There are serious flaws in the theory that the ‘jobpocalypse’ is nigh, and technology is not about to replace New Zealand workers anytime soon, according to a new book.
‘Machines as ministers to man’, screams the US newspaper headline.
Apart from the slightly old-fashioned language, the banner could be describing the conventional modern wisdom that an army of new technologies is amassing on the fringes of the workplace ready to revolutionise human employment as we know it.
It is in fact the headline for an article written by Henry Ford in the 1920s.
In the past 100 years the world has seen rapid technological improvements leading to huge upheavals in the way people work, not to mention some gnarly economic times. But none of this has led to sustained or widespread technological unemployment, economist Kinley Salmon says. The reality is that there are now more people working than ever.
There are some pretty large gaps in the narrative that says machines will soon replace people, Salmon says. Almost every economic indicator that could suggest the robots are taking over instead shows the exact opposite.
A New Zealander who was drawn overseas to study at Cambridge University, Salmon now works for the World Bank in Washington DC and became fascinated with the predictions of doom and gloom. “That’s my future that’s often being talked about, so I was really wanting to take a look at it. Is it really going to be that bad?”
There was also little research on New Zealand, and he wanted to find out whether the trends were any different in his home country.
The result is Jobs, Robots and Us: Why the Future of Work in New Zealand is in our Hands, a book in which he puts common predictions about a jobless future under the microscope and sketches out two alternative scenarios for Aotearoa.
He runs through the numbers. As in many other developed countries, unemployment in New Zealand is near record lows. Labour force participation is at an all-time high, with more people in the workforce or looking for work.
Coupled with that our productivity growth remains stubbornly low. Productivity is a key measure of widespread automation in the economy, and New Zealand is crap at it – per hour the average Kiwi worker produces about two thirds the amount of their Australian counterpart. If the machines really are rising, why are we still so employed and still so unproductive?
“It’s not the list you would draw up and say, ‘this is what I would expect to see if robots were really about to do dramatic things to people’s job prospects’,” Salmon says.
In 2013 two Oxford University academics spawned thousands of ominous headlines when they published a study making the scary claim that 47% of all US jobs were at high risk of being automated within the next 10 to 20 years.
Multiple similar studies followed. In 2015 the New Zealand Institute of Economic Research, using the same methodology, found that 46% of New Zealand jobs are at high risk of computerisation by 2035.
The inference is that if a job can be automated, it will be, Salmon says. “That is a shockingly big assumption.”
Not every technology out there that’s tipped to impact on the future of work is going to be as successful as electricity, smartphones or the internet, he says.
“Often these studies tend to look at something in a pretty hypothetical way, like what is technically possible or even what do we think is technically possible, but don’t go to the next step very often and say, ‘do people want to use this technology in this way, and do regulators actually make it possible’.”
A classic example is driverless cars. While there has been much progress, there are still a lot of questions on the regulatory side, he says. Another is solar power. Despite being around for many years it’s still not in widespread use for a host of reasons.
Cost is a big factor, Salmon says. “Is this technology, driverless cars or drones delivering things, going to be cost competitive with the way we’ve been doing it in the meantime?”
New Zealand is also a nation of small businesses. If a large corporate decides to implement something – for example if Amazon starts using drones to deliver its goods – the technology can arrive very quickly.
“But if lots of people have to make a decision to use something it can take a bit longer to get it adopted.”
Automated milking on dairy farms is a case in point. “It’s quite costly. And each dairy farmer is having to make a decision about whether that kind of investment is worth making. Do they have that availability of capital, but also do they have the right sized herd, and does it make sense for the kind of lifestyle they have?”
Implementing new technologies also requires a depth of knowledge in an industry, something New Zealand often doesn’t have. And as technologies advance, learning to use them productively is getting harder and requiring yet more knowledge, Salmon says.
Technology isn’t something that just happens to us, and the future of work is in our own hands, Salmon argues.
One of the ways we can do this is to focus on the right kind of innovations. All innovations are not created equal, and Salmon puts them into three broad categories.
