Let’s clear something up. Technology does remove more jobs than it replaces – directly. It always has. But technology has always more than offset this indirectly, with previously unimaginable jobs being created in greater number than those removed. We can prove this in retrospect, but identifying what the new jobs will be in advance is very difficult to do. For example, in 2007 there were no jobs in the US relating to smartphone apps. Today there are nearly half a million. Yet futurists, academics, Guardian journalists and even the Bank of England continue to predict doom and gloom. In a world of automation, what will our children do for a living?
There are many jobs from the past which we seem to have collectively forgotten existed. Bowling pin setters are a great example (they manually re-set the pins in the ten pin bowling alleys). So why do futurists think they can predict the jobs of the future when we can’t even remember the jobs of the past?
Job losses are always a worry to economists, politicians and financial markets and automation appears to be a legitimate threat. As such, we are often asked if automation is sustainable? Our answer is yes. Increasing productivity is necessary to drive economic growth and this in turn indirectly creates the unimaginable jobs of the future. Automation increases worker safety, saves lives and reduces waste too. As an analogy, the closing of coal mines had a terrible social cost attached in the short term, but in the long-term it could be argued these jobs were replaced with call centres, which didn’t exist at the time. Extending this further, the call centre worker has much less risk to his or her short and long-term health and produces a good that has a much smaller carbon footprint.
“So is automation sustainable? Yes. Increasing productivity is necessary to drive economic growth and indirectly create the (unimaginable) jobs of the future. Automation also increases worker safety, saves lives and reduces waste too. Simplistically, it is the call centre worker versus the coal miner.”
As investors we have noticed that companies have repeatedly cited automation as the focus of their capital spending. This is true across a range of industries and is often the result of competitive pressures to keep up with industry leaders and disruptive new entrants. The return-on-investment from capital expenditure on automation is increasing as costs fall via scale and technology improves. This is good news for many of the stocks in our global sustainable equity strategy, which benefit from automation and are identified below.
So whilst automation will inevitably replace some workers permanently, we expect that more new jobs will indirectly be created in their place. We just don’t know what they are yet.