The future of work has been on my mind a lot over the past few years. It seems that the future of jobs is bleak in a number of ways. For example, zero hours, surveillance, and robots are on the horizon for many workers.
This post about the future of work was originally inspired by Marissa Mayer’s pronouncement in early 2013 banning work from home at Yahoo!. The ever-present drives for efficiency and lower costs mean that businesses are changing the way we work, and they are also changing the way that we are contracted to work.
Increasingly we live in a digital panopticon and technologies like CCTV, drones and the internet of things are emerging and merging to provide mechanisms for better and more omnipresent surveillance of people in all aspects of their daily life. When we add this growth in surveillance to other factors, such as a shift to lower economic growth rates and changes in the traditional twentieth century employment contract, for example the introduction of zero hours contracts, then things are really becoming quite different for workers.
Higher Skilled Jobs Disappearing
Headlines like “Cisco to cut 4,000 jobs” have become a regular sight and it is clear that it is no longer only low skilled or manufacturing jobs that are disappearing. The jobs that are going are increasingly higher skilled and middle class roles. Thus while “Robot Serves up 360 Hamburgers per Hour” is an example of the disappearance of low skilled jobs, we can also see automation impacting other industries. The young woman who used to hand back my dry cleaning is gone now, replaced by a large red machine that dispenses my laundry with nary a snide remark, and it gives a 20% discount too.
Law is one good example of an industry that is beginning to be disrupted. The first phase is shipping expensive western jobs to lower cost geographic regions, thus legal process work is being outsourced to places like India or the Philippines. This is removing the entry level jobs that law school graduates once used to get a step up on the rungs of their new career. The next phase is automation of other legal processes within law offices, for instance adoption of legal decision support systems. Thus firms will require fewer more senior personnel and hardly any of the para-legal personnel they once required. All of this will be framed as ‘efficiency’ gains for the business. But what it really translates into is a substantial reduction workers required in the legal industry. A consistent pattern across all industries is the implementation of solutions that take human workers out of the business process and replace them with machines.
This automation trend started with the early days of computers and has gathered pace as artificial intelligence technology became a commodity and internet connectivity became ubiquitous. Typically, if a business cannot remove the human workers by means of technology, then they will shift the jobs to the lowest cost region. Thus, at best, we are seeing a downward pressure on wages and salaries, and at worst complete removal of jobs from the global economy.
Casualization of the Workforce
Many new businesses or startups rely upon outsourcing to reduce costs. This means that where once a new business would create a number of jobs at various levels they now use platforms like Air Tasker or Task Rabbit. With the adoption of these tactics by businesses there is increased casualization of the workforce. This casualization of the workforce removes the notion of job security that enables workers to plan effectively for their future by getting a mortgage or affording health insurance. Casualization of the workforce shifts the buying power of workers from the current pattern, where they are good risks for lending by banks due to their regular pay cheques, to poor risks. These shifts in spending power of the workforce will have impact on industries like retail and telecommunications.
In the US the Wall Street Journal (WSJ) reported that “A Jobless Recovery Is a Phony [sic] Recovery. More people have left the workforce than got a new job during the recovery—by a factor of nearly three”. Further WSJ noted that “Long-Term Jobless Left Out of the Recovery. Despite Improving Economy, Prospects Are Bleak for Millions of Unemployed”.
Real Jobs for Real People?
In Australia, according to the Australian Bureau of Statistics (ABS), there are approximately 140,000 job vacancies as at November 2013. And in December 2013 the ABS reported that unemployment increased to 716,000 while the unemployment rate remained steady at 5.8%. Given these numbers it is unlikely that getting the unemployed into education or training is going to help very much unless the job supply is increased substantially. Perhaps they can all become entrepreneurs and start micro-businesses?
If this is where Australia sits regarding unemployment when coming out of a mining boom, with a Triple A credit rating and having successfully negotiated the global financial crisis, then is does not presage well for the future. The mining boom is winding down and jobs will disappear in that industry anyway due to automation (as reported by the University of Queensland).
Australia is on the cusp of a dilemma. We face an ageing population that is about to put substantial pressure on the welfare budget, reduced traditional employment opportunities for both low and higher skilled workers, and the end of a jobs-rich mining boom. Heavy industrial manufacturing is all but dead in Australia, and the car industry is dying too. This is clearly demonstrated by the recent exit of Holden leaving Toyota as the last remaining Australian car manufacturer (and even Toyota is likely to exit the market over the next few years). Then there will likely follow the demise of car component manufacturing in Australia too, unless the component manufacturers can find other markets.
Traditionally construction and retail picked up the slack in the Australian economy during lulls in mining booms. However, the continuing weak performance of Australian retail makes it an unlikely contender for jobs saviour. And while we are seeing construction increase as the mining boom eases, neither industry is likely to have the capacity to fill the increasingly large gap between the number of available workers and suitable jobs. This issue is reflected by the markets in lower currency rates based on weak jobs data. And a lowering of the currency, while helpful for export driven sectors, reduces consumer purchasing power to support the retail and housing markets.
The Future of Work?
There are no obvious replacement industries to fill the gap left in the traditional jobs market in any of the western countries. We are facing enormous structural change, and there is an emerging crisis. What is to be done about a post-jobs future? I wonder who in the Government and Opposition is thinking about these issues? It seems kind of important.
Disclosure: For a considerable part of my career I worked on large scale operational efficiency and innovation projects that removed workers from business processes and implemented process automation; where that was not possible work was typically outsourced to lower cost regions.