Digital skills and the future of the labour force - Baroness Morgan

“We are being afflicted with a new disease,” writes the eminent economist John Maynard Keynes, “of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come - namely, technological unemployment.

“This means unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour.”

Writing in 1930, Keynes was not the first to worry about the automation of work, nor was he the last. Every burst of technological progress engenders its opposition, in those who fear it will supplant them. Early 19th century textile workers - the Luddites - who rose in revolt of the invention of ‘power looms,’ smashed the machines that would replace their trade with low skilled low wage operators.

150 years later, in presenting Labour’s 1963 manifesto, Harold Wilson supposed: “If there had never been a case for socialism before, automation would have created it.” Technological progress, he said, if left to private industry, “can only lead to high profits for a few, a high rate of employment for a few, and to mass redundancy for many.”

That technology has never triggered the mass unemployment so often foretold suggests to some such prophecies need not be headed. Technology reduces costs, they say, and frees up money to be spent on new things, inevitably creating new jobs. But the current wave of progress, exponential in its nature, has left many thinking this time will be different.

“There’s a vast range of views on this,” says Baroness Morgan of Huyton, who spent nine months heading the Lords Select Committee on Digital Skills. “We were hearing a lot of noise from those who predict an endgame scenario, but many others who said there wouldn’t be this wipeout.

“What’s certainly clear is that jobs are not going to stand still. Jobs will change.”

Oxford researchers Frey and Osborne predict 35% of all UK occupations could be automated in the next two decades; the Bank of England’s chief economist Andy Haldane says 50%; while the OECD tempers it could be closer to ten.

Wild estimates aside, it’s clear that technology is disrupting the labour force in the here and now. There is no mass unemployment in the short term, but automation is already displacing workers, especially in routine or administrative jobs - office work, sales and services, construction and manufacturing - leaving traditionally middle-income workers to compete in the low-skill low-wage sectors.

“It’s already making inequality worse, and the fear is that it will continue to do so,” says Morgan. “But you can’t stop the clock; you can’t fossilise jobs. The only way round this is to invest in skilling people up.”

The economy is still creating more jobs that it destroys, the Labour peer reminds, but the nature of them is changing rapidly, meaning workers must become more “nimble” to keep up. “The job title may be the same, but the components will inevitably be more technical, and therefore we’ve got to make sure we keep people flexible.”

Even the lowest skilled jobs today require some level of “digital confidence:” a cleaner may be required to use an online system if only to clock-on or book holidays, while those not connected or unfamiliar with the internet will struggle even to apply for work. In basic digital competency however, the UK lags some way behind its OECD comparators.

Research by Go ON UK suggests a universal basic minimum in digital skills could add £63bn to the economy each year. On an individual level, basic online competency could add £1,064 to one’s annual income, increasing to £3,568 for more advanced skills.

The Select Committee’s report Make or Break: The UK’s Digital Future laid out a number of recommendations for the state to make “clever” interventions in skills training: including a computer component in all teacher training, for example, or ensuring each school’s governing body has someone from a ‘digital background.’ Neither require an overhaul of the curriculum or a huge amount of resources, but could raise the overall level of “digital confidence.”

On a vocational level, colleges too are “clunky,” and “not nimble” enough to adapt to the fluid demands of employers. They should work more closely with employers, Morgan says, and be more flexible in offering specialised and relevant short courses. However, “the system at the moment mitigates against that.”

More responsibility must also lie with the individual. “We have to change the conversation,” so that adults understand they may need to be retraining throughout their life, as the technical requirements of jobs change. Equally the state must understand it has to ensure that up-to-date training is readily available.

“It’s a sort of nimbleness,” she adds. “We have to keep re-educating people, and you can no longer take the view that if you do this course you’re going to be fine for life.”

Automation does not only require more technical skills however. Another educational challenge is that employers are increasingly asking for more “personality” skill sets: the ability “to challenge, to lead, to think creatively and work in teams” - to do more of the things that machines can’t.

Indeed as machines become more intelligent, more capable of automating technical work, it’s likely that swathes of the workforce will fall back on roles that require uniquely human skills such as empathy.

The worry is that in time this will accelerate inequality through the hollowing out of middle-income middle-skilled workers.

Highly skilled highly paid jobs will be created, but relatively few. Whereas the majority are likely to be down-skilled: competing for more empathy-based jobs that can’t be automated - care work, educational support, hospitality and leisure - which may well be limited, and less well paid.

This growing inequality between workers is already evident. The Resolution Foundation predicts living standards for low-to-middle income households are likely to be lower in 2020 than in 2008. Notwithstanding inequality between capital and labour, as the owners of productive machinery increase their profits, while requiring exponentially fewer employees.

According to the Bank of England, in the longer term there is good reason to be concerned that job creation will fall far behind the rate of labour automation, just as Keynes predicted. 50% of all occupations is a lot to create, even for the most entrepreneurial economies, in just 20 years.

What will the state’s role be then?

“It’s an area where people simply don’t know,” said Morgan. “In the end it will be a decision for us all: If there is wealth, what do we do about redistribution, and how far do we go?

“But what we’re worried about now is the increasing number of very high level jobs requiring very high level skills, and a lot of people who will be left well behind.”

It’s not only the low skilled who are in danger of being left behind, but the UK economy. Morgan stressed that while the problem may become transnational in nature over a time, the strategy for Britain today must “absolutely” be framed in terms of global competitiveness.

“You have to be very careful about saying certain technological advances can’t be allowed because they might lead to inequality - that will only help our competitors,” she affirms.

“All our major competitors, both inside and outside the EU, are engaging with this change; some of them are doing it much better than us. We’ve got to find a way of getting the opportunities out of technology. What you can’t do is stand still - you’ve got to get on the bus - but in a way that helps as many people as possible.”

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