Archive for July, 2016

Where will the jobs be – 3

July 18, 2016

Can machines replace humans?

As background to forecasting jobs and education/skills for the future, a McKinsey Quarterly study provides input.

“Michael Chui, James Manyika, and Mehdi Miremadi have been exploring what jobs are likely to be altered more or less by technology. They present some results in “Where machines could replace humans—and where they can’t (yet)” in the July 2016 issue of the McKinsey Quarterly.” (from The Conversable Economist, July 11, 2016 posting.)

 

In order to view this chart please click on:

http://conversableeconomist.blogspot.ca/2016/07/when-technology-alters-jobs-but-doesnt.html

( I was unable to copy the chart to this posting!)

The chart lists sixteen sectors of the economy in different manufacturing and service sectors. Each row lists seven activities which are broadly common to each sector, thus “managing others” and “data processing” for the agriculture sector are an example of two of the seven activities in this sector.

The size of the circles shows how much time is spent on each activity – a small circle for little time and a large one for much time. Thus a lot of time is spent on “unpredictable physical work” in agriculture and on “predictable physical work” in manufacturing. The colour of the circle shows how easy it is to automate that activity, thus easy to do in retail trade for “predictable physical work” and hard to do in “applying expertise” in finance and insurance. In accommodation and food service, a large amount of time is spent doing “predictable physical work” and this is easy to automate. In general a worker entering a sector where anything is easy to automate will probably have a lower salary and a higher risk of losing that job.

The table provides information to job seekers and counselors regarding employment opportunities. What sectors and skills to prepare for (education and training) can be gleaned from this figure. While some jobs are likely to be lost due to some form of automation, others will be created to provide whatever needs to be substituted. The US Department of Labour lists 800 occupations and 2000 tasks performed in the context of these occupations.

Data on wages and salaries in Canada is another source of what remuneration can be expected today for particular jobs. A web search will locate this type of information for different occupations in Canada.

One example, and there are many more, is at:

http://www.canadianbusiness.com/lists-and-rankings/best-jobs/2014-full-ranking-canada-100-best-jobs/

This listing shows expected jobs by title, median salary, 5 year wage growth, 5 year job growth and demand outlook.

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Where will the jobs be? (2)

July 12, 2016

Those who subscribe to a “lump of labour” view believe that there is only so much work to be done, and when, for example, machines substitute for what was previously done by humans there is nothing more, or something less, for workers of any age, sex or race to do. I and many others don’t believe this is the case, but there are serious questions about what displaced workers will do and, for example, whether they can be retrained for other jobs.

In thinking about this question, consider the following, in no particular order:

  1. In countries like Germany and Japan, the population is ageing and the concern is for a future workforce shortage. This explains Germany’s welcome for refugees and displaced persons from the Middle East and Africa. Japan so far is reluctant to dilute its native population with foreigners, and will reap the consequences if it fails to do so. As people are living longer, the present retirement age can be extended providing partial relief, but there is a limit.

 

  1. Unemployment due to the need to adapt to changing technology – the Schumpeterian case of creative destruction – that is the introduction of different ways to produce familiar as well as new goods and services, gives rise to the need for retraining. This is easier for some, say younger folk, than others, but is an option that almost always occurs in similar circumstances. How fast workers can adapt is an issue. For example, a change from manual work to engaging with digitized production processes may require more of a generational change than a simple retraining course. If the change is too slow or virtually impossible then other measures, preferably of a temporary nature, can be tried.

 

  1. Young people have the flexibility to aim for employment in areas where demand is growing in both low and high skilled occupations, and to take courses accordingly. It is pretty obvious that in higher income countries there is strong demand for service sector employees in food and other types of retail operations. The job vacancy signs are posted in store windows as well as in help wanted electronic and other billboards. No, they don’t pay well, frequently offering minimum wage but they exist. Some taking these jobs may decide to experiment themselves by starting their own businesses.

 

  1. There is an active market for caregivers for old people (like myself) and for children in rich and poor countries as well as for healthcare workers. Where available nationals won’t apply for these jobs, temporary or permanent foreign workers are often hired. The work is there. The locals don’t want to do the jobs. In general, employment is increasing in the service sector in middle and upper income countries. There is no shortage of work, often a shortage of the type of work people may be willing to do.

