Are we educating a generation of children for yesterday’s jobs?
Technological change has posed a threat to unskilled labour since the Industrial Revolution
Britain’s prime minister David Cameron sits with pupils in a computer class at St Mary’s and St John’s CE School in north London. Chris Johns’ says the UK labour market has proved to be more flexible than previously thought but fears children are being educated with a view to taking the wrong jobs. Photograph: Getty Images.
One of the many mysteries left in the wake of the Great Financial Crisis is the way employment has held up in the UK. If, five years ago, you had told an economist what was about to happen to the economy he would have forecast a rise in unemployment, much, much bigger than what actually transpired.
There are, unsurprisingly, various theories about why more people than expected kept their jobs. Some suggest that “zombie companies” have been kept alive by the Bank of England’s quantitative easing (QE). Under normal conditions, these businesses would, it is argued, have gone to the wall.
More plausible is the idea that wages have responded to the recession by more than was forecast; real wages and earnings have fallen. Lower wages led to more jobs being saved; the UK labour market has proved to be more flexible than previously thought. QE has played a role by ensuring that UK inflation has stayed relatively high - this, as much as anything else, has reduced real wages, boosting employment.
But, in the longer term there are headwinds facing the labour market that are likely to be common to all countries. Dark structural clouds are gathering that have profound implications for all workers, everywhere.
An established trend for many decades, even centuries, is the way in which machines eventually take over work previously done by human hands. This trend is accelerating.
Technological change has posed a threat to unskilled labour since the Industrial Revolution, if not before. A new feature of this process is the way in which jobs much further up the value chain are threatened by machines. If there is anything about a task that is in any way routine, there is, it seems, an app that can do it better than a humble human. And not just routine tasks. Artificial intelligence may have been slow to move from the pages of science fiction into the real world but the ways in which machines are becoming smarter are multiplying.
This is not about high-end jobs moving to be performed by highly qualified people in India and China. This affects China and India as well. To exaggerate what unlimited capital for labour substitution might mean, imagine a world where one large machine produces every conceivable physical good, and an army of robots supplies us with every personal service that we could possibly need.
This rather extreme version of what is happening illustrates both the upside and downside: productivity growth expands exponentially, making society unbelievably richer than we can imagine today. But who gets to consume the output of the machines? Who owns the output? Presumably, the owners of the machines. There are no workers, so no wages for anyone who is not an owner, not a capitalist. In this brave new world, the machines even make the machines - the advent of 3D printing is the start of this.