Jobsimpactofautomation:Biggerthanthethoughtleaders

sayitisDavidTicoll

CDOConferenceMay2017

Commonapproach:laboursubstitution

• Prominentsourcesrelabourmarketimpactofautomation:o Brynjolffson/McAfee(MIT,2011)– RaceAgainsttheMachineo Frey/Osborne(Oxford2013)– 47%ofjobsatrisko Amtz/Gregory/Zierahn (OECD2016)– 9%ofjobshighautomatability (butfocusontasks!)

o McKinseyGlobalInstitute(2017)– 47%ofactivityFTEsinCanada,51%inUS

•Methodologicalconsistency:repeatablealgorithm(automatabletaskcharacteristics)

Frey- Osbournemethodology

McKinsey

Allbasedoncurrentlydemonstratedtechnology

%oftimeautomatable:- Canada:47- US:46

“Pessimistic”reautomationpotential?• Incompleteonthefaceofit

o Manyjobshavedeclinedordisappearedwithoutbeingautomatedo Theseincludeoccupationslikely”belowmedian”onMcKinsey’sautomation

susceptibilityscale§ Horseshoemakers§ Pulp&paperworkers§ Investigativejournalists§ Professionalphotographers

• Overlooked:Impactsofbusinessinnovationandchangestocoretechnology,withimpactacrossasector’secosystem

Alternativemodel:Coreecosystemtechnology(CET)assessment

Anewmodel:Coreecosystemtechnology(CET)labourmarketimpactassessment• Employmentimpact(technology+businessinnovation)=

o Sumoflabour…§ Substitution§ Obsolescence§ Impactoftechnologychange§ Offshoring/outsourcing§ Economicviability

• Abovefunctionso Distincto Ecosystem,task&rolespecifico Mayoverlapinaspecifictask/rolecase

• CETanalysisiscomplicated:o Requiresidentification&analysisofentireecosystemso Non-substitutioneffectsvaryconsiderablyandaresectorecosystemspecific

Hypotheticalexample:vehicleautomation• Mobilityusers(laboursubstitution)

• Transporttruckdrivers 261,775• Taxi,limodrivers 48,545• Delivery&courierdrivers 90,075• Mail,postal,courierworkers 92,825

493,220• Complementarysectors(labourobsolescence)

• Autodealers&distributors 195,160• Autorental&leasing 16,600• Gasstations 52,300• Autoservice&bodyshop 166,100• Insuranceagents&brokers(x.25) 16,550• Policeofficers(x.25) 20,000

496,710

• Competitors(economicunviability)• Publictransit,hotels,airlines ???

• Mobilitytechproviders(coretechnologychange)⦁ Automanufacturing 125,000

Automationofad-taking&placement

Source:TheShatteredMirror,PublicPolicyForum

TheCanadianMediaGuildhastrackedlayoffsandbuyoutsforthepastfewdecades.Whennon-newscompaniesareexcluded,thetotalisintheorderof12,000positionslost,morethan1,000oftheminthelastyearalone.Unifor’s 46mediabargainingunitshad1,583membersin2010butonly1,125byearly2016.TheCWAestimatesithadabout400editorialmembersin2016,adeclineofaboutone-thirdfrom2010andmorethantwo-thirdssincetheearly1990s.

Pulp&PaperManufacturing2000 2013 Change %Change

Employment 115,700 62,692 -53,008 -46% Wages&salaries $5,221,169,000 $3,235,468,000-1,985,701,000 -38% Income/employee $45,126.78 $51,608.95 6,482 14%

Pulp&PaperManufacturing2000 2013 Change %Change

Employment 115,700 62,692 -53,008 -46% Wages&salaries $5,221,169,000 $3,235,468,000 -1,985,701,000 -38% Income/employee $45,126.78 $51,608.95 6,482 14%

TotalN

umbe

rEmployees

EmployeesinselectphotographysubsectorsUnitedStates1998-2014

Numberofemployees:

1998 252,6482014 97,471

Netdecline:155,177%Change:-61.4%

0

50000

100000

150000

200000

250000

300000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Selectphotographysubsectorjoblosses

