WHILE productivity figures are pointing in the right direction, it is much too early for the Chancellor, Philip Hammond, to be declaring that he has seen the ‘green shoots’ of recovery in the UK’s post-crash productivity rates.
The American economist, Paul Krugman, was on the money when, in an echo of Keynes, he said “productivity isn’t everything, but, in the long run, it is almost everything”. Unless the UK meets the productivity challenge, then any idea of redressing the widening gap between the rich and the poor is whistling in the wind. But how to improve productivity?
In a slew of reports and strategies published late last year, including the much vaunted Industrial Strategy, something called ‘industrial digitalisation’ featured large.
Behind that innocuous-sounding rhetoric lurks a threatening spectre, however: the spectre of robots taking jobs. Or that, at least, is how the tabloids see the prospect facing us as the Fourth Industrial Revolution gathers pace.
Jobs certainly will be lost. But jobs are lost every day. And new ones are created. The challenge for policy-makers is to ensure this process of ‘creative destruction’ not only raises productivity levels, but does so in a way that shares the wealth it generates fairly.
And this is what both the IPPR and the IFS understand. The latter’s paper on how increases in the minimum wage could lead to job losses through automation, and the former’s analysis of robotics and increased inequality are valuable additions to a much needed debate.
What was fascinating about the IPPR’s Managing Automation report was the discrepancy in the headlines that greeted its publication: many warned that robots would kill jobs; others that the poor would get poorer. But some, perhaps those who took the time to read the report rather than the Twitter feeds, saw a more subtle document. The IPPR is clear that robotics and automation will “produce significant productivity gains”. Jobs, it says, “will be reallocated rather than eliminated, economic output increased, and new sources of wealth created”. This is my experience.
Look at the manufacturing companies who have invested heavily in automation. Companies such as BMW Mini Oxford and Jaguar Land Rover have shown vast increases in employment for the UK. People are no longer welding cars together, because it’s dirty and repetitive, the jobs have merely changed to carry out other roles such as designing of manufacturing systems, delivery of the parts and fitting of the more complex assemblies.
The companies that I work with who have embraced automation are the ones winning more orders and increasing not only their turnover, but also their workforce. They have more cash to buy newer machines which are quicker and have more flexibility. Think of it like a mobile phone. You continually invest in this technology because it has more features and makes your life easier – it’s no different to innovative manufacturing technology.
Shortly before the White Paper was published, the Government received a document called the Made Smarter review. Its chief architect is Juergen Maier, the CEO of Siemens UK, whose German-based parent company is Europe’s largest industrial manufacturer.
He brought together a formidable team of engineering, digital and manufacturing talent to devise a cure for the UK’s productivity malaise. If British businesses adopted digitised technology including automation, he argued, the UK manufacturing sector alone would grow by £455bn in just 10 years. But to do that requires an Industrial Strategy with serious new money behind and the Treasury – who have long held against the idea of any such strategy – saw in Made Smarter a real threat to their control of the nation’s economic destiny.
All is not lost. A body of opinion is growing that UK companies need to become much more confident, early adopters of digital solutions. If we don’t grasp this opportunity – as the US, Germany and Japan are doing – British jobs will certainly be lost. And it is the least skilled who will be out of the door first. That is the flip-side to missing the ‘once in a generation opportunity’ Juergen Maier identified. We can seize that opportunity but it needs two ingredients: leadership and skills. Both of which, sadly, are short supply.
The IPPR and the IFS, in their own way, are showing leadership. They recognise that digitalisation will happen – rather like globalisation – whether we like it or not. But we need a shift in education policy towards re-training those in jobs at risk of displacement and the creation of new, practical training courses for people to install and maintain robotic systems. There should be funding incentives for companies to facilitate automation investments and subsidies for re-allocation of staff to different roles and sectors.
A new approach to education, training and skills is the only way of avoiding the creation of a second Generation X – a mass of people who feel left behind by the Fourth Industrial Revolution.
What we need is the leadership and skills to make sure that it works for the many and not the few. Now that is a grand challenge.
Ben Morgan is Head of the Integrated Manufacturing Group at Rotherham’s AMRC Factory 2050, part of the University of Sheffield.