Anxiety over robots stealing jobs is overblown. Policymakers need to focus on more immediate threats.
By Torsten Bell
“The robots are coming to take our jobs”, the Evening Standard told Londoners in December 2016. In case that didn’t depress their readers enough, the article went on to spell out the coming doom: “The sheer pace of change in computational power and grinding efficiencies of automation will alter or eliminate many of our jobs, far faster than we anticipate.”
And then, to ensure the anxiety was sufficiently widespread, they reminded their middle-class readers that “many of the relatively fortunate in the professional class in London will face upheavals too”.
Anxiety about the impact of robots on the world of work has been a hot topic across Western countries for several years. You couldn’t move at Davos last year without seeing grown men (it’s always men) with their heads in their hands predicting the end of work. Bill Gates is so worried that he has called for a robots tax.
But is the rise of the robots really what the Mayor and other London policymakers should be spending their time thinking about? Here are three reasons why we might want to dial down the robot angst and focus our anxiety elsewhere.
First, if the robots are taking all our jobs, they’re doing a really bad job of it. Far from falling, the proportion of Londoners in work has risen fast in recent years, with the London employment rate now three percentage points higher than it was on the eve of the financial crisis. London’s employment rate currently stands at a record high of almost 74 per cent, significantly higher than all other major UK cities bar Bristol.
Second, London is less at risk of automation abolishing work than most parts of the UK. That’s because of the kind of work that actually gets done within the M25. Manufacturing jobs are famously prone to being replaced by robots because of the repetitive and physical nature of much of the work: think of a modern car factory filled with robot arms, compared to the world of Henry Ford. But manufacturing jobs make up a much smaller share of the work done in London than across Great Britain as a whole. London has instead a far greater share of professional and finance jobs, which are much less susceptible (though not totally immune) to being automated.
Third, robot scares are far from new. Back in the 1980s, the headlines were focused on a new-fangled thing, the computer chip, that was threatening to destroy work. “Robots to take over the world” was another Evening Standardheadline. That was printed on 11 September 1995, and they’ve not done it yet.
None of this means that there are no serious public policy implications of automation. Industries that are affected can see big changes in employment levels – especially where the related forces of globalisation and automation come together, as they have for clothes manufacturing in the UK. The nature of specific jobs can also change, even if the work is still there. For example, there are questions about the extent to which technology is used to control workers.
But the big picture is that most of the current bout of robot anxiety over the London economy is overdone. That matters – not just because the anxiety is misplaced, but because it distracts London’s policymakers from the real issues that need addressing.
For example, London has seen an increase in the number of people engaged in various forms of precarious work in recent years. There are now 120,000 people on zero-hours contracts in London, the second-highest number in any region (though the proportion of Londoners on a zero-hours contract is similar to the UK average). Many of these workers will be putting in regular hours, but without the guarantees that would help them plan.
London has also seen a much bigger pay squeeze than the UK average since the financial crisis – something that should be at the top of the list of policymakers’ concerns. Pay is down a shocking 13 per cent in London since 2009, compared to less than 7 per cent across the UK. Indeed, average weekly earnings have not increased at all in London between 2011 and 2016, whereas house prices are up by 60 per cent and rents up by 20 per cent. Meanwhile, the main national policy to raise wages for low earners, the National Living Wage, will have less impact in London than elsewhere.
For policymakers wanting to ensure that London’s labour market remains a success in the years ahead, worrying about the right things is crucial. Yes, technology brings challenges, as always, but let’s focus on the very real problems of stagnant pay and precarious work, rather than the science fiction of robots taking all our jobs.