 

  1. The educational and training paths may be out of whack with available job opportunities. A higher percentage of the population in upper income countries now go to university than previously, but the available jobs may not need degree training. Often a rewarding career in the trades benefits from attending community colleges where skills required from emerging technologies can be acquired. Past emphasis on the three Rs may now need the addition of skills like computer programming and apprenticeship-type programs. (I learned the basics of Fortran programming in the 1960s, and whereas I never followed this up and could not earn a living at it, I know what is involved. It may now be a necessary and rewarding skill in many industries subject to the use of computers.)

 

  1. There is considerable research available that addresses the question of where future job opportunities lie. I will refer to these in a future posting.

 

None of the foregoing suggestions involve rocket science. They do suggest ways of looking at the future labour market and its required skills. They do indicate a willingness to be adaptable and engage in life-long learning, something that recent technology facilitates. In my view, there is no fear of a finite lump of labour syndrome.

 

Where will the jobs be?

July 11, 2016

Global affairs is a stew with many ingredients and seasonings.  The flavours vary in different parts of the world. As of summer 2016, they include a US election, the fallout from Brexit, war and terrorism in the Middle East and parts of Africa, a stuttering Chinese economy and politics in the South China Sea, tensions on Russia’s European borders and events in numerous other places. Keeping track is challenging, let alone trying to understand how they interact.

 

An analysis of international affairs used to be simpler or at least appear to be. Parts of the world were not as connected as they are today, largely as a result of falling communication and transportation costs. These have lead to changes in the way people move, where and how they travel, as well as how, and the frequency with which they talk to each other.

 

When I moved to Canada from the UK over 60 years ago, it took ten days to travel from London to Vancouver by train, boat and train. A long distance phone call was exorbitant, the $3.00 per minute in 1962 dollars would translate into over $21.00 in today’s dollars. You just did not call. Snail mail and telegrams were a cheaper substitute. Few today using the internet would know how a telegram was transmitted and its cost. One result is that information and events which seemed to be unconnected no longer are, meaning that analysis and forecasting of events are much more difficult….at least for me.

The future for jobs?

Consider the issue of jobs and employment. With the mechanization of many jobs, how will future generations be employed? This question is frequently posed to grandparents enjoying , at least at the moment, a comfortable retirement. The following is one way to think about it.

First, reflect on what has happened to employment and occupations since the 1900s. The level of unemployment (employment) has fluctuated, but except for the 1930s and a few shorter periods it has been around 5% or less. WW2 solved the unemployment crisis and brought women into the workforce for wartime, if not later peace-time, production. It provided an enormous fiscal stimulus, and the immediate postwar period lead to civilian spending which was depressed during the war. When I first studied economics, a big macro question was whether there would be a return to the depression years. It did not happen for what now appears to be obvious reasons, but didn’t at the time.

Second, technological change always brings employment impacts in terms of level and type of jobs. Around 1900, about 25% of the labor force was in agriculture, today it is less than 2% in North America, while farming output has grown enormously, and with it rising labour productivity. But this took place with the growth of jobs associated with mechanization, and the development of improved strains of meat and crops. In a sense, jobs in agriculture morphed into jobs in machinery, equipment, agriculture research labs and firms producing new and improved plants and animals.  These were not counted as farm workers but in an indirect sense they were.

 

Similar adjustments took place in other industries as technology peculiar to those industries took hold, none more so than recently with the introduction of computers, the internet and all that. Jobs in almost all industries except perhaps hairdressing and undertaking have been affected. As new technologies are introduced, some jobs become obsolete while others open up often requiring a different type of education and training.

 

One difference is that today’s technological tsunami may be having a faster and perhaps more devastating effect on jobs than did the previous agricultural one. It has translated understandably into a political backlash as seen in both the US (Trump, Sanders and the dislike/distrust of Clinton) and Europe with Brexit, and the rise of mainly right wing political parties seeking to distance their countries from immigration, the EU and its bureaucracy.

