The greatest source of instability in the world today is the automation of work. It also the most ignored – to the peril of our democracy. It does not have to be that way. It’s time to start talking about the opportunity.
In September 2019, the United Nations released a landmark report specifically for the benefit of developing nations like Romania. The report begins with this statement by Secretary General Antonio Guterres:
The digital revolution has transformed our lives and societies with unprecedented speed and scale, delivering immense opportunities as well as daunting challenges.
New technologies, especially artificial intelligence, will inevitably lead to a major shift in the labor market, including the disappearance of jobs in some sectors and the creation of opportunities in others, on a massive scale.
The digital economy will require a range of new and different skills. We need a major investment in education, rooted not just in learning but in learning how to learn, and in providing lifelong access to learning opportunities for all.
The thunder of the massive changes Secretary Guterres was speaking about was heard in 2016, when the world’s most mature and stable democracies, England and the United States, had elections with shocking outcomes. Technology is dividing our societies into two economies: winners and losers from the automation of work.
A Harvard Business Review Study estimated 7,000,000 American people lost their jobs to automation between 2004-2009. The workers fortunate enough to get a new full-time job, saw a 17-30% decrease in their salary. Workers who did not find a job in two months, were usually left to struggle in the ‘gig economy’ as contracted workers with no health, vacation or pension benefits. These are the angry voters, and rightfully so.
I believe technology can create huge opportunities for economic growth, salary increases and improved social welfare for societies that are proactive in the managing the Future of Work.
Lesson from History
The Industrial Revolution had a staggering impact on western society. Economists from Karl Marx to John Maynard Keynes raised concerns about massive unemployment and social unrest. Many novelists, such as John Steinbeck and Charles Dickens, used the harsh realities of the displaced workers as the storyboard for their work.
In December 2017, the McKinsey Global Institute published a report titled JOBS LOST, JOBS GAINED: WORK FORCE TRANSITIONS IN A TIME OF AUTOMATION. It is estimated that 90% of the jobs in 1919, no longer exist in 2019. History shows a major shift in jobs by sector as the economy has progressed from farm, to factory, to digital networks.
History also shows that technology creates significantly more jobs than it displaces. A 2018 World Economic Report titled “Towards a Reskilling Revolution”, forecasts job growth over the next 7 years in various economic sectors. Other than office administration and production, every other job category projects job growth.
But most these new jobs come with a caveat. Almost all the new jobs require new skills in applying technology, critical thinking and emotional intelligence. We need a ‘Reskilling’ revolution to equip the workforce.
IT talent has replaced oil as the world’s most valuable resource
The pace of change in the digital revolution is much faster than in the Industrial Revolution. In 1917, the world’s largest telephone business (ATT) introduced the mechanical switchboard to replace the manual switchboard operator. But it took 50 years for the transition to be completed because of the negative public reaction to 100,000 switchboard operators losing their jobs.
Technology and automation in the 21st century is being implemented at breakneck speed. Verizon’s nationwide roll-out of 4G was completed in less that 3 years and impacted 190,000 jobs.
New paradigms of influence are emerging in the world that we don’t realize or grasp.
There has been a massive change in corporate power throughout the world between 2009 and 2018. Technology businesses now make up 56% of corporate wealth, while oil and gas businesses have declined to just 7%.
The most valuable infrastructure today is not highways or trains, but underground cables. 99% of all international data transmissions run through fiber optic submarine cables. These submarine cables are not owned and controlled by governments, but the private sector. Amazon, Microsoft, Google and Facebook own or lease over 50% of these strategic assets.
Technology is also the battleground in the new Super Power competition between the United States and China. The leading-edge technology in the world resides in business, not governments. This bubble chart depicts the corporate wealth of the leading technology companies.
The major geopolitical struggles of the next 50 years will be shaped by the conflict between American and Chinese interests.
The rapid pace of technological change is a reset button for individuals, businesses and nations. A big opportunity for those that embrace the opportunity and serious consequences for those that ignore the new reality.
Three big questions come to mind as read about the Future of Work.
- What are the work skills of the future?
- How are education systems adapting?
- How are nations competing for talent?
In my next three posts, I will share what i have discovered about each of these questions.