This page has been archived and commenting is disabled.
The European Union's (Other) Deflationary Driver - Job Computerisation
Submitted by Jeremy Bowles via Bruegel.com,
The computerisation of European jobs
Who will win and who will lose from the impact of new technology onto old areas of employment? This is a centuries-old question but new literature, which we apply here to the European case, provides some interesting implications.
The key takeaway is this: even though the European policy impetus remains to bolster residually weak employment statistics, there is an important second order concern to consider: technology is likely to dramatically reshape labour markets in the long run and to cause reallocations in the types of skills that the workers of tomorrow will need. To mitigate the risks of this reallocation it is important for our educational system to adapt.
Debates on the macroeconomic implications of new technology divide loosely between the minimalists (who believe little will change) and the maximalists (who believe that everything will).
In the former camp, recent work by Robert Gordon has outlined the hypothesis that we are entering a new era of low economic growth where new technological developments will have less impact than past ones. Against him are the maximalists, like Andrew McAfee and Erik Brynjolfsson, who predict dramatic economic shifts to result from the coming of the ‘Second Machine Age’. They expect a spiralling race between technology and education in the battle for employment which will dramatically reshape the kind of skills required by workers. According to this view, the automation of jobs threatens not just routine tasks with rule-based activities but also, increasingly, jobs defined by pattern recognition and non-routine cognitive tasks.
It is this second camp - those who predict dramatic shifts in employment driven by technological progress - that a recent working paper by Carl Frey and Michael Osborne of Oxford University speaks to, and which has attracted a significant amount of attention. In it, they combine elements from the labour economics literature with techniques from machine learning to estimate how ‘computerisable’ different jobs are. The gist of their approach is to modify the theoretical model of Autor et al. (2003) by identifying three engineering bottlenecks that prevent the automation of given jobs – these are creative intelligence, social intelligence and perception and manipulation tasks. They then classify 702 occupations according to the degree to which these bottlenecks persist. These are bottlenecks which technological advances – including machine learning (ML), developments in artificial intelligence (AI) and mobile robotics (MR) – will find it hard to overcome.
Using these classifications, they estimate the probability (or risk) of computerisation – this means that the job is “potentially automatable over some unspecified number of years, perhaps a decade or two”. Their focus is on “estimating the share of employment that can potentially be substituted by computer capital, from a technological capabilities point of view, over some unspeci?ed number of years.” If a job presents the above engineering bottlenecks strongly then technological advances will have little chance of replacing a human with a computer, whereas if the job involves little creative intelligence, social intelligence or perceptual tasks then there is a much higher probability of ML, AI and MR leading to its computerisation. These risks range from telemarketers (99% risk of computerisation) to recreational therapists (0.28% risk of computerisation).
Predictions are fickle and so their results should only be interpreted in a broad, heuristic way (as they also say), but the findings are provocative. Their headline result is that 47% of US jobs are vulnerable to such computerisation (based on jobs currently existing), and their key graph is shown below, where they estimate the probability of computerisation across their 702 jobs mapped onto American sectoral employment data.
How do these risks distribute across different profiles of people? That is, do we witness a threat to high-skilled manufacturing labour as in the 19th century, a ‘hollowing out’ of routine middle-income jobs observed in large parts of the 20th as jobs spread to low-skill service industries, or something else? The authors expect that new advances in technology will primarily damage the low-skill, low-wage end of the labour market as tasks previously hard to computerise in the service sector become vulnerable to technological advance.
Although such predictions are no doubt fragile, the results are certainly suggestive. So what do these findings imply for Europe? Which countries are vulnerable? To answer this, we take their data and apply it to the EU.
At the end of their paper (p57-72) the authors provide a table of all the jobs they classify, that job’s probability of computerisation and the Standard Occupational Classification (SOC) code associated with the job. The computerisation risks we use are exactly the same as in their paper but we need to translate them to a different classification system to say anything about European employment. Since the SOC system is not generally used in Europe, for each of these jobs we translated the relevant SOC code into an International Standard Classification of Occupations (ISCO) code, which is the system used by the ILO. (see appendix) This enables us to apply the risks of computerisation Frey & Osborne generate to data on European employment.
