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New research ‘fears of technological change destroying jobs may be overstated’

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Frank Levy an economist and Professor at MIT and Harvard, who work’s on technology’s impact on jobs and living standards, has written to assay the sensationalized fears of the overhyped study by Frey and Osborne. Levy indicates:

  • The General Proposition – Computers will be subsuming an increasing share of current occupations – is unassailable.
  • The Paper (Frey and Osborne study) is a set of guesses with lots of padding to increase the appearance of “scientific precision.”
  • The authors’ understanding of computer technology appears to be average for economists (= poor for computer scientists). By my personal guess, they are overestimating what current technology can do.

Researchers at the OECD analyzed the Frey and Osborne study and conducted their own research on tasks and jobs and concluded that: “automation was unlikely to destroy large numbers of jobs.”

I have also been quite critical of the Frey and Osborne study based on my understanding of technological advances, which they claim to be way more ahead than it is:

We argue that it is largely already technologically possible to automate almost any task, provided that sufficient amounts of data are gathered for pattern recognition.

With the exception of three bottlenecks, namely:

“Perception and manipulation.”

“Creative intelligence.”

“Social intelligence.”

Frey and Osborne divided the tasks involved in jobs along two dimensions: cognitive vs. manual and non-routine vs. routine. They then identified three aspects (bottlenecks) of a job making it less likely that a computer would be able to replicate the tasks of that job: First, “perception and manipulation” in unpredictable tasks such as handling emergencies, performing medical treatment, and the like. Second, “creative intelligence” such as cooking, drawing, or any other task involving creative values relying on novel combinations of inspiration; Third, “social intelligence”, or the real-time recognition of human emotion.

Race with the machines

Now a new research paper, released in July 2016, by researchers at the Centre for European Economic Research has indicated that technology has in fact had the opposite impact and is a net creator of jobs not destroyer (at least in 27 European countries – and I suspect the same is true for other regions).

The paper, Racing With or Against the Machine? Evidence from Europe by authors Terry Gregory, Anna Salomons, and Ulrich Zierahn (Gregory and Zierahn were also two of the OECD paper authors) looked at the impact of routine replacing technology on jobs and concluded:

Overall, we find that the net effect of routine-replacing technological change (RRTC ) on labor demand has been positive. In particular, our baseline estimates indicate that RRTC has increased labor demand by up to 11.6 million jobs across Europe – a non-negligible effect when compared to a total employment growth of 23 million jobs across these countries over the period considered. Importantly, this does not result from the absence of significant replacement of labor by capital. To the contrary, by performing a decomposition rooted in our theoretical model, we show that RRTC has in fact decreased labor demand by 9.6 million jobs as capital replaces labor in production. However, this has been overcompensated by product demand and spillover effects which have together increased labor demand by some 21 million jobs. As such, fears of technological change destroying jobs may be overstated: at least for European countries over the period considered, we can conclude that labor has been racing with rather than against the machine in spite of these substitution effects.

My research of companies using robots has also categorically shown, through factual evidence, that those companies have created significantly more jobs than have been lost due to technological change. Similarly a detailed analysis prepared for the European Commission Director General of Communications Networks, Content & Technology by Fraunhofer about the impact of robotic systems on employment in the EU found that:

European manufacturing companies do not generally substitute human workforce capital by capital investments in robot technology. On the contrary, it seems that the robots’ positive effects on productivity and total sales are a leverage to stimulate employment growth.

So if robots are not job killers what is the real problem?

We need to fill the skills gap

I have argued before that we have a skills problem. Jobs all over the world are not being filled because of lack of skilled personnel to fill them.

New and emerging technologies both excite and worry. Robotics and Artificial Intelligence (AI) is certainly a minefield for both exuberance and fears.

By definition, there is a knowledge and skills gap during the emerging stages of any new technology, Robotics and AI is no exception: researchers and engineers are still learning about these technologies and their applications. But, in the meantime, hope, fears and hype naturally and irresistibly fill this vacuum of information.

Depending on whom you ask Robots and AI is predicted to help solve the world’s problems. Or by building this devil, these technologies may scorch the earth and fulfill a prophecy of Armageddon.

On the other side, especially with respect to AI, what it will most likely do – if and only if adopted by major corporations and governments — is foster technological and institutional betterment at a frenetic pace through improved health care, solving climate problems, helping those with sight problems, helping to get much needed aid spread more equitably.

We need education and training fitted to a different labour market, with more focus on creativity, flexibility and social skills. We need more Moonshots from Governments and Industry as so well described by Mariana Mazzucato in her book the Entrepreneurial State: Debunking Public vs. Private Sector.

Machines are there to augment human intelligence and ingenuity, to improve our environment and workplace, we need to stop fearing the machines and learn how to better integrate them into our processes, destroy the fears and improve productivity. We are not going to stop technological progress, if we embrace it we are better prepared to gain from it.

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4 Comments

  1. Richard says:

    Thanks for the article. I agree with you that the negative impact of AI and automation on jobs is probably over-estimated, provided that the pace of technological advance is gradual and even, allowing labour markets and jobs to adapt and evolve.

    I agree that education and training are important but both are not enough. Welfare and taxation models need to come into the 21st century and be tuned with and support changing employment patterns. Breaking negative role models within families and communities where long term unemployment is seen as the norm will also be necessary if individuals from these groups are to benefit from the education and training on offer. Raising basic incomes to lift the lowest paid out of the indignity of welfare dependency is also a pre-condition.

    Ultimately, trends in technology will give all of us the possibility for greater freedom and self reliance. Sadly, current economic and social trends may hold us back from realising these potentials.

  2. […] staat. Maar nu blijkt uit recent onderzoek dat dit allemaal ontzettend meevalt. Sterker nog: robots pikken niet alleen NIET je baan in, maar ze zorgen zelfs voor méér werkgelegenheid.  “Overall, we find that the net effect of routine-replacing technological change (RRTC ) on […]

  3. victorvanrij says:

    The study of Frey and Osborne is indeed quite weak and only shows that a lot of old jobs will disappear (because of automation including robotics) and that it is almost not foreseeable which new jobs and how many will appear in the future. Everybody will agree on that. Also it seems clear that our societies are capable of creating a lot of “bull shit” jobs just to keep people working ( Graeber). Unfortunately we also have difficulties to predict the pace of technology development and the way in which this translates in the diminishment of jobs. We only know that this pace is increasing which also causes a decrease of the sustainability of new professions, Where a black smith in medieval time could work and live his whole life on what he had learned in his youth we can see that new professions in ICT but also industry are becoming obsolete in periods of tens of years or less. However it is up to societies to create new meaningful or less meaningful jobs, this is not a matter of faith given development but of policies. Next to this it is highly disputable that the raise of productivity (labour hours per product or service)caused by automation should only lead to the production of more goods and higher incomes and not to more free time (which in fact is shared unemployment). Keynes already in 1930 gave the prophecy that we all could have a 15 hour working week with the present salary by now (or actually in 2030), if we would not have had wars where we tend to destroy and rebuilt the world which costs a lot of work.

  4. […] on what sources you look at, the predictions for robotic job takeover are either negligible or apocalyptic. The truth will probably fall somewhere in […]

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