Technological transformation

The synergy between capital and labour, which typified the developed economies of the 20th century, is not as strong as it once was. In most industries, capital can replace labour by investing in new technology. This trend is already transforming the workplace. As Ana Swanson noted in the Washington Post: "US factories make twice as much as they did in 1984, with one-third fewer workers. The economics are unavoidable and irreversible. Although a human welder may earn $25 an hour, a robot welder costs around $8 an hour and, according to estimates from the Boston Consulting Group, that could fall to as little as $2 an hour within 15 years. The ‘job intensity’ of America’s manufacturing industries — and especially its best-paying advanced ones — is only going to decline. In 1980, it took 25 jobs to generate $1m in manufacturing output. Today, it takes just five."

Automation will work in mysterious ways. You can see the changes in narrow terms. Lawyers may believe their profession is sacrosanct, but Richard Susskind, IT adviser to the Lord Chief Justice, argues that intelligent search systems do a better job of reviewing large sets of documents and selecting the relevant ones than a junior lawyer. Yet there is good news for zoo-keepers — interacting with animals is one of the occupations that McKinsey’s consultants, those sages of corporate America, predict are unlikely to be automated.

Society, security

Yet, there’s a broader concern too. As Ronald Fraser noted in the introduction to his book of essays, Work: Twenty Personal Accounts (1968), “[b]y work, by the transformation of the environment through work, we produce the society we live in, we produce ourselves. At the same time, the society produces our work, channels and defines it, delineates its purpose, rewards it according to its aims. To ask the purpose of work is to ask simultaneously what purpose society assigns to it.”

The mystery of what purpose our society will assign to our work in the years to come is unsettling. We’re smart enough to know the future exists but not smart enough to know what’s going to happen in it — and that stresses us out. The British Social Attitudes Survey suggests that, over the past decade, economic uncertainty has taken its toll on us. In 2005 and 2015, around 40% of managers said they were stressed at work but, over that period, the percentage of people in routine or semi-routine jobs who were stressed virtually doubled to just under 40%.

The same survey showed that 92% of people considered security to be important in their work. Yet with a triple whammy of economic crisis, automation and new patterns of working, many people are suffering from what Anthony Painter, director of the RSA’s Action and Research Centre, calls “insecurity cubed”.

Security will be a very scarce commodity in the decades ahead and that is why, CIPD CEO Peter Cheese argues, we need to look beyond forecasts of how many, and what kind of, jobs will be automated by when. Although it has been suggested that automation will create new jobs — though even optimists can’t quite imagine what they are yet — there is a consensus that Industry 4.0 will, certainly for a while, destroy more jobs than it creates.

In his book, No More Work, James Livingston wrote: "The measurable [employment] trends of the past half-century and the plausible projections for the next half-century are too empirically grounded to dismiss as dismal science or ideological hokum. They look like the data on climate change — you can deny them if you like, but you’ll sound like a moron when you do."

The implications become even more disturbing when you consider the incremental advance of the retirement age. One recent survey of American millennials, many of whom leave university with a debt equivalent to £30,000, found that half of them expected to get no social security when they retire. But how will they keep on working if there is no (paid) work to do?

For Cheese, the threat — that there will be much less traditional work to go around and what there is of it will be less likely to pay a few bills — is also an historic opportunity. “This could be the chance for us to redefine work, to stop thinking about work in purely financial terms and think about the kind of work that is valuable to society. Instead of forcing millions of people to endure drudgery, we could free them to do more useful things that could give their work more meaning; it could be, for example, caring for a relative, or volunteering.”

Universal basic income

Part of the answer may lie in paying for the socially valuable work that is “free” at the moment. And that brings us back to money — specifically, how will we pay for all this?

The idea of a universal basic income to underpin economic security has an obvious appeal. As Painter says, “[i]t gives people a greater opportunity to pursue better work, try setting up a business, reskill or undertake caring responsibilities.” The proposal is being seriously studied in Canada, Finland and the Netherlands, and the UK could learn from their experiments without having to leap straight into a universal basic income. Yet it would take a bold British politician to suggest such a transformative step at the moment, when it risks being pilloried by the media as a “scroungers’ charter”.

As to financing such a move, Livingston had a simple, provocative proposal: tax the hell out of corporate profits. This runs counter to the conventional economic wisdom that has guided Western governments since the late 1970s. Responding to those who insist his proposal would stop businesses investing, Livingston said simply: they aren’t investing anyway. His research suggested that, certainly in the US, the economy has grown substantially since the 1920s even though net private investment hasn’t.

Livingston’s medicine will be too strong for many politicians to stomach. Other proposals — such as a very small tax on money sitting “idle” in bank accounts — sound even less palatable. Yet the merits of a universal basic income have been recognised by economists as politically divergent as John Kenneth Galbraith and Milton Friedman. In 1970, Richard Nixon proposed a negative income tax (a kind of universal basic income) to help families, but the bill was rejected by the Senate.

Confronting the issue

The coming crisis in the way we work is the kind of issue politicians instinctively avoid — on the not unreasonable grounds that it could wreck their career. There are too many other crises affecting us in the here and now, and voters are more focused on migrants who are “stealing” their jobs than on the robots that could replace them for good. Yet inaction could be disastrous. Erik Brynjolfsson, co-author of The Second Machine Age, said automation could usher in a “digital Athens” where robots work and citizens have time for art and sport. Yet he warned: “If we do not adequately respond to these challenges, I can see violence, revolution and the failure of a lot of big companies.”

The technology is new — the problem isn’t. When William Beveridge was describing his vision for a better Britain in 1944, he proposed that work was good for the human condition and that the provision of good work was central to the creation of a good society. If we want to live in a “good society”, we need to redefine “good work”.

Businesses must confront this issue too. Consumer spending is the pump that primes the economy and, as Henry Ford recognised, people can’t buy with no money. No one has credibly suggested that firms can flourish by hiring robots to make stuff other robots want to buy.

At the same time, there is an opportunity to help the heirs of Fraser’s disgruntled factory worker who said:
"Sometimes I have an urge to open the nearest door and walk and walk and walk. I need to get away from the here and now."

By Paul Simpson, published in the Winter 2016 issue of the CIPD’s Work. magazine.