First there is efficiency innovation – think robots answering customer queries online, or The Warehouse using scale to deliver lower prices. Efficiency innovations increase productivity and reduce the number of workers required, thereby freeing up money to be used for other things.
The second category is sustaining innovation. Consider the iPhone. Even the most ardent Apple fan queueing outside the store to buy the new iPhone 8 isn’t going to buy the next gen device and keep using their old iPhone 7 as well. The new product substitutes for the old one and the jobs and people that used to support the development, sale and apps of the old phone now support the same for the new.
Then there are market-creating innovations, and it is this the prize that the government should have its eye on, he argues. Market-creating innovations do what they say on the tin – they generate a new market for products or services no-one was consuming before. Millions of new jobs were created by the invention of the PC and the laptop, for example. “These kinds of things can help compensate for people losing hours or jobs due to efficiency innovation,” Salmon says. More and more academic studies are concluding that getting the balance of types of innovations in an economy right is key, he says.
New Zealanders worrying about the future of their jobs can breathe easier than most, because we’re a bit of a special case, Salmon says. Much of our employment is in agriculture, tourism and the services sectors, and these are industries that are not as easily automated.
However the flipside to automation is improved productivity, which New Zealand desperately needs.
“While it’s reassuring we might not be as threatened, we also need to think about how we try to then take advantage of the good parts of technology that’s available.”
Salmon paints a picture of two possible future work scenarios.
First there is Paul and Natia. Paul has a busy job creating special effects for Bollywood movies at Weta Digital in Wellington’s Miramar, while Natia is a doctor who works for a ‘slow medicine’ co-operative that promises longer appointments and visits patients even when they’re not sick. They live close to Paul’s work in a smart home fitted with the latest technology. Their son goes to school on a bus that now has a driver again after that incident with the epileptic child and no adult supervision. Paul buys his coffee on the way to work from a cafe run by a couple of miners-turned-baristas.
Paul and Natia are thriving in an employment market where the creative and innovative sectors benefit from technology but are less susceptible to complete automation. There is enough wealth to allow for personalised services, enabling Natia’s job as a ‘slow doctor’ with extra time for her patients, and recognition that it’s preferable not to automate some roles such as driving the school bus. People whose jobs have been rendered obsolete by technology have been able to retrain for other roles.
Then there’s Rachel and Wei who live in a world where few people still work. Grocery delivery drones have made supermarket shopping a thing of the past. Both received a ‘gift’ portfolio of shares from the government on their 18th birthdays, and survive on that along with a universal basic income payment.
A few people still work, like the executives who have to sit years of exams to qualify for the sought-after jobs and are a lot wealthier, but whose incomes are heavily taxed. Of course, robots and artificial intelligence can’t do everything so there are still professional people such as investigative journalists, psychotherapists, politicians, and caregivers.
Rachel and Wei fill their days with volunteering and hobbies. Having a few beers after playing sport isn’t a problem because driverless pods have removed the risk of drink driving. Their daughter is taught by artificial intelligence-powered interactive computers at school, leaving plenty of time for kids to try out whatever they want and find their ‘passion’.
While many people will focus on which scenario is more likely, to Salmon the more important question is ‘what future do we want?’. There will be changes to how we work, and New Zealand faces six key challenges in addressing this, Salmon argues.
As well as encouraging the right kind of market-creating innovations, the country will need to support people through job changes and deliver the education and skills needed for the future job market – something we haven’t been terribly good at to date.
To maintain a high productivity, high employment future people will need to live near to work or within an easy commute. New Zealand’s dysfunctional housing market and clogged urban motorways are a barrier to this.
We will also need to maintain access to foreign markets to ensure there is continuing demand for our goods, and the recent global trend towards protectionism is worrying for a nation like New Zealand.
On top of it all New Zealand needs to make some serious progress on ‘greening’ our growth, Salmon says.
‘Jobs, Robots and Us: Why the Future of Work in New Zealand is in our Hands’ is published by Bridget Williams Books. The views expressed in the book and this interview are Kinley Salmon’s own. He is speaking at the Auckland Writers Festival on May 19.
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