What is the evidence saying about the impact of automation and digital technologies on the labour force?

Leslie Willcocks

Professor Emeritus

London School of Economics and Political Science

The evidence is surprising. Back in 2014, influenced by a lot of the books and reports coming out then, we first assumed the equation was ‘automation equals job loss’. Across our 750 plus cases and in our surveys, we found certainly around 10–13 percent looking for labour displacement. But, looking at the 2015–2023 period, the majority were automating because they were experiencing year-on-year massive increases and intensification in work, they had skills shortages, productivity problems, and/or they could not meet work processing targets.

Another surprise was that in most cases people did not fear but embraced automation. It helped their work; it took away the painful, deskilled parts; jobs were restructured to include more valuable tasks—for example moving people into dealing directly with customer service problems. All that improves employee morale, and job satisfaction. We once interviewed a CEO in the USA and he summed it up as “the problem with US industry is too many idiot jobs and not enough idiots to fill them”. Well automation—RPA and cognitive automation—provide some answers to that one!

Now we are not saying that all workforces will have these experiences. Some sectors and occupations are going to be hard hit by automation over the next ten years. In particular we expect to see 68 percent of data processing activities automated in the next ten years, 64 percent of data collection, and quite a lot of physical work. But the studies show there will be large gains for humans in areas such as applying experience and specialist knowledge, interfacing with stakeholders, and managing people. We give other examples below.

It is worth looking at the issue of job loss, which is very misunderstood. Actually, the net job loss from now to 2030—about six major reports including our own agree—is about 1 percent. We have read early reports that quote figures like 47 percent of the US workforce jobs are automatable, then jump to the conclusion that this is what is going to happen. It is not. I provided an in-depth analysis of this in a June 2020 paper in the Journal of Information Technology called ‘Robo-Apocalypse Cancelled? Reframing the Automation and Future of Work Debate’, that gave eight qualifiers to these big estimates. It’s not whole jobs but part of jobs that will be automated. These early studies leave out job creation as a result of automation. More recently, McKinsey, for example, found that 18 percent jobs might be lost from automation by 2030 but 17 percent will be gained. There is an over-belief in how easy it is to implement these technologies. Ease is certainly not what we are finding in our studies of the banking, insurance, telecoms, healthcare and energy sectors—in fact, reviewing the studies, it takes anything between 8–26 years for a technology to be 90 percent adopted in the developed economies.

There is also a massive over-optimism about how perfectible these technologies can be. Watch the driverless vehicles and ChatGPT spaces for learning experiences on this one. Then there are the macroeconomic factors like ageing populations, productivity shortfalls, skills shortages, that help explain why countries like China and Japan are automating so fast—it is as a coping mechanism in the face of labour shortages, and not to eradicate the labour force. Finally, in our estimates the amount of work to be done globally is not static, as virtually every study assumes, but is in fact increasing at around 8–12 percent per annum annually. Ironically some of this is due to the exponential data explosion, and the problems automation and becoming digital create—the cybersecurity industry is growing exponentially for a reason! Once again automation becomes a coping mechanism, in this case in the face of growing workloads, as we have found across our main 1,200 plus case database.

So generally, looking across our research and all the studies, one can create a picture for the next seven years that suggests, admittedly depending on a range of variable factors, that there will be job creation—around 10 percent of jobs in 2030 do not exist in 2023. Some job occupations will shrink so that around 15 percent of the global workforce will change occupations. Around 8–10 percent of jobs may will cease to exist. McKinsey—rightly we think—see 60 percent of jobs will be more than 30 percent automated by 2030, but only around 9 percent of jobs today are wholly automatable. When you think about it, this is not that surprising as most jobs have seen the steady take-up of automation and digital technologies over many years, and this would seem to be a continuation of that trend. Despite the predictions of massive job loss, more recent studies are in line with that of McKinsey mentioned above suggesting that by 2030 there will be a dual impact, with 18 percent jobs lost and 17 percent gained from automation. Our own work suggests that the big issue facing the major economies is not job loss and unemployment, but skills shifts.

Next month I will be looking at ‘Automation Jobs and Skills and RPA’ and asking: Does automation change jobs and the skills required? What is Robotic Process Automation (RPA), and what is its future role?