As new, artificially intelligent machines emerge in the next decade, millions of workers could lose their jobs or see their working lives altered radically. And, unlike previous waves of automation, it won't only be manual workers who are affected, like factory workers replaced on the line by mechanized robots. It will be relatively high-skilled employees as well.
So says a new report from UBS, the Swiss financial group, which says a "fourth industrial revolution" is coming. "Extreme" automation and connectivity, it says, could automate everything from insurance claims to legal services, forcing many of us to retrain and adapt to a new hyper-computerized reality.
"The advent of 'cobots,' or collaborative robots, which are able to 'move around' and interact without the need for fixed positions, have the potential to work at a higher rate of production relative to that of lower skilled human workers. The greatest disruption, however, could be experienced by workers who have so far felt immune to robotic competition, namely those in middle skill professions," the report says.
"Minor claims in insurance could be processed without human intervention, most incoming customer queries answered automatically, and many customer calls deflected. In finance, 'roboadvisors' are already available in the market. In the legal world, computers can quickly go through millions of emails and dramatically cut the cost of investigations. And if fewer people are employed in a sector, fewer managers will likely be needed in that sector."
The first industrial revolution occurred in the late-1700s, when the introduction of steam power allowed us to build bridges and run railroads. The advent of electrical power in the 1870s enabled mass production for the first time, before everyday IT and electronics brought another revolution, which started in the 1950s. The fourth revolution, says UBS, will be characterized by artificial intelligence and machines that are able to analyze data for themselves, make complex decisions and adapt to their environment.
UBS doesn't expect an aggregate increase in global unemployment. It says automation will eliminate jobs but create new ones in "hitherto unimagined professions" (it doesn't say what these industries might be, or whether these jobs will pay benefits or offer vacation time). It does expect a further increase in income inequality, as high-skill workers and owners of the new technologies increase their relative advantages over low-skilled workers.
"Near-term polarization in the labor force and greater income inequality imply larger gains for those at the top of the income, skills and wealth spectrums," the report says. "These individuals are likely to be best placed from a skills perspective to harness extreme automation and connectivity; they typically already have high savings rates and will benefit from holding more of the assets whose value will be boosted by the Fourth Industrial Revolution."
UBS also expects more global trade to become "virtual" rather than physical, and for the length of global supply chains to be reduced; that the threat of cyberattacks will increase (notably in the U.S., which remains a "prestige target"); and that some countries will benefit more from the revolution than others. It also expects developing countries still reliant on agriculture and basic manufacturing to lose out to developed countries in Europe and North America.
"'Flexibility' will be key to success in the Fourth Industrial Revolution—economies with the most flexible labor markets, educational systems, infrastructure, and legal systems are likely to be relative beneficiaries," the report says. "[Emerging market] economies are at risk of squandering their demographic prime, if they are yet to move from low income to middle income. Many of these economies have still not dealt with the challenge of previous industrial revolutions."
The report makes a lot of sense—but it does imply a certain passivity in the face of technological change. It says labor markets have to become more flexible and mobile than ever, even though many labor markets are quite flexible and mobile already—much to the detriment of workers. It says middle classes should resist the urge to recreate "medieval guilds with arcane qualifications" or to "throw up barriers" to change, but without explaining how supporting change will help them. It doesn't say how workers can actually adapt, short of gaining unnamed new skills, or what might be done to reduce inequality gaps, prevent polarization, and heal social unrest. Presumably the answers to those questions are coming in another report.