 

How will this all pan out? Only God, Allah, Buddah or Brigham Young probably knows. I don’t. My gut instinct is that over time economic adjustments will be made that are not too disastrous for those of us and our children, who at present enjoy a remarkably high standard of living, at least relative to a century or even half a century ago. What it will require is for many existing workers to be retrained, and for new entrants to the labour force to receive a different type of education/training.

What type of education/training?

In the last 50 years, the proportion of people attending university has risen markedly as many feel that a degree is necessary for lifetime success. The data show that those with a degree tend to have higher lifetime incomes, than those with only a high school diploma. But at the same time many successful entrepreneurs were university dropouts including Bill Gates from Harvard – later he received an honorary degree from the university. People with technical training can often earn six figure salaries. Granted these are a small proportion of the population and workforce, but they point to one road to employment opportunities.

In recent years, community colleges providing education and training in the trades are experiencing increased enrollment as young people, and older people who have lost their jobs, receive training suitable for today’s workforce. This is merely a continuation of the idea apprenticeships and that education is a life-long process and not just undertaken at the start of life. A combination of university courses and trade skills is one option, as is a mix of academic courses and work related activities including apprenticeships. All point to adjustments being made and the need for these to occur during a person’s working life.

 

More on what and where are the jobs of the future? A topic for a future posting.

 

Brexit and all that (2)

July 6, 2016

What would the reaction have been if the UK vote had been 52/48 in favour of staying in the EU? Almost half the UK population would still have wanted to leave and would have continued to lobby for such an outcome. The message seems to be that there is extensive dissatisfaction with the status quo, as there is in the US for different but related reasons. But the historical and geographical circumstances differ.

Think back to 1945 and the end of WW2. For at least the next 35 years there was a period of global prosperity with rising per capita income reasonably distributed in developed, and in an increasing number of developing countries, as well as in countries ravaged during the war. This postwar fiscal stimulus prevented a return to the dirty thirties.

Politically, the postwar period contained a number of regional wars, Algeria, Korea, Malaya and Vietnam being examples, while colonies gained independence in Africa and Asia. The Soviet and Chinese empires remained mired in their communist molds, each of which was broken but with differing outcomes. China has since experienced rapid economic growth with an economy promoting exports of manufactured goods, while Russia has depended on export earnings from energy and other natural resources. The politics of the two communist systems differ.

The next 35 years, say since 1980, saw major technological change especially  the introduction of computers and the internet affecting many industries such as communications, transportation and manufacturing as well as resource based industries. Around 2008 there was a global recession with the slowdown affecting countries, industries and occupations differently. While Gross Domestic Product grew in most countries, it did so unevenly,  in that some citizens  made a great deal of money, while many saw their real incomes either stagnate or shrink, leading to dissatisfaction and the general malaise found in both Europe and North America. Supporters of Trump and Sanders in the US, and those unhappy with the EU are a reflection of these events. Immigration and the crossborder flow of refugees and displaced persons are other factors affecting both areas in ways peculiar to their locations.

Brexit has understandably forced attention on conditions in Western Europe. Meanwhile the rest of the world has not stood still. Islamic terrorism in the Middle East and parts of Africa, Chinese naval actions in the South China Sea, Russian moves in eastern Europe, and the nuclear factor in countries like North Korea, Iran and Pakistan are also cause for concern. The list of political/economic factors could easily be lengthened, one of which is cyber-terrorism (for a future posing)..

A summary of these issues illustrates the context within which Brexit is taking place in a domestic and international setting. If the vote had been no, the context would have changed very little, with the same set of dissatisfactions remaining. For a fuller listing of these see the web report by Maudlin Economic, posting for July 2nd, 2016.

I have no idea what will happen. There are too many factors at play. It easier to forecast the result of a World Cup soccer game, a Wimbledon tennis match, the Tour de France, or even a chess game than it is to assess how world events will evolve.

In the UK, I will watch how the political parties and parts of the country respond, and how other European countries react to the British vote and what follows. It already seems that the EU Council of Ministers, if not the EU Commission made up of officials, recognize that something needs to be done. The fallout from the US November election is even more difficult to forecast.