PhotographyIndustrySubsectors(basedonNAICscodes)

Employed1998

Employed2014

Job losses %change1998-2014

Photofinishinglabs 57,140 6,884 50,256 -88.0%

Photographicfilm,paper &chemicalmfg 36,942 10,992 25,950 -70.2%

Photographic/copyingequipmentmfg 24,566 5,130 19,436 -79.1%

Photoportrait studios 62,811 44,571 18,240 -29.0%Electriclampbulb&partmfg,includingphoto 16,156 4,626 11,530 -71.4%

1hourphotofinishingservices 15,102 774 14,328 -94.9%

Photographicequipment&supplieswhsle 21,787 13,638 8,149 -37.4%

Commercialphotography 18,144 10,856 7,288 -40.2%

Total 252,648 97,471 155,177 -61.4

Methodologicalconsiderations

Whatdotheseecosystemshaveincommon?• Mobility:pilot shiftfromhumantoautomatedpilot• Newspapers:adplacement shiftfromhumantoautomated• Photography:imagecapture shiftfromanalogtodigital• Anotherexample:shippingcontainer(ie notjustdigitaltechnologies!)

o Shipping:packingorganization shiftfromadhoctostandardized

• Commonfeature:shiftinacoreecosystem technology(CET)o CETsarerareandspecialo Businessweb/ecosystemanalysisrequired

Factorsoflabourmarketchange,e.g.self-drivingcars• Laboursubstitution. SignificantlaboursubstitutionforCanada’s500,000professionaldrivers(light&heavyfreight,taxi/limo,transit)andoperatorsofmobileservices(e.g.,streetcleaningandgarbagecollection).Newjobsmayariseforvehiclecleaners&travelassistants(eg forelderly&disabledpassengers).

• Coretechnologies. ShiftfromsteeltoICT&lightweightbodiescouldreducelabourdemandandfacilitateoffshoring.Electricvehicleswillneedlessroutinemaintenance(nooilchanges!).Demandforoilandgasolinewilldecline.Labourdemand– upforinformationtechnologists,downforupstream/downstreamoilsectoremployeesandcarmechanics.

• Transactioncosts&disintermediation.Mobilityservicesthatusetheirownfleetswilldealdirectlywithconsumers.Theywilldisintermediatecardealers,automotivelendingandleasingservices,insurance,etc.Intheprocess,theywillreducetransactioncostsforconsumers.

• Positive/negativeexternalities. Apositiveexternalityofautomationwillbeimprovedsafetyandtrafficself-management.Thiswillreducetheneedforjobsinautobodyshops,policing,andaccident-relatedmedicalservices.Itwillalsoreduceavailabilityoforgantransplants.

• Economicviability. Asprivateownershipdeclines,thetraditionalautomotiveaftermarketwillbechallenged.Ontheotherhand,anewmobilityappaftermarketcouldarise.

• Rippleeffects. Victimsofjoblosseshavelesstospend,affectingemploymentandincomesacrossavarietyofsectors.Thisappliestobothcommercial(fewertruckdriversmeanlessspendingattruckstops)andconsumeroutlays.

Anewmodel:Coreecosystemtechnology(CET)labourmarketimpactassessment• Employmentimpact(technology+businessinnovation)=

o Sumoflabour…§ Substitution§ Obsolescence§ Impactoftechnologychange§ Offshoring/outsourcing§ Economicviability

• Abovefunctionso Distincto Ecosystem,task&rolespecifico Mayoverlapinaspecifictask/rolecase

• CETanalysisiscomplicated:o Requiresidentification&analysisofentireecosystemso Non-substitutioneffectsvaryconsiderablyandaresectorecosystemspecific

Thefutureofwork• Wheredojobscomefrom?

o Subsistenceà industrialeconomyo 4 industrialrevolutions

§ Steam/cotton/agriculture§ Electricity,engine,massproduction,plumbing,medicine,etc.§ Electronics,ICT§ AI,machinelearning– declineofwork?

• Canada– groundsforoptimismo Smallpopulationo Educatedo Demographicso Exportorientedo Publicpolicy