The coming disruption from automation is generating much debate.
Volumes have been written about the expected impact on the jobs of
today, and even the jobs of the future. Some of the discussion has been
alarmist, predicting doom for workers not nimble enough to adjust.
However, there is more than one school of thought here.
Depending on who you listen to, automation either is a wrecking
ball poised to ruin the working lives of millions of Australians, or a rare
opportunity not to be missed. Indeed, rapid adoption of new technology
has been a key driver of productivity. A better productivity performance
will, in turn, help lift Australia’s potential growth rate, the effectivespeed
limit for the economy. This means more jobs and higher incomes.
The gloomier economists believe around half of today’s workers will be
replaced by computers or robots, and not just those working on the farm
or the factory foor where most of the previous change was concentrated.
Increasingly, they predict, service sector jobs will be at risk.
A report by the Committee for the Economic Development of Australia
(CEDA) in 2015 predicted a “radical reshape” of labour markets. It found
a high probability that 40 per cent of jobs in Australia will be replaced by
computers within a decade or two, and a medium probability that another
18 per cent of roles will be eliminated.
At the same time, the boost to productivity from the adoption of new
technologies could further lift the return on capital at the expense of
labour. Already, the widening skew between the soaring profit share of
GDP and the sliding wages share makes many
workers feel they have missed out on the
proceeds of prosperity. Such disruption may have
profound implications for income inequality as
lower-paid jobs disappear. It also raises policy
dilemmas. What support, if any, should be
provided for displaced workers and by whom?
As RBA governor Philip Lowe indicated
in June, society is still grappling with the
tension between the winners and losers
from technological change, and the policy
implications. The governor suggested that
Australians needed to get over their fear of
foreigners and robots and embrace the positive
aspects of globalisation, some of which are not
necessarily apparent at first glance.
Other researchers, though, take a more benign
view — if we can get our act together.
A recent report by economics and strategy
consulting firm AlphaBeta estimated that
productivity gains from automation could deliver
a $2.2 trillion windfall to Australia’s national
income over 15 years. Rather than spell doom
for many workers, the report claimed that
reducing routine and manual work would make
workplaces safer and more satisfying. Still, older
workers unable to find alternative roles would
be most at risk of being displaced.
Similarly, work by the World Economic Forum
was constructive on the digital revolution, a key
element of what economists call the “fourth
industrial revolution”. While there may be a rise
in income inequality, the surviving workers
would end up in more rewarding workplaces.
Perhaps the most likely impact will be
somewhere between the polarised views, but
the truth is that no-one really knows. The results
from the economic modelling, as always, are
only as good as the assumptions made.
There are, however, key messages from these
studies. One is that technological change isn’t
new — it has been happening for centuries. The
evidence also shows that the damage to labour
markets is not worsening. The AlphaBeta report
found that job losses today owing to productivity
enhancements broadly match those in the 1950s.
Less benign is the finding that the pace at
which Australian firms adopt new technology
lags behind most advanced economies. Our
underperformance here should prompt business
leaders and policymakers at the least to consider
the implications of automation, as best we can,
given the uncertainties.