Tech­nol­ogy is cut­ting jobs

The Sun (Malaysia) - - SPEAK UP -

FOR most peo­ple, a se­cure, fairly paid job is the dif­fer­ence be­tween a rea­son­able life and des­ti­tu­tion. To­day changes in the struc­ture of the work­force make this ob­jec­tive in­creas­ingly elu­sive.

Tech­nol­ogy ex­ac­er­bated de­clines in em­ploy­ment and in­comes by elim­i­nat­ing cer­tain tasks and deskilling many jobs. Ro­bot­ics and com­put­erised equip­ment suc­cess­fully re­placed of­ten skilled labour. Soft­ware is re­plac­ing jour­nal­ists be­ing able to syn­the­sise news items elec­tron­i­cally by crawl­ing the world­wide web. Even traders in fi­nan­cial markets are be­ing re­placed by au­to­mated al­go­rithms.

In the late 20th cen­tury, global sup­ply chains let lower paid work­ers dis­place ex­pen­sive coun­ter­parts in more de­vel­oped coun­tries. Ini­tially, this oc­curred in man­u­fac­tur­ing in­dus­tries re­quir­ing limited skills. Over time, it en­com­passed more skilled jobs, spread­ing to ser­vices and pro­fes­sional work.

Com­mu­ni­ca­tions, which al­lowed cheap real time trans­mis­sion of voice as well as near in­stan­ta­neous trans­fers of vast amounts of data and in­creas­ingly high definition im­ages, ini­tially fa­cil­i­tated re­lo­ca­tion of pro­duc­tion. In­creas­ingly, it al­lows re­lo­ca­tion of ser­vices such as en­gi­neer­ing, ar­chi­tec­tural, ac­count­ing or le­gal ser­vices and even med­i­cal pro­ce­dures.

In com­bi­na­tion with re­mote com­mand and con­trol tech­nol­ogy, orig­i­nally de­vel­oped for mil­i­tary ap­pli­ca­tions, it is now pos­si­ble to con­trol au­to­mated pro­duc­tion lines and even mines from dis­tant sites.

These changes af­fect in­comes and the avail­abil­ity of jobs. US median earn­ings have not in­creased since 1975 in real terms. Av­er­age real Ja­panese and Ger­man house­hold in­comes have been stag­nant for more than a decade. UK fac­tory in­comes are at or lower than in the late 1970s, af­ter ad­just­ing for in­fla­tion.

All work­ers, ir­re­spec­tive of pro­fes­sion and skill, now face what John May­nard Keynes called “tech­no­log­i­cal un­em­ploy­ment”. A much cited re­search study by Oxford University found that 47% of all em­ploy­ment (80 mil­lion jobs in the US and 15 mil­lion in UK) is threat­ened by au­to­ma­tion.

A com­mon as­sump­tion was that new jobs in new in­dus­tries would al­low dis­placed work­ers to be utilised. Un­for­tu­nately, the re­al­ity has been dif­fer­ent.

The num­ber of peo­ple em­ployed in tech­nol­ogy has re­mained mod­est, around 5-6% of the work­force. By one es­ti­mate, only 0.5% of US labour force is em­ployed in in­dus­tries that did not ex­ist in 2000. In Sil­i­con Val­ley, only 1.8% of work­ers are em­ployed in new in­dus­tries.

One rea­son is that many new in­dus­tries are not labour in­ten­sive and even where they are the tasks are out­sourced to the cheap­est sup­plier glob­ally. A lead­ing tech­nol­ogy com­pany like Google only has around 60,000 em­ploy­ees world­wide.

Many of those sub­ject to be­ing “demised” or “in­vol­un­tary sep­a­ra­tion” (the Or­wellian term for los­ing your job) are un­likely to find new em­ploy­ment. As­sem­bly line work­ers are un­likely to rein­vent them­selves as knowl­edge work­ers, tech­nol­o­gists, bio-en­gi­neers, fi­nanciers or other pro­fes­sion­als. English eco­nomic ge­og­ra­pher Pro­fes­sor John Lover­ing re­ferred to this in 1995 as the “tran­si­tion fan­tasy of in­tel­lec­tu­als and pol­i­cy­mak­ers”.

