Fears of automation need to be cast aside - The Centre for Independent Studies
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Fears of automation need to be cast aside

robotsRecent research claims that automation threatens more than five million jobs in Australia as early as 2025, putting pressure on the young cohort of workers entering the labour market.

However, the solution is not more government intervention in the labour market, but less — and more emphasis on foundational skill learning.

The first jobs in line to go are those requiring low-skill, repetitive tasks, which usually constitute the entry gates for young workers into employment.

Yet another report suggests almost half of 702 skilled occupations known today — from accountants and financial advisers to real estate agents and drivers — are also at high risk of giving way to technology displacement in the next decade or so.

The threat of automation is real and many jobs will potentially become extinct as a consequence. Yet this is not the end of the story. All these dooming predictions fail to quantify the new jobs created by the same technological spring. And the reason for the omission is not poor research methodology, but the mere fact that we are completely ignorant of what the future holds for us.

If history is of any guide, concerns over automation leaving humans without a job have been largely overestimated. Back in the sixteenth century, Queen Elizabeth I expressed horror after contemplating what a knitting machine would do to the employment of many poor subjects — and ultimately forced the inventor to flee from England to France. In the 1800s, textile workers known as the Luddites vowed to destroy newly developed labour-economising machinery. And now in 2015, taxi drivers throughout the world mount violent protests against ride-sharing technological platforms — while probably still oblivious about the perils of imminent driverless car technology. Even famous economist Lord Keynes once predicted that automation would leave his grandchildren with 15 working-hour weeks.

From a public policy perspective, an often forgotten — and concerning — aspect is the interplay between automation and counterproductive government regulation; the first being the populist impulse to forbid the unstoppable course of technological advancement. It did not work for Queen Elizabeth I, it will not work by outlawing new market entrants like UBER.

Moreover, government regulation on minimum pay floors (e.g. national minimum wages and Modern Award rates including penalty rates) can artificially speed up the rate of automation, making it particularly difficult for workers to adapt to the technological wave. Recent work by Daniel Aaronson, Eric French and Isaac Sorkin offers some eye-opening findings, providing empirical evidence that higher statutory wages prod companies into substituting human labour by automation.

For young jobseekers, the best help comes from a solid educational base, with a strong focus on foundational skill set such as numeracy and literacy that empower them with the basic skills needed to learn new skills. In our fast-changing working environment, mushrooming demand for new specific occupational and trade skills are the rule, and the ability to quickly adjust someone’s skills is paramount for a successful professional career. In this respect, numeracy and literacy skills are the baseline foundation of skill learning abilities; able to effectively improve the employability of young Australians.

With solid foundational skills, young workers should not fear automation, which could be seen both as a threat as an opportunity. On the one hand, technology keeps raising the bar of initial entry-skill levels, increasing the role of education as a decisive factor on employability. On the other hand, a cornucopia of new job roles will keep springing up, with automation potentially raising the productivity of workers, and ultimately, their respective remuneration as well.

The take-away message is clear: we should not fear technology’s potential to threaten jobs, but conquer it through solid educational foundations — and less government intervention.

Dr Patrick Carvalho is a Research Fellow at the Centre for Independent Studies.