has already created nearly four times more jobs than have been lost, and has brought considerable additional value to the UK’s economy.

According to a poll – held by the Future Foundation research agency on behalf of Infosys – 45% of young Britons between the age of 16 - 25 believe technology will imminently replace them in the workforce due to low confidence in their own IT skills. A new report by Deloitte, however, titled ‘From Brawn to Brains The impact of technology on jobs in the UK’, allows for a more nuanced, positive outlook arguing that many occupations can actually benefit from partial integration of technology relieving them from many manual, routine tasks in, for instance, creative occupations, business, professional services and caring professions. Deloitte considers the past in relation to the future promise from automation technologies currently being developed, including AI, robotics and RPA. 

Robotics are projected to perform 25% of four key manufacturing sector functions in the coming decade, and RPA is set to create a wave of automation in the coming years as more and more businesses adopt the technology. AI technologies, with advanced cognitive capabilities, create an even more uncertain spectre as their capabilities continue to develop. Many of these technologies are still someway from being deployed or are some ways from reaching maturity.

change in employment by occupation from 2001 to 2015

Deloitte explores the effect of technology on the UK labour market over the past 15 years to make a general projection about the changes technology may come to have over the coming two decades. The study seeks to use a model developed by Deloitte in association with Carl Benedikt Frey and Michael Osborne of Oxford University in Agiletown: The relentless march of technology and London’s response, about the future effects of automation on the basis of the past 15 years of technological advance.

According to the study, a wide range of easily automated jobs have been lost since 2001. Jobs in a range of sectors with a probability of 0.7 for computation has seen declines, with steeper declines coming closer to 1. At the same time, the UK economy has seen a large increase in the number of professional jobs, technical jobs and managerial positions, as well as the number of carers.

change in total employment 2001 - 2015 by skills category

Different regions have seen different distributions of loss from technological advances over the past 15 years, with particularly the South East and London seeing a large number of automation resilient positions created, while the East, North West, and Midlands have seen a loss of high automation probability jobs. In total 3.5 million jobs were added to the economy since 2001, with a total loss of 800,000 during that same period.

probability of computerisation and median earnings

The analysis also considers the median income in relation to the probability of automation for a range of jobs, finding that the higher the pay the lower the probability of computerisation. At a probability of around 0.3 the reward for employment begins to decline, while any position above 0.4 sees the probability for computerisation increase further as the relative payment for employment declines from around £20,000 to £15,000 a year. The decline in high probability for computerisation positions, and the increase in low probability positions, has gone hand in hand with an increase in pay of newly created positions, with on average each one of these new jobs paying £10,000 more per annum than the one lost – with an estimate that this technology-driven change has added £140 billion to the UK’s economy since 2001.

employment changes

The research highlights that the changes have seen a massive reduction in the number of personal assistants and secretaries, down by more than 200,000, as well as typist and related keyboard positions, down by more than 100,000. Bank clerks and post office worker demand has plummeted by 83,000.

Interestingly, the largest two groups of growth in terms of employment, are care workers and home carers as well as teaching assistants, with 271,000 and 235,000 additions respectively, all representative of some of the lowest paid positions in the UK economy. The number of higher paying positions created, relating to professionals such as nurses, 186,000, secondary teachers, 131,000, and business professionals, 115,000 – likely pull up the average in terms of pay.

The report paints a relatively positive picture about the future of the UK employment market, given the trend continues as it has over the last 15 years – even with the projected coming loss of 35% of current positions on the basis of rapidly advancing and new forms of automation technologies. The past rapid increase in low paid social positions, as well as high paid calculative positions, highlights the potential of an economic divisionary trend following continued automation.

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High employment drives deals to access fresh talent

09 April 2019 Consultancy.uk

The UK continues to have a historically low unemployment rate, resulting in a tightening employment market and demand for recruitment services. The industry topped £12.3 billion last year, while valuations continued to rachet up. There were were 32 firm acquisitions in the recruitment services space last year, up significantly on the previous five-year average.

Labour markets globally are tightening, particularly in developed economies. At the same time, access to top talent is becoming increasingly difficult to source, as demand for that talent continues to rise. Higher demand has been one of the key drivers for acquisitions in the space. New analysis of the recruitment M&A market, from consultancy firm BDO, looks at current trends and future projections for activity in the segment.

The UK employment rate has grown considerably over the past decade, with the number of NEET decreasing, more women joining the workforce, and older people continuing to work, among other trends. Participation rates hit more than 75% in 2018, up from around 73% in 2014. The unemployment rate dropped to 4.1% last year, the lowest level in more than 40 years.

UK Recruitment Market

 

The recruitment industry has enjoyed strong growth over the same period, with revenues increasing from around £8 billion in 2014 to £12.3 billion last year. However, the growth rate for the industry is expected to stall for the coming years – the firm is projecting annual growth of 0.1% to 2024. The stall reflects deep seated uncertainties stemming from the future of the UK, from migration to internal employment in an increasingly uncertain future.

According to the firm’s analysis of market trends for UK listed FTSE recruitment companies, their performance over 2018 outperformed the wider FTSE market by a significant market during some months – the end-of-year uncertainty hit both recruitment and non-recruitment firms with relatively equal strength. The drop partly reflects market sentiment about the future of the UK.

FTSE Listed Recruitment Firms Average EV/EBITDA Multiple

 

The study also considered the multiples growth, average EV/EBITDA multiples, over the past year – which has shown considerable ups and downs. The yearly average multiple of 10.4x was above that of 2017’s 9.9x – although a 26% drop at the end of the year was significant. The drop was tied to the relative volatility in macroeconomic conditions affecting the globe, though another major contributing factor has been Brexit and political instability.

Global M&A

The global recruitment M&A market was particularly active in the UK, with 32 deals last year – a five-year high, and well above the 17 recorded for second-place US. Deal activity in the UK was focused on expertise and capacity in industrial and technical sectors, reflecting skills shortages in those segments. The US was largely focused on healthcare-related M&A, representing 25% of their market.

Overall, of the 92 deals in 2018 (a 21% drop on 2017) generalist firms were the most in demand, at 25% of the total, followed by education at 14% and engineering & construction at 13%. Software saw relatively low demand, at 2%.Investment into the UK by country

In terms of investments made into the UK, domestic investment continues to be the most dominant, accounting for 24 deals. Japan made three deals, although Brexit is seeing the country become increasingly nervous about investment. The US accounted for two deals. The longer-term trend shows that domestic investment is up on 2017, hitting the highest level in five years, while the US has reduced its M&A investment into the UK.

Commenting on the results, the firm noted, “The latest report shows the recruitment sector remains strong and continued to grow through 2018 despite facing many challenges. Notwithstanding the personalised nature of these services, the market continues to evolve, seeing traditional recruitment firms utilising available technology along with new entrants showcasing innovative platforms.”

Related: High UK employment masks troubled economy.