In January, pundits, politicians, corporate CEOs and celebrities gathered at the annual World Economic Forum (WEF) in Davos, Switzerland to ponder the perils and promise of the digital age. The theme this year was The Fourth Industrial Revolution, defined by the WEF as “a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres. (Water and steam power propelled the First Industrial Revolution, electric power the Second, and electronics and information technology the Third.) This latest revolution represents “a paradigm shift,” which is likely to change the way we live and work,” as robots and artificial intelligence penetrate every industry sector. But this change won’t come without its costs.
Up to seven million people in the largest economies stand to lose their jobs because of automation just in the next five to seven years. That’s the grim conclusion of a WEF report. In the U.S. alone, as many as 47 percent of the people working today could be displaced by technology, according to a study by Oxford University.
And it won’t be only manual workers who could be thrown out of work. “The middle-income classes …are the most at risk,” says Beijia Ma, lead author of a study by the Bank of America. “’High risk’ jobs tend to be in office and administrative support, sales and services, transportation, construction and extraction, and production.” If you’re in a highly skilled managerial position, or hold a job in financial services, computing, engineering and science, Ma says, you can breathe easier. But even jobs that were previously considered safe are in danger. Nursing and home healthcare, for example, are becoming increasingly automated as those jobs are replaced by robots, especially in Japan which is far ahead the rest of the world in robotic development. (South Korea, China, the U.S. and Germany are the other leaders in the robotic revolution.) “As robotic labor goes from manual and repetitive to cognitive and nonroutine it can wipe out entire new categories of work,” says Alec Ross, author of “Industries of the Future.” Robots now can do everything from “play the violin to do the dishes to help elderly people stand up or get back into bed,” he says, adding, “Our future caretakers are being developed in Japanese factory right now.” Many elderly patients don’t appear to mind; on the contrary, they tend to anthropomorphize their robot caretakers. By now, the attachment people can feel towards robots is a well-documented phenomenon. In one study, children from ages 7 to 15 reported that a robot ‘dog’ produced by Sony comforted them when they were sad even though they understood that the ‘dog’ wasn’t a real dog. And it wasn’t just children that responded to these robots as if they were human; one woman said that at her death she wanted her robotic dog to be cremated along with her.
The trend towards robotics is accelerating, too. Ross points to the example of FoxConn, the huge Taiwanese manufacturer of iPhones, which recently announced that from now on it won’t hire human beings since robots can do their job so much more efficiently — and cheaply. (FoxConn currently employs nearly a million workers.) “Humans and robots have entirely opposite cost structures.” Ross told public radio station WNYC , “Humans don’t have a lot of capital expenditure upfront costs. But we have a lot of operative costs — we want a paycheck every two weeks. Robots have a lot of upfront costs, but don’t require much in operative costs.” In Japan, for instance, robots can work up to 30 days around the clock in automotive plants — no need for lunch breaks, health insurance or pension plans. As for cost savings, robots can’t be beat. It’s estimated that manufacturers could save up to 90 percent of their wage costs by using robots instead of people. A 2013 McKinsey Global Institute report put the savings for businesses at nine trillion dollars if the trend continues.
Even jobs that you might have needed a business school degree for — providing financial advice, for example — may vanish in another generation as computers take over. (Of course, that raises the question of how many people would want to rely on an algorithm for guidance on how to invest their money.)
But where does that leave all the people who’ve been lost their jobs because robots are appropriating them? Already, an estimated 200 million people are out of work throughout the world and half the world’s population barely gets by on a couple of dollars a day. Ross, who served as an adviser on technical innovation for the State Department, can even foresee people taking to the streets in protest against enforced obsolescence.
When we think of inequality — a hot-button issue in this political season — we tend to regard it in terms of a growing chasm between the rich and everyone else. But automation has the potential for causing many other kinds of inequalities. Axel Weber, chairman of UBS bank, warns that technological disruption threatens to increase inequality “not only between developed and developing and emerging countries,” but “also the young and the old.” And it may also create inequality between sexes, too, since women may have more to lose than men in the Fourth Industrial Revolution because they are less likely to be working in fields where the adoption of new technology will create jobs.
That isn’t to say there won’t be people who will come out ahead. According to a UBS study , the winners will be “individuals (who) are likely to be best placed from a skills perspective to harness extreme automation and connectivity,” a demographic that includes those who “typically already have high savings rates and will benefit from holding more of the assets whose value will be boosted by the fourth industrial revolution” — in other words, the people who are already doing well now. By contrast, the losers are likely to be the lower- and middle-skilled workers “who lack the flexibility to be able to change their skills to meet the requirements of extreme connectivity” or who are unable to “reskill into tasks that extreme automation cannot perform, or move into industries where extreme connectivity permits them to work outside of traditional global or regional boundaries.” That’s a pretty tall order given the difficulties that so many workers have who are struggling to find decent-paying jobs now.
Economist Carlotta Perez sees another risk from automation: “There’s very little in life that’s good that doesn’t come from activity and creation.” And creativity could be threatened, she warns, if robots take over our jobs. Already, she says, “We can’t fix our cars and can’t remember our phone numbers.” BoA’s Ma disagrees. As machines take over menial tasks, she says, people will have “more time to deploy creative abilities, blurring the line between mind and the machine.” She goes on to point out that “the toughest things to automate today are tasks that require creative intelligence, social intelligence and perception.” Whether people will be able to take advantage of their new freedom or turn into couch potatoes is another question altogether.
Perez is among the techno-pessimists who believe that robots and AI will have “a massive detrimental impact on society…leading to income inequality and breakdowns in social order.” According to a Pew polling survey, they’re outnumbered — but only by a slender margin — by those describing themselves as techno optimists (52 percent) who “anticipated that human ingenuity would overcome and create new jobs and industries.” But what jobs and what industries? We don’t know. The BoA predicts that about 65 percent of children starting primary school today will end up working in jobs that don’t yet exist. UBS, too, sees the glass more full than empty, declaring: “We do not expect the Fourth Industrial Revolution to result in an aggregate increase in global unemployment.”
Education is widely seen as key to finding gainful employment in the Fourth Industrial Revolution. Countries will have to invest in transforming their workforce if they want to keep up with the changes and avoid a worst case scenario of “talent shortages, mass unemployment and growing inequality,” says Klaus Schwab, the founder and chairman of the World Economic Forum. “Greater educational attainment would not only be a huge boost for economic development,” BoA’s Ma asserts, “but also provide the skills necessary to power the next level of productivity growth.”
Even Alec Ross, who can envision jobless protesters taking to the streets, believes that education may allow future workers the means to find new employment in spite of automation. And they won’t need to go to Harvard or Stanford to learn new skills to give them a competitive edge against robots. Less costly vocational and community colleges could play an important role, too, if they can offer an innovative curriculum. A degree in cybersecurity from a community college, he says, will virtually guarantee someone just starting out with an annual salary of $65,000.
But education in itself may not be sufficient to meet the challenges of greater automation, Ma cautions. “The continual evolution of jobs – those that we can’t imagine today – will require another crucial skill: adaptability.” In her view, we will have to become lifetime learners, constantly updating our knowledge and acquiring new skills. After all, she points out, over the past two centuries, a period that encompasses the previous three industrial revolutions, societies have always found a way of turning technological developments to their advantage and adapting to change. There’s no reason we can’t do so now.