Having obtained these risks of computerisation per ISCO job, we combine these with European employment data broken up according to ISCO-defined sectors. This was done using the ILO data which is based on the 2012 EU Labour Force Survey. From this, we generate an overall index of computerisation risk equivalent to the proportion of total employment likely to be challenged significantly by technological advances in the next decade or two across the entirety of EU-28.
It is worth mentioning a significant limitation of the original paper which the authors acknowledge – as individual tasks are made obsolete by technology, this frees up time for workers to perform other tasks and particular job definitions will shift accordingly. It is hard to predict how the jobs of 2014 will look in a decade or two and consequently it should be remembered that the estimates consider how many jobs as currently defined could be replaced by computers over this horizon.
The results are mapped below.
Source: Bruegel calculations based on Frey & Osborne (2013), ILO, EU Labour Force Survey
The pattern that emerges is not unsurprising. Northern countries - Netherlands, Belgium, Germany, France, UK, Ireland, and Sweden - have computerisation risk levels similar to the US figure discussed above. The further away from this core the higher the risk of job automation, with countries on the periphery of the EU most at risk.
Given the argument that this automation will primarily affect low-skill, low-wage jobs, it is little surprise that the results correlate with other economic indicators. Below, we plot the log of GDP per capita across the EU-28 countries against our calculated risks of job automation, which presents a negative association.
Fig. 3: GDP per person versus the risk of computerisation
Source: As above, Eurostat
This might suggest that the computerisation of jobs is likely to affect the labour markets of peripheral EU countries more severely than northern countries over the same period of time. However, an opposite effect moderates this: peripheral countries have historically adopted new technology more slowly. Due to differences in how fast firms across countries tend to adopt technologies, therefore, it is hard to predict ex ante which countries will be hurt most in a given number of years (since it is hard to know whether lags in technology adoption will outweigh the greater number of vulnerable jobs). Furthermore, the timing of adoption will of course depend on the relative price of the technology. Similarly, the impact and path of future regulation makes it hard to make any statements about the timing of these technological shifts. But in the long term the periphery is more at risk once this adoption occurs.
When, and if, such predictions of technological advance come even close to fruition then the effects will be dramatic - irrespective of geography. Using these estimates generated from the Frey & Osborne paper, they range from around 45% of the labour force being affected to well over 60%.
Though the first order concern in Europe is to tackle persistent unemployment rates, the second order concern of labour allocation cannot be ignored. If we believe that new developments will indeed hit sectors traditionally largely immune to technology towards the low-skill end of the spectrum, then a reallocation of workers towards tasks less susceptible will have to occur. Such tasks are likely to prioritise creative and social intelligence, which implies a substantial challenge in the development of European human capital. Reallocating workers in this way is a prospectively painful process and it seems evident that education systems will have to adapt to meet this challenge.
»
- 7998 reads
- Printer-friendly version
- Send to friend
- advertisements -
Transitory, BULLISH!!!
They'll never replace Joe Biden with a robot.
[Why would anyone build a robot that does absolutely nothing?...]
I disagreez... Kids would love Muppet Robotz.
Office and administrative support?
Anyone else remember secretaries?
Jennifer Marlowe made the most in her office. Right after Big Guy that is.
90% of university teaching staff could be replaced by Youtube. Why watch a second-rate lecturer in some dingy hall, when you could be sitting in your room watching a world-class professor give a lecture in Cambridge or MIT?
https://www.khanacademy.org/
You could replace him with a door stop,
or a potted plant.
Door stops and potted plants the world over are deeply insulted.
In other news...
Declaration of war? We don't need no stinking declaration of war!
http://www.washingtonpost.com/news/checkpoint/wp/2015/03/11/pentagon-leaves-door-open-to-strikes-against-syrian-regime-if-u-s-backed-rebels-need-them/?wprss=rss_national-security
Pentagon leaves door open to strikes against Syrian regime
In other interesting news :
- 6000 troops are near Mariupol, ready to attack, ATO expecting an attack within hours or days
- Putin hasn't been seen in public since March 5...
"Boldly going where no man has gone before"........
Spock: "computer, tell me the future" Nano technology and youre truly fucked when you go there....no dirty clothes, no petrol, no dirty dishes,
Fuck you Capt Kirk for not attending his funeral...
