AI and the Digitisation of Employment – part 1

What Could AI Do?

Modern information technology and the daily use of the Internet have strongly influenced the world of work in the 21st century. Intelligent algorithms simplify everyday tasks, and it is impossible to imagine how most steps of a procedure could be managed without them. Thus, the question arises as to what the future world of work will look like and how long it will take for this to happen.

Even if intelligent systems and algorithms played an increasingly central role in the new world of work, no jobs would be lost abruptly as a consequence of digitalisation. Instead, a gradual transition will take place, which has in fact already started, and differs from industry to industry and from company to company.

Significant data analyses and intelligent algorithms are also increasingly replacing or supporting workers in the service sector. In the industrial sectors, automation and the use of production robots could lead to considerable savings regarding the cost of labour and can release workers from hard and dangerous, repetitive and monotonous work.

Robots and intelligent algorithms will not have sick or maternity leave, or participate in industrial actions, and are not entitled to annual leave; therefore, for many companies, it is worthwhile investing in robots and intelligent software. An autonomous system does not depend on external factors and works reliably and continuously; it can also work in danger zones and overnight. It’s therefore probable that we’ll see more advances being made within the traditional ‘heavy’ industries first, while other industries will gradually follow suit.

Keith Beekmeyer, of Newpoint Capital Ltd, says “While we are interested in the advances of AI and digitisation, Newpoint Capital is very much a company that considers people as its core. We also believe the assimilation of the latest technology in our work process would equip our staff in helping them to achieve the very best in their field.”

Certainly those AI predictive models already exist and are being refined by advanced technology companies at the time of writing. Other areas that AI is beginning to show include:

  • Deep learning – machine learning based on a set of algorithms that attempt to model high-level abstractions in data.
  • Gig economy – independent contractors looking for individual tasks that companies advertise on an online platform.
  • Robotisation – production robots replacing employees because of advanced technology (they work more precisely than humans, eg, three-dimensional printers).
  • Autonomous driving – vehicles have the power for self-governance using sensors and navigation without human input. Taxi and truck drivers are no longer necessary. The same applies to stock managers and postal carriers (eg, delivery drones).
  • Dematerialisation – thanks to automatic data recording and data processing, traditional office activities are no longer necessary (eg, accounting or lawyer assistants).

Of course not all industries are ‘at risk’ of being developed further along the AI track, as not all industries are suited – certainly by our current way of thinking, that is. In fact, according to recent studies, about 47% of total US employment is at risk, while around 70% of total employment in Thailand or India is at risk. Low-wage countries such as China, India and Bangladesh are still benefiting from their surplus of low-skilled workers, and western companies have outsourced their production and some services to these countries. In most developing countries, the implementation of (partly) autonomous systems is unlikely to be worthwhile at present for economic reasons, since the labour costs are not much higher than the costs for acquisition, development and maintenance of the necessary equipment. On the other hand, companies also located in low-wage countries must invest in relevant IT systems in order to improve their productivity and attractiveness and remain competitive in the long run.

Eventually, however, these companies will decide to produce in their countries of origin using production robots and only a few workers. In this case, the surplus of low-skilled workers will turn into a curse for developing countries. The question is how to integrate a large number of unskilled production workers into a structurally difficult labour market that depends on the demand of foreign countries. Another problem is that there are no comparable social security systems in place in most developing countries. Possible mass unemployment could lead to humanitarian catastrophes and a wave of migration.

Due to the lack of financial investments in many developing countries, digitalisation will initially be strongly focused on developed countries and Southeast Asia. For example, more than 80% of the robots sold each year are used in Japan, South Korea, the United States and Germany.

Does the United Kingdom need to join in with this new industrial revolution so that it doesn’t get left behind? Undoubtedly, and it’s going to be fascinating to watch the industrial employment landscape change over the coming few years.