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Mind the Gap

Stian Sandberg looks at the transitions that lie ahead for various forms of transportation.

Over the course of the last decade, we have witnessed an unparalleled increase in technological innovation. We are used to hearing stories about how robots and technology are replacing workers on factory floors, but surely, they will never be able to automate my job, right? According to the 2013 Oxford study “The Future of Employment” by economists Carl Benedict Frey and Michael A. Osborne, 47 percent of the total US employment is at risk of being automated, with the transportation industry one of those most vulnerable to automation. With this estimation in mind let’s take a closer look at transportation in the UK as an example of what might happen if an entire industry were automated.

Transportation in the UK
Frey and Osborn’s findings that transportation is one industry most susceptible to computerisation seems like a fairly natural development. After all, self-driving cars are already on the road, and self-driving trains and public transport are nothing new. The incentives to implement automated transportation are quite clear: safer and more cost-effective transportation.

In the UK, a fully automated transportation industry would result in the loss of almost 1.6 million jobs. Even more specifically, Frey and Osborne estimate that there is a stunning 89 percent chance of taxi and chauffeur services being completely automated over the course of the next few decades. These occupations alone provide over 200,000 UK jobs. One of the arguments against the looming threat of complete automation is that labour unions will fight this, refusing to allow 1.6 million people to suddenly be without a job; it is hard to fathom the level of chaos that would ensue in labour markets following such a large displacement of workers. Unfortunately, history is not on their side. Unions and workers fought for their rights during the industrial revolution when machines were replacing them on the factory floor, yet factory floors as we know them today are filled with robots doing most of the work. This battle is also being fought in the transportation industry. In 2012, then mayor of London Boris Johnson announced that the London Underground would be fully automated by 2022. This would effectively mean that over 3000 drivers in the Tube Network would find themselves swiftly without a job. As expected, the unions are strongly opposed to this notion, raising concerns over safety and the accompanying reductions in staff level. Unfortunately, the workers have a history of losing when employers are faced with great economic incentives to replace them. It happened during the industrial revolution, and it will happen again.

One of the most interesting economic impacts of this movement, is what Andrew McAfee, co-director of the MIT initiative in the Digital Economy, has called the “Great Decoupling of the Economy”. This is where even though employment and household income is stagnating, we still observe a steady increase in labour productivity and GDP. Up until the early 2000s, these four factors have been growing alongside each other, but in recent years’ employment and household income have stagnated. This is an indicator that more and more jobs are being automated.

Challenge or opportunity?
So what will this mean for the future of employment? Many economists, academics and governments are now beginning to research this question seriously. Many argue that we should embrace automation of labour as soon as possible, and start working on economic policies that will accommodate those in the labour force who automation displaces. On the other hand, critics of automation have pointed out that a world where capital is more important than human skill and education could lead to higher inequality.

This debate has inspired a number of policy initiatives from groups on both sides of this argument, the most notable of which is likely the Universal Basic Income (UBI). A UBI seeks to provide everyone with a basic guaranteed income regardless of employment or wealth, crucially allowing those experiencing structural or temporary unemployment to continue to support themselves.

Whether this is the solution or not is open for debate, but what is certain is that we as a society need to acknowledge the potential of technology-induced mass unemployment, and work towards a solution for those most at risk.

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