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Jobs, technology, and disruptive change

Siddhartha Raja's picture
Not being skilled for work in 2030 will have serious implications

The children entering school in 2014 will start working in about 2030. One can safely assume that the world then will rely even more on information and communications technologies. After all, technology is already transforming agriculture, manufacturing, healthcare, financial services, and more.

Some technologies will have incremental influence on business and society. Others will herald significant changes. For example, 3D printing is already changing how businesses and garage innovators are building things. 3D printers are becoming more reliable, sophisticated, and cheaper. In time, manufacturing could change as much as publishing did when desktop computing became widespread.

The impact of such disruptive technologies will be significant. The McKinsey Global Institute identifies twelve such disruptive technologies that could have an economic impact of more than $14 trillion annually in 2025. Their analysis covers the automation of knowledge work, advanced robotics, 3D printing, and cloud technologies.[1] Information and communication technologies underpin most, if not all of these advances.

If the world relies more on technology, the young people starting to work in 2030 will face difficult times if their education and skills maintain status quo. Developed economies in the EU and US already report a shortage of skilled professionals. The situation is likely worse in developing countries where schools often rely on outdated syllabi or impart industrial-age skills.

Not addressing skills gaps will prove disastrous, especially for countries that have only their human resources to rely on, where joining the knowledge economy is the hope for the future. Being unprepared for 2030 will have serious implications for people, businesses, and governments.

Not playing games
It is tempting to say that children today are technology-savvy. But playing games on a smartphone is no preparation for being able to manipulate the game-changing technologies of 2030.

As 3D-printing experimenters will attest, the process is not easy. They have to learn specific skills to design and to get the machines to produce what they wanted. The process becomes more complex with the product; requiring investments in tools, training, or teams. A Star Trek-style voice-controlled “replicator” is still some time away. Today, only the resourceful can print in three dimensions.

Emptiness in the middle?
Developed economies have already begun to see the impact of slowness in adapting to change. A set of studies from researchers at MIT show how technology poses a challenge for workers today and for the jobseekers of the future.

Erik Brynjolfsson and Andrew McAfee from MIT predict that machines will get smarter and will displace more workers from jobs, at a pace more rapid than the past. Machines are becoming smart enough to drive cars, participate in and win quiz shows, and even serve customers online. These technological advances create a few billionaires or ‘superstars’ and may employ fewer people. Brynjolfsson and McAfee surmise that technological progress is driving a ‘great decoupling’ between job creation and productivity growth. Even as technology improves life, its benefits will not spread evenly and will vary depending on skills and ability. Moreover, only those businesses that invest in organizational change alongside technology will benefit.[2]

David Autor and David Dorn—also from MIT—argue the same point but in a different way. They find that employment changes and wage growth in the US over the past three decades follow a U-shape when mapped to skills. Put another way, more jobs have been created—and wages have risen—where either high-level or low-level skills are needed, while the middle is getting squeezed. They argue that this has been because of the growth of lower-wage non-tradable service occupations. Workers shift away from mid-level skill jobs due to falling wages (or job losses) into lower-skill service jobs “that rely heavily on ‘manual’ tasks such as physical dexterity and flexible interpersonal communication.” The mid-level has seen jobs being replaced due to a mix of consumer preferences (for more choices, needing more specialists) and “non-neutral technological progress,” that is technologies that replace some jobs—typically those that can be codified, automated, or outsourced—but not others. The challenge is income inequality as much as job losses: as high-skilled workers earn more, lower-skilled workers might find only less-paid jobs.

As machines displace their jobs, the middle class will bear the brunt. This is apparent in the developed world today. In the future, though, developing countries that were counting on being the factories and back-offices of the developed world will also face this constraint: the production and delivery of goods and services will shift back home if machines or lower wages undermine cost advantages.

A personal touch
What skills will be relevant for workers in 2030? Brynjolfsson and McAfee suggest that prosperous workers in the future would be to ‘race with the machines’ (as opposed to against), and be able to complement machines by providing the personal interactions and decisions that only humans can (at least for now).[3] Autor and Dorn similarly suggest that “the middle-skill jobs that survive will combine routine technical tasks with abstract and manual tasks in which workers have a comparative advantage — interpersonal interaction, adaptability and problem-solving.”[4]

These predications resonate with those of the Institute for the Future, a Silicon Valley think tank. They forecasted that the rise of smart machines would need workers with skills such as sense-making, novel and adaptive thinking, and social intelligence.[5] The ability of workers (and businesses) to use or manipulate technology effectively will determine their prosperity no matter their skill-level.

Alongside, jobs at the extreme ends of the skills scale will likely grow. It is unlikely that artistic or creative tasks can be automated. And as Autor and Dorn find, low-skill and non-tradable service jobs have grown too. However, wage inequality could rise and the unskilled—young or old—will be affected disproportionately.

A challenge for the future
Such a prospect is worrying for governments looking to stem inequality while simultaneously supporting businesses’ efforts to compete, often through laborsaving technology.

Centuries of technological progress has not created massive unemployment. But it is possible that the rapid changes wrought by the Internet, robotics, and automation might threaten employment more than the steam engine or plough. Some commentators suggest this as a key reason for why jobs recovery was slower than economic recovery following the recessions since the 1990s; the computer, Internet, and consequent automation allowed for jobless recoveries like never before.

What could governments do then? Certainly retaining the status quo is a recipe for irrelevance. The solution seems simple: reform education to develop the needed skills. But reality is more complex. To begin with, educations systems will need to become more flexible and competent to deal with an unpredictable future for their students. The iPhone was first sold in 2007; what will the world in 2030 look like? But often, teaching often lags technology, and preparing students for this future will need teachers to have the appropriate training, tools, and tempers.

Skills development will also need to train those who will fit into various groups of jobs. For those in interaction or service jobs, social skills will be critical. Technical skills will also be necessary, with varying levels depending on individual capacity and interest. And some might become innovators—the recipe for which is still a work in progress, and governments can at best create an enabling environment. In every case, though, students will need to know about how to use (and in some cases, create) technology. It might be possible to shift some from the mid-level to higher-level skills through education-to-employment bridging programs. But for this, students will need to have a base of skills that can be developed, and again students in many countries perform poorly in math, science, and reading assessments.

The challenge is greater in the developing world, where low labor costs and relatively large but inconsistent talent pools might exist. Lulled into a false sense of security given today’s trends to offshore services or manufacturing, the developing world faces in some ways greater risks due to technological progress. If they do not equip their children with the knowledge to use and create technology, they risk losing out to developed countries’ ability in the future to re-shore, make capital investments in automation, or innovate. Indeed, for the developing world, 2030 might be closer than it seems. Absent adequate skills, their infant schoolchildren might just be facing the most uncertain future of all.
 

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