Digital puts one in three jobs at risk
Pandora’s Box
The best thing the cave people did was leave the cave. Technology helped them take that step. Today the possibilities created by technology continue to be felt in every sphere of business and life. Its artefacts, from fire to forks to Facebook and machine learning algorithms, have catapulted humanity from Stone Age to phone age to drone age. We can now solve some of the world’s most intractable problems and finally make significant progress in reducing our usage of our planet’s capital for our living expenses, as economists encouraged us to do over 100 years ago. But technology’s ability to release humans from much physical drudgery is also the source of much fear and anxiety.
John Maynard Keynes predicted this day would come in his 1930 lecture “Economic possibilities for our
grandchildren”. He suggested then that mankind will solve its most pressing economic problem, one that we have been steadily solving since we walked this planet, namely ‘the struggle for subsistence’. Machines will help us produce enough for our needs. But we open Pandora’s box because, as Keynes argued then, solving the economic problem is coupled to a second problem, namely ‘technological unemployment’— ‘unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour’. We are producing more and more (products and services) with less and less need for intervention.
What options are open to us?
Job transition is not new. In the pursuit of higher productivity at lower cost options, jobs have for many years been shed. In recent times, many manufacturing and standard business process intensive jobs were outsourced to countries where labour was cheaper. Those jobs rarely made it back to home soil but at least labour in outsource recipient countries benefitted from the employment opportunities created there. Today, the same phenomenon occurs. But now, the search for labour arbitrage is no longer between physical geographies; today, jobs are lost to the digital world and will, in all probability, never to be done by humans again.
The loss of jobs creates an even bigger problem. Machines do not consume things. Machines do not buy things.
So, while machines can replace human work, they do not drive purchasing power and consumption or GDP as humans do. Humans work. Humans get paid. Humans spend. Humans consume. Society progresses. Humans don’t work. Don’t get paid, can’t spend or consume (much). Society regresses.
While the steady march of progress inevitably spells more and more machine augmentation, allowing humans to
use their time, energy and creativity differently, we are ill prepared for its consequences. Labour is still a major
economic growth driver. Jobs remain the primary mechanism of distributing income and providing humans with
access to the economy. This is especially true in emerging markets—like South Africa—where poverty remains a
problem, rates of unemployment are high and the social security blanket is thin.
JOBS AT RISK IN SOUTH AFRICA
South Africa has made good headway in terms of adopting digital, however, the growing maturity of its digital economy has yet to translate into significant growth, especially for labour.
While it scores well in terms of digital competitiveness compared to its emerging market peers (Figure 1) and its demographics—50 percent of the population is under 30 years old—are well suited to the demands of a digitally-driven economy (Figure 2), South Africa’s economy remains weak. Population growth has overtaken GDP growth (Figure 3). Labour and income growth are declining (Figure 4) while unemployment (now at 28 percent), and especially youth unemployment (at 36%), is high. Jobless youth make up 75 percent of the unemployed.
Figure 1: South Africa is ahead in terms of adopting digital
Figure 2: Almost 50 percent of the population is under 30 years old
Figure 3: Population growth has overtaken GDP growth
Figure 4: South Africa – household disposable income and unemployment rate
Until now, digital technologies have been deployed to work alongside people and automation has occurred
only in isolated cases. Now, as digital technologies advance, the threat of automation grows. It will eliminate
a broad swath of jobs across the economy, aggravating the risk of unemployment. And, as digital technologies become ever more sophisticated, more waves of job displacement will almost certainly occur. It is a distressing picture.
To quantify the size of the challenge, Accenture commissioned South Africa-specific research. The result: 35 percent of all jobs in South Africa are currently at risk of total automation— i.e. machines can perform 75 percent of the activities that make up these jobs. The threat is significantly higher in South Africa than in more advanced economies such as Germany (24 percent), and second only to Brazil (46 percent) in this study (Figure 5).
Fully understanding the risk
For the study, Accenture Research developed an econometric model using labour data from Statistics South
Africa (Stats SA)4 to gain insights beyond just the job categories at risk. To fully understand the risk, it identified
the share of job activities in each category that can be automated.
Human-like (analytical, leadership, social intelligence, creativity) and machine-like activities (routine work,
transactions, manual work) were allocated across professions and adjusted based on local South African statistics, including type of work, skills and tasks, the recent skills evolution in jobs, degree of work automation, work supply demographics and productive structure.
