Selected Issues of the Public Sector Spring 2016 Martin GUZI martin.guzi@econ.muni.cz The future of labor and alternative forms of work Week 11 TECHNOLOGY AND EMPLOYMENT • Diffusion of technology: time to reach 50 million users • The ruling elite often blocked technological progress •Emperor Vespasian (AD 69) denied the use of machine for transporting columns to capitol –“How will it be possible to feed the populace?” •Queen Elizabeth in 1589 denied a patent to William Lee of the stocking frame knitting machine because of her concern for the employment security of hand knitters. French King Henry IV. granted a patent. •Britain passed law in 1769 making the destruction of machinery punishable by death. •Nowadays technological adoption is slowed by regulatory concerns and political activism (e.g. Uber). • Acemoglu and Robinson (2012) http://indaily.com.au/wp-content/uploads/2016/01/20150910001175645591-original-850x455.jpg https://si.wsj.net/public/resources/images/BN-KS230_austax_P_20151012022708.jpg http://o.aolcdn.com/dims-global/dims3/GLOB/legacy_thumbnail/750x422/quality/95/http:/www.blogcdn.co m/slideshows/images/slides/349/349/0/S3493490/slug/l/mexico-transport-taxi-uber-protest-1.jpg http://wpmedia.montrealgazette.com/2016/02/montreal-qc-february-10-2016-montreals-taxi-driver-ab1.j peg?quality=55&strip=all&w=840&h=630&crop=1 Taxi drivers protest against Uber and other alternate transportation services during a demonstration in Montreal. Taxi drivers protest against Uber Berlin's government legislates against Airbnb •A new law – Zweckentfremdungsverbot - became effective on 1 May 2016. •Berlin began restricting private property rentals through Airbnb and similar online platforms. City attempts to keep housing affordable for local people. •The city has appealed to the “civic spirit” of residents, asking them to anonymously report suspected misuse online. •Offenders can face fines of up to €100,000. https://www.theguardian.com/technology/2016/may/01/berlin-authorities-taking-stand-against-airbnb-r ental-boom Jobs that machines can do •Supermarkets now include self-checkout points to replace the cashiers, people get cash out from an ATM instead of a bank office and airlines encourage passengers to check in online rather than at the desk at the airport. •People should be happy that a lot of these jobs have actually disappeared. •Traditionally, routine tasks have been at risk of being replaced by technology but non-routine work has been considered safe. •Machine learning, mobile robotics and big data computers are capable of doing more and more tasks that have previously seemed impossible. http://www.mckinsey.com/insights/economic_studies/automation_jobs_and_the_future_of_work The replacement robots are in clear sight •Information technology affects workers high in the education and skill distribution. Think how Google reduces the need for librarians and research assistants, or the way massive open online courses reduce the need for professors and lecturers; the chess-playing computer Deep Blue, beating Kasparov as world champion; Watson, the artificially intelligent computer system, becoming the greatest Jeopardy player; MOOC (Massive Open Online Courses) are far less expensive than hiring full-time faculty to lecture students. •Short reports and sports commentary are written by the use of algorithms. •The US online legal advice and document drafting service legalzoom.com is replacing law firms. • Are truck drivers out of job? •Truck driving is currently the most popular job in 29 states in the US (3.5 million drivers). •Self-driving trucks don’t have to stop for long mandatory breaks after spending hours on the road. •Up to 4,000 lives each year are lost in crashes with large trucks. •Study shows that 47% of total employment in the US is endangered by automatization. Image result for Trucking industry http://www.bbc.com/future/story/20150805-will-machines-eventually-take-on-every-job • WALL-E (2008) http://screenmusings.org/movie/blu-ray/WALL-E/images/WALL-E-382.jpg http://gb.images.s3.amazonaws.com/wp-content/uploads/2012/01/WALLE.png Living with robots •Robots have the potential to greatly improve the quality of our lives at home, at work, and at play. •Today’s robots have limited capabilities and limited applications. The car industry automates approximately 80 percent of its assembly processes but it is only ten percent in electronics. •By working together, robots and humans can augment and complement each other’s skills. •Robots may well support people by doing physically difficult or tedious jobs: stocking shelves, cleaning windows, or sweeping sidewalks. • The hollowing out of the labour force •Employment growth has been most robust at the highest and lowest ends of the skills spectrum. •High- and low-skilled jobs involve tasks that are non-routine, requiring either cognitive capacity or complex but manual tasks to complete them. •The middle skill jobs, in contrast, contain the highest concentration of routine tasks and are thus relatively easy to automate. •Workers downskill fast and upskill slow. A detailed analysis of the link between automation and job polarisation is provided in Autor, D. (2014a) Change in employment shares by occupation, 1993-2006 • Computerisation of occupations • 'Evolution of Man ending with Artificial intelligence' illustration •The paper The Future of Employment: How Susceptible are Jobs to Computerisation (Frey & Osborne, 2013) predict the probability of computerisation of over 700 different occupations. •The task requiring Originality combined with Service Orientation are most difficult to automate. •Automatization depends on relative costs and other factors - humans will prefer certain jobs regardless if a machine could perform the same tasks (e.g. athletes) •For some occupations it might make sense to replace certain tasks with machines but not the job as a whole. Computerisation of occupations JOBS MOST AT RISK http://www.thisismoney.co.uk/money/news/article-2642880/Table-700-jobs-reveals-professions-likely-r eplaced-robots.html Algorithms for big data are also already taking over jobs that are reliant upon storing or processing information, suggesting that a growing share of office and administrative support jobs will soon be subject to automation. Computerisation of occupations