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Automating the Western Economy

botThere have been a few scare stories over the past few weeks around robots and automation taking over a large swathe of jobs in the Western world.  Rather than worry about this, though, I believe that the underlying issues need to be considered — and then we need to try and figure out what to do about the outcome, not the symptoms of the loss of unskilled jobs.

The minimum wage in the UK is currently running at around $20,000; in the US it is just over $15,000.  In China, it is $2,500; Bangladesh, $220; India, $689; Pakistan, $1,285.  For unskilled, labor-intensive work the West just cannot compete with the emerging economies — even when transportation costs have been taken into account.

Only by automating many elements of the human side of things can the West hope to compete.  If a production line can be reduced from using hundreds of (error-prone) humans to being automated with a couple of human overseers in place, then it can compete against the low-labor costs elsewhere.

This, then, is the real way for Western countries to push toward the post-bank crash target of renewed and continuous growth.  Except, that is, for the problem of what to do with all the people who are now out of work and dependent on state hand-outs to survive.

Can technology help here?

In some circumstances, it already has.  Take call centers as an example.  Outsourcing call centers to low labor cost countries can lower the cost base considerably.  However, it can also lower the effectiveness as well, with customer loyalty often nose diving.  Building a large contact center in a high-cost environment and bringing in three different shifts of agents tied to a desk in the West may not work either.  Some organizations have realized that through the use of home working and voice over IP (VoIP) technologies, flexibility can be brought in where workers are paid purely on performance/outcomes, rather than on the standard key performance indicator (KPI) of number of calls handled.

This appeals to those who want a more flexible work environment — parents of younger children, those with certain illnesses or disabilities, or those for whom a commute would cost more than they would earn by being tied to a specific desk in an office.

For others, technology enables them to take a completely new path in their working life.  In the UK, austerity measures have led to a swathe of public sector workers being made redundant, alongside those in the private sector who find themselves either without a job or with financial resources sliding backwards as inflation bites into static salaries.  The latest employment figures, however, show that overall employment is on the rise — with the greatest increase in those who have chosen self-employment.  Now, 15% of the UK workforce is self-employed, compared to 7% in the US.  Through making use of home-based offices utilizing modern computers, peripherals, and reasonably fast internet connectivity, self-employed workers can set themselves up and interact with customers around the world at low cost — and for those who are reasonably skilled, can become global players and make a decent living from their work.

However, for the less skilled, the problem of finding a job is pretty stark.  As automation does come through, fewer unskilled jobs will be available, leaving more of an underclass that will struggle without state aid.

Sure, technology can help through providing computer-based training (CBT) to increase the level of skills of the individual — yet by the time many of these have reached employment age, such training is likely to be too late.

If the West is to regain a high level of growth while creating a low state aid environment, changes in how education is managed will be required.  Technology needs to be used to more rapidly identify where intervention is required to deal with truantism, with bullying, with those struggling with learning and as to what the cause behind this is, whether medical or societal.  Inherent skills need to be identified and nurtured, rather than forcing students through straitjackets of “one size fits all” education.

It is important to understand that automation is the only way that the West can compete at the low-skilled end of the market.  The problem is not that individuals will lose their jobs — but what can these people then do that does not push them into using the safety net of State aid?  Technology can — and must — be brought to bear; governments need to think differently and outside their blinkered boxes to come up with new ways for individuals to be useful in the greater society.

Image credit: Jonathan McIntosh (WikiMedia Commons) / CC-BY

About the author
Clive Longbottom