Ed­u­ca­tion is not a guar­an­tee of em­ploy­ment. The cost of train­ing has risen sharply, leav­ing many in­di­vid­u­als with sub­stan­tial stu­dent debt. Many new grad­u­ates are un­able to ob­tain work in their se­lected ar­eas and start­ing in­comes are around 10-12% lower than five years ago com­pound­ing the problem of higher and in­creas­ing stu­dent debt.

Mo­bil­ity of labour is re­stricted by fam­ily, so­cial and fi­nan­cial com­mit­ments, such as home own­er­ship. Glob­al­i­sa­tion never em­braced free move­ment of peo­ple, be­ing limited to the move­ment of cap­i­tal and goods and ser­vices. In re­al­ity, mo­bil­ity ex­ists only for a small num­ber of skilled in­di­vid­u­als, who can trade up to coun­tries with greater op­por­tu­ni­ties and higher re­wards us­ing their abil­i­ties and train­ing.

Even if fea­si­ble, tran­si­tion re­quires ad­e­quately funded re­train­ing fa­cil­i­ties. The com­plex­ity and dy­namism of the new econ­omy means that em­ploy­ment op­por­tu­ni­ties for re­trained peo­ple are not guar­an­teed. For those who find jobs, the threat of un­der­em­ploy­ment or un­em­ploy­ment is con­stant, mak­ing it dif­fi­cult to make long-term plans and achieve long-term fi­nan­cial and per­sonal se­cu­rity.

The eco­nomic ar­gu­ments do not fac­tor in the in­ef­fi­ciency and high costs of con­stant re-ed­u­ca­tion and re­train­ing of work­ers with par­tic­u­lar skills who may not want to change occupation. It also fails to ac­knowl­edge that cheaper goods and ser­vices can only be achieved by re­duc­ing the in­put cost, in­clud­ing labour. While in­no­va­tion and pro­duc­tiv­ity im­prove­ments con­trib­ute, re­duc­tion in em­ploy­ment or in­come lev­els is nec­es­sary to cut labour costs.

While there are well-paid jobs for a small por­tion of the work­force with the re­quired skills, most new jobs are in the low-paid ser­vice sec­tor, such as re­tail, se­cu­rity, aged and health care. Youth un­em­ploy­ment re­mains high.

A large part of the pop­u­la­tion are now mem­bers of the “pre­cariat”, a short­ened ver­sion of the term “pre­car­i­ous pro­le­tariat” used in Ja­pan to de­scribe work­ers with­out job se­cu­rity who now make up more than 30% of the coun­try’s work­force as com­pa­nies cut labour costs.

Changes in the work­force af­fect the na­ture of so­ci­ety. In the brave new world, a small elite, say 5%, en­joy the sig­nif­i­cant wealth and con­trol much of its re­sources. They em­ploy an­other stra­tum of peo­ple, say 20%, to ad­min­is­ter their af­fairs as well as con­trol the pre­cariat, 75% of the pop­u­la­tion. Con­nec­tions, beauty and brains will per­mit up­wards mo­bil­ity, though move­ment be­tween the groups may be­come more dif­fi­cult. In the new “eke-on­omy”, the pre­cariat sur­vives rather than pros­pers in an es­sen­tially sub­sis­tence ex­is­tence.

In 1999, with the Amer­i­can econ­omy in the grip of a spec­u­la­tive ma­nia, Wired, the mag­a­zine that ex­em­pli­fied the dot. com era, en­vi­sioned ul­tra pros­per­ity. By 2020, av­er­age house­hold in­come in the US would triple to US$150,000, and fam­i­lies would be served by their very own house­hold chefs. Many as­sumed this pro­gres­sion to be in­evitable, ig­nor­ing the fuzzy logic and vague arith­metic be­hind the fore­casts. A lit­tle more than a decade later, the pop­u­la­tion must now con­front a sharp de­cline in liv­ing stan­dards, driven by glob­al­i­sa­tion, tech­nol­ogy and changes in the struc­ture of the work­force. Steady im­prove­ments in liv­ing stan­dards, once taken as a given, may not be the fu­ture.

The con­se­quence for the struc­ture of the econ­omy and wider so­ci­ety re­main un­known. As Har­ley Shaken, a labour econ­o­mist at the University of Cal­i­for­nia at Berke­ley, noted: “The most im­por­tant model that rolled off the Detroit as­sem­bly lines in the 20th cen­tury was the mid­dle class for blue-col­lar work­ers”. – The In­de­pen­dent

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