The results clearly show that occupations that allocate more time to human-like activities have a lower probability of automation, while workers involved in occupations such as production, office administration, farming, food preparation, construction, mining, transportation, installation and maintenance are at highest risk.
For South Africa, initial findings show that 35 percent of all jobs in South Africa are currently at risk of total automation. By 2025, this will reduce to 20 percent as workforces evolve with new digital demands across
occupations
Figure 5: Jobs with risk of automation by country
Which jobs are at risk?
Both white – and blue-collar jobs are at risk (Figure 6).
The more predictable and repetitive the activities that make up the task, the more likely it is to be replicated by machines … and automated. The jobs of clerks, cashiers, tellers, construction-, mining- and maintenance workers all fall into this category.
The more intensive the use of human-like skills to perform a task, the less likely it is to be automated. Jobs with less than 25 percent of risk of automation will comfortably ‘run with the machine’. Hard-to-automate jobs include tasks like influencing people, teaching people, programming, real-time discussions, advising people, negotiating
and cooperating with co-workers.
Figure 6: Top 10 jobs at risk in South Africa
Clearly, the threat that automation and the growing sophistication of digital technology (e.g., AI) poses to jobs in
South Africa will add considerable stress on an already pressured economy. But there are also answers and a significant incentive to act now. Digital—a growth multiplier Digital technologies will usher in a new economic era—they overcome the physical limitations of capital and labour, exposing new sources of value and growth, increasing efficiency and driving competitiveness. Without these technologies, companies will lose market share and be left behind, and economies will stagnate. The opportunity for South Africa is considerable.
Accenture Research shows that one major digital technology, artificial intelligence (AI), has the potential to boost labour productivity in countries by up to 40 percent by 2035 as innovative technologies enable people to make better use of their time. By embedding AI and making it a factor of production, this research indicates that South Africa could potentially double the size of its economy five years earlier.
To rise to this challenge, South Africa will need to recalibrate its economy and its workforce for digital, developing
an environment in which humans and machines work together to engage with customers, and create entirely new products, services and markets. This will drive demand and consumption within the economy, boosting growth.
The foundations are in place. With a strong digital economy in the making and the right demographics, South
Africa has the tools to stimulate economic growth and reduce the number of jobs at risk. But, to be effective, the key intervention— increasing the pace at which the workforce acquires the skills essential to maximise the benefits of human-machine collaboration—must start now.
The research indicates that at its current rate of learning, South Africa will shift to ‘running-with-the-machine’ activities (those that that require more human-like skills) slower than other developed countries. However, by reallocating skills and doubling the pace at which its workforce acquires relevant skills, South Africa can reshape work and activities such that the share of jobs at risk of being fully automated reduce from 35 percent (5.7 million jobs) to 14 percent (2.5 million jobs) by 2025 (Figure 5). This intervention equates to reducing the risk of automation for an additional one million jobs.
Figure 7: Doubling the pace of learning will reduce jobs at risk of automation in South Africa from 35 percent to 14 percent by 2015
INTRODUCING NEW SKILLS
Human beings have an amazing capacity to learn new skills and adapt to new environments. This is true not only in early life, but throughout our lives. As the nature of work evolves—i.e., becoming more digital and human, cooperative and collaborative, knowledge and taskbased, flexible and fluid—employees and entrepreneurs will need to adapt their mix of skills and knowledge to embrace new challenges and stay relevant.
In addition to a big data analysis of in-demand skill trends, a review of skill frameworks and a landscape
scan of 1,000 workforce development programmes, Accenture interviewed experts from a wide variety of fields, from neuroscience and corporate learning to education and workforce development. We then used these insights to help identify and categorise both the universal skill families and the underlying cognitive capabilities needed for inclusion in the digital economy. We call the resulting taxonomy ‘New Skills Now,’ and the six skills families that underpin it are: Learn to Earn, Build Tech Know-How, Apply We’Q, Create and Solve, Cultivate a Growth Mindset and Specialise for Work (Figure 8).
Figure 8: The New Skills Now Taxonomy, Accenture
RESPONSIVE, RESPONSIBLE AND RESPONSE-ABLED LEADERSHIP IS CRUCIAL
If our challenge is securing economic growth for South Africans through the provision of access to, and participation in the economy without compromisingglobal competitiveness and the productivity that comes from digital technologies, multi-stakeholder leadership and collaboration is our collective crisis.
