By Jock Finlayson and Kristine St. Laurent

The world of work is being transformed as we enter a new phase of the “age of the machine.”  With disruptive technologies pushing the frontiers of automation, some of the comparative advantages humans have traditionally enjoyed relative to technology are eroding.

Computers and learning-based algorithms have progressed beyond replacing repetitive, manual labour with mechanical execution; recognizing patterns, providing diagnoses, and communicating complex information—three activities once seen as falling solely within the purview of people—are now high-level functions increasingly performed by computers.  Doctors, lawyers, accountants, and many other skilled professionals may eventually join the ranks of those affected by automation.

What does the “second machine age” portend for the future of jobs? Will it yield big gains in productivity and an improved quality of life? Or does it pose a threat to workers and point to new strains for the broader socio-economic system?

In the job market context, advances in technology are predicted to have the greatest impact on tasks that are routine in nature.  Such tasks aren’t necessarily mundane, but are labelled as routine because they could be fully-automated in the foreseeable future.  Routine tasks are found in most occupations and are part of many middle-skilled cognitive and manual activities.  Examples include mathematical calculations involved in accounting and financial analysis; the organizing of information that is typically part of administrative duties; the physical execution of repetitive work, such as driving; and certain types of repeated research, such as that performed when filing a patent.

Job Polarization
In thinking about how technology shapes the labour market, a key insight is that automation is both a substitute for and a complement to human capital and intelligence. The challenge for workers is to figure out where they can add value and/or perform “non-automatable” tasks.

Rapid displacement of vast numbers of jobs is unlikely in the next 10-20 years.  Instead, change is apt to be more gradual. However, some jobs will certainly disappear, while the quality of others may be affected as the labour market incrementally polarizes into high- and low-skilled employment, with fewer options in between.

Upsides and Widening Divides
On the one hand, increased automation should boost economy-wide productivity—a good thing overall. On the other hand, more automation may translate into reduced full-time employment and downward pressure on wages/ benefits for some labour market participants. The net result—a widening divide between those whose work and skills complement technology, versus those who are at a disadvantage given the new realities of the workplace.  The risk is that more working-age individuals will find themselves trapped in a downward cycle of low-skilled, low-paying employment, with diminished opportunities to find or transition into careers that offer a decent income.

Historically, technological innovations have disrupted existing industries, business models and jobs—but without dampening the aggregate demand for labour.  Instead, new industries and occupations have emerged to replace those that have disappeared or declined in the face of technological advances.  However, today, some analysts worry that the rise of the digital economy could lead to a sharp contraction in overall employment, as machines and software increasingly replace human labour.  Some recent research suggests that the onslaught of “computerization” could put more than 40 per cent of all jobs at risk.

Building Workplace Futures Today
In truth, economists and business analysts don’t know how the second machine age will unfold.  However, a flexible, well-educated and suitably trained workforce undoubtedly will be critical to meeting the evolving demands of the labour market.  For government and industry, it makes sense to develop policies and programs to build appropriate skills —and to enhance workers’ ability to learn new skills—as we prepare for the digital economy. Digitized, computer-generated knowledge, products and services promise gains in both productivity and our standard of living, but they may leave behind those unwilling or unable to adapt.

Jock Finlayson is executive vice-president, and Kristine St. Laurent, a policy analyst, with the Business Council of BC.

(PeopleTalk Fall 2016)