“I’m doing the dearest little serial, in which I completely wreck and sack Woking – killing my neighbours in painful and eccentric ways – then proceed via Kingston and Richmond to London, which I sack, selecting South Kensington for feats of peculiar atrocity.” Thus wrote H.G. Wells on The War of the Worlds in 1897. When we worry about the impact that new technology will have on London this is evidently not anything new – even if H.G. Wells envisioned invading tripod Martians wielding heat-rays and poison gas while our concern is about computers and robots.
By Angus Knowles-Cutler
On a less dramatic note, this year I celebrate thirty years working in the capital. I arrived in London in 1985, employed as a graduate analyst for a strategy consultancy firm. The working day was long and and the technology I had to hand was basic, if not downright Dickensian. A typical shift might start with a trip to our cavernous library where one of six librarians would help me find a set of blue microfiche, which I would inspect on a reader. I would then transcribe data into a notebook and do calculations with a hand calculator. By evening it was time to pull together a presentation – aided by a large team of assistants who would type up a handful of precious slides and cut out coloured cellophane to liven up the overhead acetates.
When I describe the way we worked just one business generation ago to younger colleagues at Deloitte, where I am a Partner responsible for the London region, they are amazed. In fact, as an experiment, one of my graduate colleagues kindly offered to do the same day’s work using current technology. The result: my day’s work now takes forty minutes.
Yet all this technical transformation has not played out as might have been expected. If thirty years ago I had been able to foresee the changes to come, and the huge increases in productivity that they have brought, I would have predicted a decimation of the ranks of management consultants. But the opposite has occurred. The number of consultants in the UK has risen from less than nine thousand in 1981 to 188,000 today. No doubt some readers will long for a return to the days of microfiche and cellophane!
I have long been interested in the way that technology affects the world of work, especially in London. So I was delighted when I recently had the chance to collaborate with two leading Oxford experts, Carl Benedikt Frey and Michael Osborne, on a Deloitte research project 8 on just this subject. We identified 369 job types and asked: what effect could computer intelligence and robotics have on them over the next ten to twenty years?
The findings were dramatic. We concluded that 30 per cent of today’s jobs in London are at high risk of disappearing because of automation. Moreover, the jobs most in danger are typically lower-skilled and lower-rewarded ones: roles that pay less than £30,000 are over eight times more likely to be replaced by automation than roles paying more than £100,000. Put another way, 63 per cent of London work that today pays £30,000 or less is at high risk of automation in the next ten to twenty years.
We concluded that 30 per cent of today’s jobs in London are at high risk of disappearing because of automation.
Thankfully, job destruction due to technological advances is just half of the equation. There are at least three good reasons for thinking that London is likely to adapt well to the changes to come and that the city will create new jobs to replace those rendered redundant.
First, London has form in this area – form that stretches over centuries, if not millennia. Nothing perhaps better illustrates this than the remarkable industrial and commercial archaeology presented by the 110 livery companies of the City of London. Most of these represent trades long since extinguished such as armourers and braisers, basket-makers, blacksmiths, bowyers, coach-makers, coopers, cutlers, fan makers, farriers, fletchers, framework knitters, girdlers, horners, loriners, pewterers, saddlers, tallow chandlers, wax chandlers and wheelwrights. And what about those wonderful sounding guilds that disappeared entirely: whittawyers, shivers, galoche makers, horserubbers and burillers? What on earth did they do? Answers on a postcard, please. Yet the City still flourishes today, with new liveries being set up all the time. Recent examples include actuaries, air pilots, arbitrators, art scholars, chartered accountants, educators, information technologists, international bankers, marketors, management consultants, tax advisers and world traders.
A second reason for optimism is provided by research Deloitte undertook alongside our work with Carl Benedikt Frey and Michael Osborne. First we looked at recent developments in London’s labour market, in particular among the lower paid and lower skilled sectors most at risk from automation. We found that the pattern of job loss that Frey and Osborne predict is already well underway. Since 2001, 44 per cent of London secretarial and executive assistant roles have gone, 65 per cent of librarians, 58 per cent of filing clerks, 56 per cent of travel agents and 48 per cent of counter clerks. But while these occupations are being automated, the number of Londoners employed has continued to rise. From 2006 to 2014, despite the financial crisis, the overall number of London jobs rose from 3.6 million to just under 4.3 million. We also surveyed one hundred London businesses. Nearly two thirds said that technology will have a significant or very significant impact in the short to medium term, but 73 per cent plan to increase their overall London headcount.
Third and final grounds for thinking that London is well positioned to manage the effects of automation come from the special nature of the capital’s economy. As a general rule, high skill jobs are less vulnerable to technological innovation than less skilled ones – both because it is hard for machines to do the things that highly skilled people do and because highly skilled people tend to be better at adapting to technical and economic change. That’s why the ranks of management consultants have swelled while those of filing clerks and travel agents have shrunk. And work conducted by Deloitte 9 in November 2013 found that London is the undisputed high skills capital of the world: where Paris has 600,000 highly educated workers and New York 1.2 million, the UK capital has 1.5 million. The same study found that London has the highest number of workers in twelve out of 22 high skill sectors, including publishing, culture, digital media, education, architectural and engineering services, law, management consulting, insurance and banking.
But if London is well positioned to ride the wave of technological disruption ahead, the city certainly can’t afford to be complacent. Automation is unlikely to be as devastating as H.G. Wells’s killer machines, but it will be profound. And it could go better or worse.
Immigration policies that allow employers to recruit foreign workers with the skills employers need and allow foreign entrepreneurs to set up businesses here.
To begin with, London will need to ensure that it remains attractive to talent. This will mean, among other things, immigration policies that allow employers to recruit foreign workers with the skills employers need and allow foreign entrepreneurs to set up businesses here. And it will mean tax and regulation policies that keep the capital competitive. It is also vital that London remains an attractive place to live. Young, highly educated people have many choices. They will only opt for London if it offers them a good quality of life, including the chance to rent or buy a decent home. London’s growing housing shortage is hurting its economy. 10
Second, and perhaps more challenging, London and the UK as a whole will have to find ways of helping its workers acquire the skills that a fast-changing economy needs – including the skill of learning new skills. Our survey of London businesses found that 87 per cent anticipate that the skills profile of their employees will need to change if they are to survive. The top four skills they predict they will need more of in the future are digital know-how, management capability, creativity and entrepreneurship. London’s schools have improved over the last decade and it has some great universities. But big challenges remain. Around a third of young Londoners still finish school without acquiring five GCSEs including English and maths. Businesses have long complained that too many school leavers lack essential abilities and aptitudes required to succeed in work. And our 2014 study found that fewer students study STEM (science, technology, engineering and maths) subjects in the UK than they do in many competitor nations.
There is little doubt that new technology will continue to reshape the London labour market in the decades to come. Fortunately, London is a highly creative and agile city, which, on past performance, is more than capable of generating new, more productive jobs. But it will have to make sure that it continues to attract, retain and educate a workforce with the skills a transformed economy will need.
One intriguing question: What will Londoners five hundred years hence make of today’s leading occupations? Will guilds for air pilots and information technologists seem as quaint as ones for basket-makers and girdlers? Almost certainly.