Outside the Box

Will your job exist in ten years?

In the past couple of hundred years technological innovation has delivered a great deal to the human race. Many past occupations have become obsolete, but new activities have sprung up to replace them. In general, standards of living have improved along with productivity. These days it appears that technological innovation is accelerating. The question is whether our current jobs will even exist in a decade or two, and if we can adapt fast enough. But, as I’ll explain, one very low tech trend offers hope.

Few would argue that technological progress hasn’t been positive. In fields such as healthcare, mass production, transport, communications, and data processing we have benefited massively. And the rate of change appears to be exponential (just think of computer processing power).

Of course it hasn’t all been plain sailing. During the British industrial revolution, which started in the late 18th century, many workers in the new factories wound up living in the filthy, disease-ridden slums. London may be a glittering beacon of affluence these days, with eye-watering property prices to prove it. But it wasn’t much more than a huge, violent, drunken sewer during much of the 18th and 19th centuries.

Whatever the pros and cons of industrialisation and technological progress, it’s certainly happening all around us. And most people would argue that in the long run it’s been a good thing. In developed countries at least, most people live longer and healthier lives than before, and are surrounded by useful and reasonably priced gadgets such as washing machines, mobile phones, computers and cars.

Anyone born in the 1980s or later pretty much takes internet access for granted. Whilst many older people still never touch a computer – my mother included – anyone under the age of 35 probably can’t imagine existing without one.

I believe we’ve still only scratched the surface of the internet’s potential. It’s only been around, in a meaningful and useful way, for about fifteen years. That’s the blink of an eye in big picture terms. Yet already we have seen massive changes in the way that we work and interact with each other, or are entertained.

At the same time automation in general is extending its reach into new areas. Of course factory robots that replace manual labour are nothing new, although they are becoming more advanced. Prefabricated buildings are nothing new either, where the walls and roof are made in a factory and then assembled on site. In such cases skillful bricklayers and carpenters are out of luck.

But prefabricated skyscrapers certainly are relatively new, with China taking the lead in their production and construction (see here for a video of one example). Using this new technique large buildings now take only months, or even weeks, to manufacture and build from scratch. That’s instead of a couple of years of pouring concrete.

Of course, some new jobs are created in the factories that make the building components. But if we see widespread adoption then many traditional construction workers will be seeking new employment. Some will struggle to find it. This is just one example in one industry.

And it’s not just in the realm of manual labour where automation is making its mark. Advances in computing power and artificial intelligence are approaching the point where some think computers could replace huge numbers of jobs that were previously seen as too hard to automate.

In fact it’s already happened to many roles. At the investment bank where I worked, the days of traders shouting and frantically waving in “open outcry” trading pits are long gone, for the most part in most parts of the world. There’s not even too much shouting down phones by comparison to the old days. Most trades are executed, paid for, and booked into the accounts without any human involvement, which reduces the risk of human error. It’s what the industry calls “straight-through processing”, and it allows huge volumes to be processed at low cost.

More recently, Google Inc. is famously developing driverless cars. If they and others are successful then it’s only a matter of time before we have driverless delivery vehicles too. Suddenly many taxi and delivery drivers could find their skills obsolete, at least in regular urban settings. (I have my doubts about more remote and varied terrains. I also have my doubts about using one. If the car has a choice between killing two pedestrians who didn’t look before crossing the road, or killing a single passenger – me – which will it be programmed to do? I’ll let others experiment.)

Recently I came across a late 2013 study on automation by Carl Benedikt Frey and Michael A. Osborne from Oxford University in England. “The future of employment: how susceptible are jobs to automation?” studied data from over 700 types of employment in the USA and came up with a startling conclusion.

Frey and Osborne reckon that within the next decade or two 47% of US jobs have a high probability of being automated, by which they meant greater than 70% chance.

Just think about that for a minute. They are saying that nearly half of today’s jobs in a major developed economy could be gone within half a generation. If that turns out to be even close to true it will mean a massive adjustment.

The optimists will say that it will release vast new swathes of the populace from drudgery, and the advances will provide plenty of new jobs as in the past. Pessimists will say that already low wage workers won’t be able to re-train fast enough, or ever, since change is happening more quickly than before and the only remaining jobs will be too complicated. The displaced will be consigned to even lower wages, even more menial tasks, or a permanently unemployed underclass.

For now let’s just remember that in the USA alone, that’s nearly 70 million jobs that are potentially on the line, and all the families that those workers support. Will that many people really be able to re-train fast enough to find new work? Will companies want workers with no prior experience, especially those already in their 50s or 60s? We just don’t know.

Whatever the actual outcome it’s not worth anyone wasting time trying to hold back the tide of change. We just have to accept that more technological change is coming. And we had better get used to it if we want to survive and thrive, in how we think and behave.

Have you ever considered whether your job could be under threat by the wave of automation? Are your kids going into the kinds of jobs that offer protection, which are mostly non-repetitive knowledge based roles?

In any case, there could be another huge trend that means the optimists are mostly right. And it’s distinctly low tech. This is the ageing of populations in developed countries, where there are more and more old people and fewer of the young. It’s a phenomenon that’s happening right across the developed world to a greater or lesser extent, whether we’re talking about Japan, North America or Europe. As far as we know it’s the first time that’s it’s happened in the 100,000 years or so of human history.

For example, official EU statistical agency Europop reckons that in the European Union the number of working age people (15 to 64 years old) per person of retirement age (65 or over) is set to fall from four to two between 2008 and 2050. This is an unstoppable trend of staggering proportions.

Up until now that has made me pretty pessimistic about Europe’s future, especially given its already high debt burden. It seems more or less doomed to a long and slow decline, characterised by ever more populist politics and regular financial crises. But perhaps, just perhaps, rapid automation provides at least part of the solution.

As companies discover ever more ways to replace workers there will be steadily fewer workers around to employ. Or, looked at in reverse, just as the labour pool begins to shrink seriously, new technologies will allow businesses to replace scarce workers with the latest advances in automation.

Only time will tell how things actually pan out. But, for this writer at least, it appears that rapid automation spells neither our salvation nor our doom. It’s just something that we’d better get used to. We’re going to have to adapt to change, possibly faster than ever before.

Let us know your views on this issue. As always, we’d love to hear from you.

Stay tuned OfWealthers,

Rob Marstrand

robmarstrand@ofwealth.com

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Rob is the founder of OfWealth, a service that aims to explain to private investors, in simple terms, how to maximise their investment success in world markets. Before that he spent 15 years working for investment bank UBS, the world’s largest wealth manager and stock trader with headquarters in Switzerland. During that time he was based in London, Zurich and Hong Kong and worked in many countries, especially throughout Asia. After that he was Chief Investment Strategist for the Bonner & Partners Family Office for four years, a project set up by Agora founder Bill Bonner that focuses on successful inter-generational wealth transfer and long term investment. Rob has lived in Buenos Aires, Argentina for the past eight years, which is the perfect place to learn about financial crises.