Does anyone else wonder how ZH can dish this info out so "fast and furious"?
a little bit late......
saw a 1km to 1km car welding plant doing 1 car a minute in the late nineties,
only robots, only maintenance personnel.
noone has any idea here (not union not social science not politicians)
what all the people should work today, in 10 years in 20 years in whatever
with all the automasation, the industrial farming and all that pretty new stuff made by more and more efficient machines.
they will be burnt, the easy way out.
and why will everybody be burnt?
https://www.youtube.com/watch?v=61XUb28jkUI
Quite honestly I have HAD IT with whine salesmen pawning off Champagne that is NOT Champagne.
SICKENING!
Is that an i-Doll? I want one!
Me too, but only if I can pay an extra grand for the i.
"Recreational therapist?" Is that the latest euphemism for hooker?
'
'
'
What nobody else is talking about regarding the computerization of jobs…
For us grunts that have been disemployed by the computers and the robots, what do you think we're gonna do for work, at least for the first few years?
Pile into things like recreational therapissts, or whatever is left over, that's what!
And what is and extra 5-15% (And aren't I being generous!) of unemployed people, retraining, going to do to wages?
The deflation that's coming due to not just 'automation' with computers, but outright aritificial intelligence and then robots, will be immense.
Don't forget 3D printing!
There's going to be NO WORK in 25 years and wages are going to fall into the flusher and so will wages.
And the work that's left will go to the smart-pants and the elite.
The rest of us?
Think what countries like China will do…
Tell me I'm wrong.
Please.
•?•
V-V
Damn glad I'm an electrician and have enough time in to sit for the plumbing license exam if need be....
No automating going on when the lights are out and the shitter's choked.
Roofers should be in high demand come Spring.
I really don't understand why Home Depot and Lowes aren't hiring a million people this Summer actually.
Im writing this from my study which was wired up by an undocumented Obama voter in return for a sack of tacos and a $100. The real American wanted significantlY more than that. I can only have 3 things plugged in at one time, and one outlet doesn't work at all, but overall i think my small contribution to the fall of the native-born American means something to my NWO masters and I bet ill be spared the smelliest part of the education camp.
Rise of the machines. Scientists recently published a list of threats to humans with artificial intelligence coming up on top.
What a disappointment when they find out humans create economies. Sure, you can put them all out of work but where will they find the funds to purchase the goods made by robots?
This can be observed right here in the usa. China's 'robots' are manufacturing the goods and selling to the usa. But look at the usa economy. It's is ever so slowly sinking into oblivion.
Even the free money from gov handouts doesn't help other than destroying the value of the currency.
For the last 15 years the corporation I am currently employed with has went to computerized management in a big way. What it has done is reduce my output by at least 50% due to coping with the machines. I have sat literally for hours due to server outages. About 1 hour of my day is spent logging into the machines due to their fear of hackers. Sometimes it takes me 20-30 minutes to get a job that only takes 10 minutes to fix or vice verse.
Just like our dream world of endless fiat credit is failing so will the dream of free products manufactured by machines.
Machines were meant to help man in his endeavors,,, not replace him for profit...
Don't forget that it is not just about automating jobs using robots, artificial intelligence, ... Just improving efficiency using tech will have the same effect of reducing jobs.
As an example Docker, a virtual machine based software packaging system, has the potential to eliminate a lot of high tech software jobs by eliminating the need to port software to different architectures.
I also remember how much things changed over my career. When I started in the 70's a large program was a box of cards (2000 lines of code). When I retired in 2012 I was working on a mobile phone OS with 10's of millions of lines of code. Tools, along with new paradigms, make a lot of difference and this in turn will mean a lot fewer high tech software jobs.
I also remember an 80's government contract for an autonomous vehicle. That project was a failure. Now I expect to see autonomous vehicles be in common use within 10 years or less. That alone will eliminate a lot of paid drivers.
So far, technology has created more jobs than it's replaced. So far... will that change when robots get faster, more adaptable, more accurate, more flexible, and cheaper than humans? Probably.
Too easy to steal an autonomous vehicle.
well, if being a robot is what it takes to get a decent job...then, stick a chip up my ass and hook me up to the matrix already, mother fuckers...beep !
Robots and computerisation - just more nails for the coffin of humanity.