Workaholics of the world, be warned. In the future you might need to find a hobby (or two).
Twice I’ve been on Sunday Brunch. Twice Tim Lovejoy has asked me the same question: “Will there be enough jobs for everyone in the future?”
My answers have been fairly flippant: I don’t think there would be enough work to fill five days for most people. The more I think about this though, the more I think it has to be true. I haven’t had the resource to look at it in depth yet, but I was inspired to have a first stab at tackling the question properly by the current debate around raising the minimum wage.
So just for you Tim, here’s my current thinking (to be refined).
The first thing to point out when trying to answer this question is that it isn’t a future problem: there aren’t enough jobs today. According to the latest figures from the Office for National Statistics there are 2.39 million, unemployed but economically active (i.e. available to work) people over 16 in the UK. Contrast this with the number of available vacancies — 562,000 — and you see that already we have nowhere near enough jobs available for everyone to be able to work.
The situation is actually more complex than this, as you might expect: a further 1.46 million people who are technically employed are only in part-time jobs when really they want to work full time. It’s hard to estimate how many extra jobs/job hours would be needed to create a situation of full employment. But if you take each part-time job as being 50% of the hours of full time (this feel generous but I haven’t found any good data to work from) then we would need more than 3 million new jobs to fully employ everyone.
We are slowly crawling our way out of recession of course, which doesn’t help the vacancy numbers. But it’s important to point out that the unemployment rate has rarely dipped under 5% in the last 30 years and for much of that time it has been significantly higher. You need a certain number of people looking for work so that you can fill vacancies and companies can grow (though clearly you don’t want anyone to be unemployed in the long term).
When looking to the future we tend to start by looking at the pressure points in a market or around a particular issue. There are plenty of pressure points affecting unemployment.
First of all, we are simply living longer, healthier lives. More of us remain available to work, later in our lives than ever before. And many of us, certainly in senior positions, may have no problem carrying on: if the work is mentally stimulating rather than physically challenging, then why not continue working?
The state pension age has already been bumped once, it is unlikely to remain where it is with the pressures the ageing population places on government spending on health and welfare. Remember that over half of the welfare bill goes on pensioners already. That’s before you take into account the costs of the NHS and nursing homes.
As a nation we need to keep people active — both physically and economically — for longer.
Our lengthening lives are the primary contributor to a growing global population: there will be 9bn of us by the end of the century based on the median estimates from the UN. This increases the demand for products and services, but the number of workers required to deliver each product or service is declining. On a global scale, whether or not there will be enough jobs between now and peak population is in some ways just a question of which curve is steeper.
Looking more locally you have to deal with the thorny issue of immigration. Within the EU there’s good evidence that migration tends to be temporary — more than half of the number who arrived between 2004 and 2009 went home within the same period, with more leaving than arriving in 2009 during the downturn (figures from the ONS). Understandably people come if there are jobs and go away again if the jobs go away. There’s no doubting this creates competition for positions, but bear in mind the people leaving the UK to find jobs or just live elsewhere. Net migration is under 200,000 people per year and the government wants to get it down under 100,000.
Finally there’s education. Much as I loved my time at university, I don’t believe the traditional 3–4 year degree has much of a future. The fast pace of the jobs and skills market means that for all the efforts of the universities, a degree no longer confers greatly increased employability. Many employers still use degree status and score as a handy filter for whittling down the number of applications to a manageable shortlist, but more and more employers I talk to are taking apprentices on at 18 or even 16 and shaping their skills themselves rather than leaving it to a university. Once you take into account the increasing cost of a degree, and the reduced chance of high earnings, going to university will lose its appeal for many school leavers who might instead choose to study at points throughout their career as required.
That’s potentially hundreds of thousands more 18–21 year olds who might be on the job market in a few years’ time.
In short then, it seems likely there will be more job seekers in the future. But what about the number of jobs? This seems to be the crux of Tim’s question.
The history of human technology is a history of our ability to build machines that do things better than we can. There remain many things today that people can do better or cheaper, or that remain uniquely human skills. But this list is shrinking. Automation has come to almost every industry: factories use robots for repetitive tasks, customer service happens online and via interactive telephone systems, banks have replaced staff with kiosks.
In the developed world, people are expensive and risky when weighed against machines.
In the developing world, people are sadly less expensive and risks are more accepted: around the world humans work in appalling conditions for low wages to collect raw materials and produce goods. For a while, this lower cost and higher risk threshold will keep people in jobs. But it can only last so long: ultimately there will be cheaper and more efficient — as well as safer — ways to do many jobs. As livings standards improve and wages rise, more and more jobs will be automated.
The jobs will also move — or at least the machines will. The rise of on-demand manufacturing could seriously change the economics of many consumer goods, making it cheaper to produce a t-shirt to exact size and design specifications from raw materials, on the high street in Manchester, rather than ship many variations of the finished item half-way across the world.
This trend will be supported by the increasing cost of raw materials and energy: why risk wasting some of your decreasing margin on over-production when instead you can have the money in the bank before you make the goods? Any surplus is just a raw material that can easily be traded at market price.
Automation isn’t limited to the manufacturing industry. Knowledge jobs can and are being automated. Just look at the change in accounting software over the last ten years: as a small business or self-employed person it has become very easy to run your own accounts without recourse to an accountant. I still use one because I value their advice, because I hate filling out forms and because the prospect of screwing up with HMRC terrifies me, but many companies I know do not. Legal, HR and other professional jobs will be diminished if not replaced completely with automation. What’s the hottest topic in marketing right now? Automation. It is coming to every sector.
The Three Day Week
So in short Tim, no there won’t be enough jobs to go around. The issue is one of supply, demand and simple economics. The increasing population of economically active people will increase the demand for products and services. But it will also increase the number of available workers at a time when the number of workers required to deliver each product or service is falling.
Demand for workers is falling because the supply side of work is being supplemented by increasing automation — essentially robots, be they software or hardware. Automation will happen faster than demand increases due to population growth, and by the end of the century population will start to fall, expanding the gap between the number of jobs and the number of workers.
Which leads to a difficult question: what are we all going to do? But that’s a post for another day.