By Sascha O'Sullivan
Scanning the candidates vying to become the next prime minister, the most immediate question springing to mind is: who on Earth would want that job? Soaring inflation, snarled supply chains, labour shortages and some of the detrimental effects of Brexit are plaguing our country. Whichever way you look at it, the UK finds itself in a hole, and it’s difficult to see how it can climb out.
It’s not just the economy that’s shrinking – so is its population. By 2025 the UK will become dependent on migration to bolster its declining working-age population, according to the Office for National Statistics. Britain isn’t the only country facing a demographic conundrum. Most of the developed world is looking at long-term population decline – even China has issues.
Declining populations will lead to higher inflation and higher nominal interest rates, according to Professor Charles Goodhart, author of “The Great Demographic Reversal”. Either we accept high inflation as the norm, or we look for a miracle. We don’t have to look too far back into history to see that miracles can happen: just ask the Germans about the aftermath of the Second World War.
The so-called “miracle on the Rhine” – in German, wirtschaftswunder – saw a defeated and almost totally destroyed nation rise from the ashes to reclaim its crown as one of the most productive and innovative economies. The Germans spent big on robotics in the 70s and 80s, resulting in a reputation for manufacturing excellence at a time when the UK – once the workshop of the world – was crippled by unionisation and losing millions of days each year to industrial action.
It’s tempting then, to see automation as a cure for our current woes – not just in manufacturing but across a swathe of job roles and industries, from logistics to finance departments. But this overly simplistic view overlooks much of the actual value that automation can generate.
When businesses view automating job roles simply as a way to get themselves out of a bind, they may achieve short-term goals such as reducing day-to-day costs or bringing down employee headcount.
But doing the same things faster and cheaper is little more than a means of treading water.
It misses any of the genuinely transformational benefits of automation and leaves devalued workers paranoid about being replaced by a robot. Added to this, of course, is the fact that there are some roles that simply can’t be automated, including many customer services positions.
Germany’s post-war industrial miracle was never really about replacing people with machines. It was about ensuring enough people could focus on delivering the right kind of work. Manufacturing prowess was built on a strategic set of considerations, ranging from the formal guest worker programme that brought many people to Germany to the principle of giving workers better tools to do a lot of the grunt work and better training to deliver a more diverse and higher value output.
These same principles are true today and shouldn’t be limited to the factory floor. From logistics centres to finance departments, technology can be a catalyst for an economic transformation that results in more of the high-value, high-reward work people actually want to do.
As the UK faces the prospect of doing more with less, automation must take its place alongside other strategic initiatives aimed at improving the dynamism and resilience of our economy, workforce and business ecosystem. These include the creation of a coherent immigration policy designed to fill specific talent shortages and new trading relationships, especially with countries and regions with a rapidly growing middle class.
Above all, a strategy that includes harnessing new technologies must go together with a renewed focus on making work more meaningful, valuable, and rewarding.
If such technologies really are an “end to drudgery” then we must ensure that those entering the workforce have both the opportunity and the skills to benefit from this. Revisiting the UK’s much touted, but highly flawed apprenticeship system should be high on the list for the next inhabitant of Number 10.
Perhaps the real miracle was that the world enjoyed such a long, uninterrupted period of cheap and plentiful labour. Adjusting to new economic realities will be painful, but simply replacing these lost workers with machines would be a missed opportunity. The real value of automation is far more profound, by providing the platform for strategic transformation, and reimagining the nature and value of work in the 21st century.
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