Technological unemployment is a huge problem facing technologically advanced countries

How will Industry 4.0 Affect the Labour Markets?

When fully autonomous vehicles reach maturity they are hailed to bring with them increased road safety, increased fuel efficiency and shorter journey times, along with more operator freedom. Automating the daily commute would save commuters over 230 hours a year, on average, providing a huge boost to the economy but many in the transport and logistics industries are worried about the potential for mass layoffs.

Once autonomous lorries come to market, roughly 300,000 lorry drivers will be out of work in the UK – and 3.5 million truck drivers will be out of work in the USA. This huge shift in the labour market will not be without its consequences, and haulage isn’t the only industry set to be rocked by huge job losses.

A report from last year by PwC estimated that automation could take up to 30% of UK jobs by 2030, with the majority of repetitive labour set to be automated in the near future. Jobs such as Library Technicians, Mathematical Technicians and Telemarketers are set to be a thing of the past in the not too distant future as repetitive jobs are filled by computers and robots.

Those at the lowest end of the economic scale are at most risk for technological unemployment, and this effect is played out on the largest scale when we look at the global outlook for automation. In 2016 Citibank released a report based on previous studies carried out by the World Bank. This report found that the risk of automation in developing countries was much higher than in developed countries. In particular, it estimates that 85% of jobs in Ethiopia, 77% of jobs in China and 69% of jobs in India were at high risk of automation.

A US-based report found similar results on the individual level too. Researchers found that 83% of jobs with an hourly wage below $20 and 31% of jobs between $20 and $40 were at risk to automation whereas only 4% of jobs with an hourly wage of above $40 were at risk. This disparity would only serve to widen the economic divisions in society, leaving many analysts worried about mass unemployment and civil unrest.

A handful of solutions have been put forward for the problem of technological unemployment in the 21st century, all of which centre around one of two approaches: preventing net job losses and living with technological unemployment. Historically, labour activists such as Gandhi and the Luddites sought to ban or slow innovation but this approach quickly lost favour in advanced economies due to international competition. Public works have similarly fallen to the wayside as a long-term solution for preventing job losses. Presently, popular solutions to abate technological unemployment have been through shorter working hours and education.

In 1870, the average American worker worked around 75 hours a week – this had fallen to 42 hours per week by 1938. By enforcing or encouraging shorter working hours technological unemployment can be avoided as more people will be needed to perform the same job. Conversely, increasing education spending is seen as a solution to technological unemployment both by expanding the skillsets of citizens to exceed those of robots and by delaying the onset of the start of citizens work lives.

Some policymakers have sought to solve the problem of technological unemployment not by preventing job losses but by preparing for them. One popular proposed solution is that of a universal basic income. Under such a system, every citizen would be paid a set amount every year to cover basic needs such as food, housing and heating unconditionally. In theory, this would encourage small business ventures and creativity, and has been successfully trialled in villages in Canada and the Netherlands but has yet to be proven on a larger scale. Of course, these schemes would not be free and funding must come from somewhere. Many proponents have suggested a ‘robot tax’ or a ‘digital tax’ to pay for such schemes but only time will tell how these plans would play out in an increasingly globalised economy.

Jackson Hogg is a specialist recruitment agency based in Newcastle, UK. Jackson Hogg specialises in engineering, technology and manufacturing recruitment across a wide range of sectors. By practising a discipline-led approach, Jackson Hogg cuts across all sectors to find the right candidate for your business.