“Automation happens in bursts, concentrated especially in bad times such as in the wake of economic shocks,” argues Mark Muro, senior fellow at the Brookings Institution.
Covid-19 is proving to be one such shock. In a recent WEF study, 57% of UK companies said they increased the pace of automation as a result of the pandemic, and more could be on its way: pent-up demand has accumulated as companies deferred investment, and an automation “spree” has been predicted for next year onwards.
The prospect of automation often raises fears that technological unemployment and inequality will follow. This does not necessarily need to be the case: automation could spur growth and create employment opportunities by increasing productivity. Unlocking this growth potential of automation requires investment, to reskill the workforce and restructure the economy around a new industrial base.
But governments and employers in the UK are not taking enough action, researchers have warned. “Certain groups may not get to benefit in the recovery because employers have made the decision to move forward on automation, which they may not have done so quickly without this pandemic,” says Josh Abey, the lead researcher on the Commission on Workers and Technology at the Fabian Society. “Without intervention, this is going to deepen labour market inequality.”
The twin threats of Covid-19 and automation
Many already vulnerable communities in the UK are facing a double hit from automation and the recession precipitated by Covid-19. Of the jobs furloughed in the first half of 2020, 61% were in the third of industries at highest risk of automation, according to the Fabian Society. “There’s this huge crossover between the kinds of workers who have felt some economic impact from the recession in the short term, and those workers who all of the previous research suggests are vulnerable to automation,” says Abey.
The Royal Society of Arts (RSA) identifies three economically insecure groups that are bearing the brunt of automation. The first is the ‘metropolitan precariat’: progressive, well-educated, urban and often working in the gig economy. The second is the ‘discontented right’: older, politically disillusioned and facing high levels of unemployment. The third is the ‘progressive working class’: rural, Labour-supporting groups lacking economic opportunities in their local area.
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These groups are diverse in profile but skew younger, less educated and in lower–paid professions. With Covid-19 and automation both disproportionately affecting those at the lower end of the economy, there is a real risk that acting together will entrench existing inequalities in UK society.
They are already likely to be disillusioned with the status quo, feeling left behind in an increasingly globalised world and suffering from the long-term effects of austerity. The combined impact of automation and Covid-19 risks alienating these groups even further, says Will Grimond, an RSA policy officer.
“A lot of people explain the rise of Trump, for instance, in terms of traditionally industrial communities having jobs automated or sent abroad and that working up a certain disenchantment,” he says. “That could be the case in the UK.”
Covid-19 will create new winners and losers from automation
The industries most exposed to the economic fallout from Covid-19 are also more likely to be those facing considerable disruption from automation. RSA analysis finds that the pandemic is reshaping the trends in automation, creating “new winners and losers, with industries we previously thought to be more resilient now on the brink of collapse”.
For sectors such as retail and hospitality, arguably the hardest hit by ongoing lockdowns, the pandemic has shifted perceptions on automation. Where once a friendly face was seen as an integral part of the service, people are now accustomed to scanning a barcode to access a menu at a restaurant and ordering groceries and clothing at a click of a button.
Other sectors such as manufacturing were already being reshaped by automation, but are likely to emerge from the Covid-19 crisis even worse off as businesses in the sector doubled down on robots in the search for greater efficiency and a more pandemic-friendly workforce, the RSA says.
This is reflected in the regions likely to be hardest hit. The areas most vulnerable to these twin threats are those that have borne the brunt of the decline in the UK’s industrial base over the past few decades – nine in ten of the local authority areas in England that are in the bottom quarter for exposure to Covid-19 and automation are classified as towns and rural areas.
Many of the areas facing this “double whammy” are also those targeted by the government’s ‘levelling-up’ agenda – an attempt to address the social and regional imbalances in economic opportunity – says the Fabian Society’s Abey. “There is obviously an interaction with the government’s levelling-up agenda, where there’s a real tension between the rhetoric and the policy reality so far,” he says. “If things continue as they are, there is going to be a lot of resentment and disappointment from those groups who have been promised a lot.”
Companies need to invest to future-proof jobs
While the need for more government action is clear, there is also a big role for employers to play in ensuring that everyone reaps the rewards of automation. Barely over a third of businesses have ramped up investment in reskilling initiatives over the course of the pandemic, despite increased levels of automation.
Just as policymakers need to collaborate with businesses and trade unions over industrial strategy and reskilling initiatives, employers need to create a social partnership with workers, says Abey.
“We’re calling for this big cultural change, whereby consultation and representation and negotiation on change becomes normalised,” he says. “There is evidence to say that where unions and workers are represented and get to negotiate with employers there are benefits in terms of productivity and innovation.”
While employers reap economic benefits from around three-quarters of reskilling investment, in the current climate, a lot of businesses are cash-constrained and struggling to pay the necessary investment to future-proof jobs, according to a report by McKinsey. This is why government action is critical to ensure that the economy has the skills base that it needs in five years, adds Abey.
“Where those workers haven’t been working and may not have viable jobs to go back to, there’s been a missed opportunity,” he says. “A lot could have been done in terms of employer-provided and government-funded training and reskilling, not only learning new skills but maintenance of existing skills.”
All eyes are now on next month’s budget to see if the necessary support will be forthcoming. The measures Chancellor Rishi Sunak announces will signal whether automation will help the UK to accelerate out of a crisis or entrench existing inequalities, says RSA’s Grimond.
“Automation should be a good thing; it should enable higher productivity and allow robots to take on jobs that humans don’t want to do,” he says. “But we have to make sure that the benefits are shared by everyone and aren’t just increasing shareholder value at the expense of increased unemployment.”
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