JOBS LEAST AT RISK •It is true that robots are getting very good at a whole bunch of jobs and tasks, there are still many categories in which humans perform better. •Robots can aid in the creation of new and better jobs for humans. We do expect that some jobs will disappear, other jobs will be created and some existing jobs will become more valuable. FUTURE OF PROFESSIONS • •The professions exist because they help us to solve problems that we do not have the expertise or the time to handle ourselves. It just happened so that, in the 20th century, the best way to do this involved face-to-face interaction with other human beings. But in the 21st century, we’ll find more affordable and accessible ways of doing so. •As the machines are becoming increasingly capable there are now systems that can do much of this without human experts. As these machines are becoming increasingly capable, now is a good time to ask whether the traditional professions that evolved to solve our problems in the 20th century are fit for purpose in the 21st. Two scenarios 1.Professionals use new systems to help them work in the traditional way 2.The introduction of a range of increasingly capable systems will entirely replace the work of traditional professionals. • •For now, these two scenarios develop in parallel. But in the long run the second one will dominate. Don’t fear the robots, technology also creates jobs •The magnitude of new jobs created from the arrival of new technologies is small. •In 2010 only about 0.5% of the US workforce worked in new industries. These workers are high educated and highly paid. •Location is more important in the digital age, cities with larger pools of skilled workers benefit (the rise of skilled innovation cities). • Berger and Frey (2014). The future world of labor •Traditional ‘linear’ careers become an exception •Lifelong employment will diminish More flexible modes such as freelance, (dependent) self-employment, on-call work and project-based temporary jobs will be more common. •The decline of routine jobs Many jobs will become ‘richer’ and more intrinsically interesting or rewarding than the jobs in the past with routine and repetitive tasks. •The workforce will be more diverse The increase of female, migrants and older workers. •Increasing heterogeneity in the labor market New creative occupations and the ‘sharing economy’ Self-employment: the new normal •There is no better time to be an entrepreneur with an insight than today, because you can use technology to leverage your invention. •Digital economy allows people everywhere to reach global markets. •E-entrepreneurship typically requires less capital (e.g. crowdfunding) •Large increase in self-employment since 2008 has been in professional occupations. •Self-employment is becoming increasingly a preference (e.g. Be your boss!). The sharing economy •Benefits talented entrepreneurs. •The Internet and smartphones make it cheaper to match supply and demand. •Peer-to-peer services to share cars, accommodation, car-parking spaces, bicycles, musical instruments, garden equipment, household appliances and other items. •Technologies connect people and build trust. The opportunities offered by the digital economy are immense as the Internet and smartphones make it cheaper to match supply and demand. People can now register their unused assets on various online platforms, connecting owners and users. Satellites and smartphones even make it possible for consumers to locate services nearby. Such peer-to-peer rental concepts can provide additional income for owners, while providing cheaper alternatives to consumers. The rise of the sharing economy is however not merely the result of digital technologies connecting people: it is as much a result of how they can be used in clever ways to build trust. A decade ago, when eBay started, people were still hesitant to provide things like their credit card details to online marketplaces. That is no longer a major obstacle. Secure Internet payment systems have been crucial, but also transparent rating systems. Home owners that register on Airbnb offering accommodation to strangers rely heavily on users’ past ratings, and travellers staying in a strangers’ flat can read reviews from previous guests. In addition, some services integrate Facebook, allowing users to check if they have mutual friends. Uberization of economy In-class debate •Uber is typical of what’s becoming known as the sharing economy. 1.Is Uber model making our lives any better? 2.Do we need new legal classification and social contracts for “independent workers”? The new challenges •Digital technologies will continue to accelerate but our skill, organizations, and institutions are lagging. Digital literacy is crucial 47% of European workers have insufficient digital skills; 23% have none •Substantial investment required for workforce up-skilling •We need to reinvent our economy and society to keep up with accelerating technology. http://www.bbc.com/future/story/20150805-will-machines-eventually-take-on-every-job Optimal policy settings to boost innovation and employment 1.Policies to reduce the cost of labour and to increase take-home pay. 2.Policies that make it easier to find jobs. 3.Policies to handle greater job precariousness and job instability. 4.Better allocation of work (flexible hours). 5. Governments, for their part, need to create a climate where entrepreneurs can flourish, because new ventures create new jobs. There is troubling evidence that entrepreneurship is on the decline. This needs to change. … but the cost labor is raising in many countries! • Positive consequences •The digital age has so far mainly benefited skilled workers as producers, it has also benefited unskilled workers as consumers, making their leisure more interesting and self-fulfilling. •People gain affordable access to quality medical guidance and legal support •Access to practical expertise (Wikipedia) •What tasks ought to be not done by machine (medicine, court judge) • • New professional assets to advance your career •The accumulation of experiences from jobs, internships, and volunteering activities. •Managing instability and uncertainty, continuous learning, mobility, flexibility and the ability to handle and interpret large amounts of data. •Creativity and innovation •