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THE BOTTOM LINE

Who's afraid of robots - and why

Washington

AN unsettling spectre haunts the world economy: a future of ubiquitous robots that destroy millions of jobs. Sometimes this is called "artificial intelligence"; sometimes it is not. Either way, it threatens the social stability of the United States and other advanced countries, which depend on most people working most of the time. Well, don't believe it, said a massive new report.

"We are not heading for a jobless future anytime soon," argued the Organisation for Economic Cooperation and Development (OECD), a group of 36 major countries with a combined population, including the United States, of about 1.3 billion. Most of its conclusions apply to the entire OECD.

It matters who is right. With many advanced economies facing challenges from populist parties, economic performance will be crucial in determining the political outcome. Job loss or low wages "may contribute to the growing sense of frustration and discontent among the middle class", said the report, which was released last week.

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It identified three major threats to existing jobs: globalisation (the shifting of work to foreign countries); ageing societies (more people entering retirement); and digitalisation (the introduction of new devices driven by the Internet and computers).

The pace of technological upheaval seems daunting. The report noted, for example, that "it took over seven decades for phone penetration to go from 10 per cent to 90 per cent in US households". By contrast, mobile phones achieved the same penetration in 15 years, and smartphones made it in eight years.

Similarly, there has been a global explosion of annual sales of industrial robots from fewer than 100,000 in 2001 to almost 500,000 projected for 2019, according to statistics from the International Federation of Robotics cited in the report.

Jobs have been eliminated; there can be little doubt of that. But jobs have also been created. The lesson from history is that inventions and innovations have typically resulted in more-than-offsetting employment gains. Cars displaced a horse-dependent society, and job gains were not only in manufacturing but also in petrol stations, car-repair shops and highway construction.

Jet planes are another good example. Although they decimated most long-distance train travel, airlines now move vastly more people than trains ever did. A similar shift may be happening now. Over the past decade, four of 10 new jobs were created in "digitally intensive industries", the OECD said.

On the other hand, there is a tendency to exaggerate the significance of novel developments. Annual robot sales, though impressive, are equal to less than one-tenth of one per cent of the 571 million OECD jobs at year-end 2018. As yet, they have not destroyed many jobs.

Indeed, it is possible - though the OECD study barely mentioned it - that the supply and demand for workers, after many years of favouring business, is slowly shifting the advantage to workers.

The impetus for change would come from the massive retirement of the post-World War II baby boomers - a phenomenon present in most advanced countries. Across the OECD, there were 20 persons aged 65 and over in 1980 for every 100 people of working age (20-64); now, that figure is 28 and is projected to double by 2050.

The OECD report suggested that a growing scarcity of workers will cause businesses to automate more activities and accept more immigrants. That is possible. But it is also possible that a tighter labour market will push up wages and cause firms to provide more job security, as companies compete for essential workers.

In any case, the OECD has concluded that much-heralded warnings of a job implosion are overstated. At least one study forecast that nearly half of today's jobs will be automated. The OECD is sceptical. Its estimate is just 14 per cent over the next 15 to 20 years. This figure may seem high, but it is less than one percentage point annually.

The paradox is that public anxiety throughout much of the OECD over the long-term job outlook remains high, even as the labour market for workers improves. To be sure, as the report emphasised, there are plenty of negative indicators. In many countries, involuntary part-time jobs are up, as is wage and salary inequality. The OECD also warned that almost a third of jobs will change dramatically, even if they are not eliminated, as they incorporate new technologies.

If there is one loud message from the report, it is that many workers need more training so that they are more employable. This has long been a problem in the United States, where public retraining programmes have not been notably successful and private-employer-based programmes tend to ignore low-skilled workers.

Still, in a pessimistic time, maybe some optimism is warranted. WP