No. 195

UNEMPLOYMENT, UNDER-EMPLOYMENT AND ROBOT EMPLOYMENT

The employment average abyss.

Stone the crows! Are we running out of things to do?

In Bob Hawke’s 1979 Boyer lectures, he talked of the end of full employment and of accordingly funding people to live alternative lifestyles outside the conventional economy. In particular, he suggested many older people stayed in the workforce to protect their self-respect, which was cruel.[i]

Thirty years on, this idea looks as disastrous as it is dated, at least for the 140,000 Australians aged 50-64 on the dole.[ii] Plus, over half the 830,000 or so disability support pensioners who are in the same age bracket.[iii] There is not much dignity in having nothing useful to do however old you are – especially when you are subsisting on welfare.

Now the fear that we will fail to find work for all Australians is with us again. But this time the option of supporting the unemployed to find fulfilment at the state’s expense looks as improbable as it is unaffordable – at least if we are to pay the health and welfare costs of the aged. Of course, this is not important if Australians work on after they qualify for the pension and superannuation access.[iv]

Good-oh, but doing what?

As Graham Richardson described the impact of the end of the old industrial Australia on Friday: “What kind of future can a 55-year-old fitter working in a car plant look forward to? That person has probably never been unemployed. It is hard to undertake retraining at that stage of life. No matter what skill set you may possess, no matter what field you work in, if you are over 50, finding a job can be well-nigh impossible.”[v]

Sadly, the only answer is indeed re-training, the universally efficacious pedagogical panacea for every labour market malaise. This may not be much comfort for older workers who hoped to end a life time of employment with the skills that got them this far – but the truth is learning to do what the market needs is the only alternative to unemployment, whether or not it is badged as retirement.

But what happens if we are not just undergoing a restructuring of the economy, as a strong dollar and resource riches end the always-impermanent manufacturing model Ben Chifley, Robert Menzies and John McEwen created? What happens if we are seeing the start of a transformation of work? As The Economist argues, where manufacturers started replacing high cost workers first with low cost ones and then with machines, artificial intelligence will make the same process possible in the services.[vi] It isn’t a Filipino aged care or call centre staffer Australian workers have to worry about – it’s a robot.

There are certainly ample commentators who argue that artificial intelligence will make many white-collar workers obsolete.

Carl Benedikt Frey and Michael A. Osborne maintain that some 47 per cent of jobs in the US economy can be, or will be, done by machines – and not just the routine work, there are already medical diagnostic programs.[vii] Clinton Treasury Secretary Larry Summers points out that 50 years back one in 20 US men of workforce age was not working – within 10 years some six or seven will not have a job.[viii]

The Crows suspect they will not all be blue collar blokes – my guess is we all know highly educated men and women who are either under or unemployed. According to Frey and Osborne, over the last decade, high-skilled workers have climbed down the occupation ladder, pushing the lower skilled even lower or into unemployment.

According to Tom Karmel, former chief of the National Centre for Vocational Education Research, 15 years ago 80 per cent of higher degree graduates had a job in the top quintile for skills and income. So did 70 per cent of bachelor graduates. However, by the start of this decade only 60 per cent of the higher degree graduates were there. Bachelor graduates were down to 65 per cent in the top 20 per cent of skilled jobs.[ix]

You can argue that this results from qualification inflation and over-supply of graduates – in law for example. But that, in itself, is an indication of the way human and technology improvements are reducing the demand for skilled staff.

Of course, there will always be creative work for people who are as smart and adaptable as they are educated and innovative. Which means the people who teach and research future skills, especially those that Artificial Intelligence cannot undertake, will also be the winners. But only some of them, mind. As Larry Summers suggests, “There exist software programs that can grade at least some kinds of student papers with more reliability relative to human beings than human beings can grade essays relative to other human beings.”

Even if the Crows were convinced that bytes will always outperform brains, they would not be all that worried. For a start, there is no point in protesting inevitable change. Just as computing power continues to revolutionise the way we understand the world and live our lives for the better so it will create new industries to replace those it ends.

But from academics to assembly-line workers, what will matter is energy, ideas and innovation. Same as always really – only this time the elite winners really will take all.

ENDNOTES

 


[i] R J L Hawke, The Boyer Lectures: Four, (ABC, 1979) @ http://goo.gl/Q268e6 recovered on February 22

[ii] Sarah Hawke, “Government wants disability support pension recipients back at work,” ABC Radio, AM, February 22,

[iii] Jacqueline Maley, “Reality beyond the rorts of the disability support pension,” Sydney Morning Herald, February 1

[iv] John Daley, Budget pressures on Australian governments, Grattan Institute, April 2013, 45 @ http://goo.gl/PloEUb, recovered on February 22

[v] Graham Richardson, “Jobs must go, but who’ll help the jobless,” The Australian February 21

[vi] “The onrushing wave,” The Economist January 14

[vii] Carl Benedikt Frey and Michael A. Osborne, The Future of Employment: How

Susceptible are jobs to computerisation,” Oxford Martin programme on the impacts of future technology,” September 17 2013 @ http://goo.gl/UvLsSg recovered on February 22

[viii] Larry Summers, “Economic possibilities for our children”, National Bureau of Economic Research Reporter, (4) 2013 @ http://goo.gl/XKud7D recovered on February 22

[ix] Stephen Matchett, “Nice work if you can get it,” The Australian, July 12 2013

'2012