To avoid any stakeholder feeling coerced into investing into longer-term shared economic growth while
potentially compromising short-term efficiency gains, a new model of co-operation is needed. Such a model will
involve multiple ecosystem stakeholders and will shift the current paradigm from doing well or doing good to doing well and doing good.
A clear collaborative multi-stakeholder approach is needed.
Government
Government needs to be at the forefront of creating opportunities for its citizens to access digital technologies
across areas such as infrastructure, connectivity, skills, incentives, policy frameworks and regulation. It must also set policy to regulate action across areas where the digital revolution is likely to have the most impact. Key areas will include eCommerce, cybersecurity, digital healthcare, the creation of a digital society (e.g., regulate more stringently the cost of data, which is in enabler), driving the acquisition of digital skills, and service provision.
South Africa talked about The Social Plan14 in the late nineties and early 2000s when retrenchments were rife.
Attempts to implement it were not very successful. Today an opportunity exists to revisit the concept of a Social
Plan and re-design it to take advantage of technology advances, as well as expand it to reach across more than one generation in a family or community.
Corporate South Africa
Large corporates have pivotal roles to play in attaining South Africa’s shared economic future. In addition to
preparing their organisations to take advantage of the benefits of digital technologies, businesses should also work at using technology to enhance growth beyond achieving efficiencies.
Corporates can allay fears of job losses by committing to:
- Creating job alternatives through reskilling initiatives
- Communicating transparently and honestly and engaging with employees and other stakeholders
- Taking all impacted parties along on the journey
Organised Labour
Organised labour needs to accept that digital technologies bring the potential for economic growth and global
competitiveness. The course of the digital revolution cannot be changed but it can be smartly managed.
The United Association of South Africa (UASA) talks about South Africa’s future workforce needing to align its skillset to keep pace with developments. Organised labour plays an important role in preparing the next generation of workers to contribute meaningfully to inclusive growth and economic transformation.
Institutions of Learning
Institutions of learning have to pivot too.
According to Edgar Morin, the French philosopher and sociologist15, we need new systems of learning for both what and how we learn across organisations, governments, non-governmental organisations and institutions of
research and education. Morin argues that the education of the future should be such that ‘we are better able to
grasp realities and problems which are ever more global, transversal, polydisciplinary and planetary’.
Prof. Tshilidzi Marwala, Vice-Chancellor and Principal of the University of Johannesburg talks about multidisciplinary education being the way to go in preparing for the workforce of the future. He states that we will need graduates who are innovative, internationally oriented and have strong problem solving capabilities. Scientists need to have soft skills and social science and humanities students will need to have technical skills.
Industry Associations
Industry associations need to lead the discussions, keep abreast of research, do
research of their own and continue to drive engagement and conversation on
matters of change.
CONCLUSION
Advances in technology have changed the nature of work since time immemorial. In the times of the first Industrial Revolution, things got worse before they got better. In Britain, the Luddites, a group of skilled artisans (textile workers and weavers) destroyed machinery in textile mills as a form of protest against machines taking their jobs. Out of that era came secondary and tertiary education, the minimum wage, bans on child labour and major public health advances, from vaccinations to sanitation. It was both the best of times and the worst of times as Dickens wrote. It’s time to change again.
The adjustments we require in this era will be equally large and will additionally require both economic focus and political attention. We’ve seen the harsh beginnings of this in the United States, with Brexit in Europe, with the ‘Arab Spring’ and, in South Africa, with Marikana and the “fees must fall” protests. Anger about inequality and social and economic exclusion is brewing under the surface.
While Luddites still live among us, we have to resolve the jobs debate in a way that does not impact our competitiveness. Keeping machines at bay would, as University of Oxford professor Luciano Floridi indicates, “damage technological innovation and fail to improve the human condition”.
This period of ‘maladjustment’, where new uses for labour are still somewhat illusory, is temporary.There are many questions. Will there be enough jobs to fill our time? Will working for money be replaced by working for meaning? In the future, will jobs be fewer and work weeks shorter, and will jobs be shared? The answers are already apparent. We will find new jobs. We will not only do things differently, we will do different things. New industries will emerge. But the future trajectory of countries will, by and large, be determined by how they ensure economic access for all to build a consumer class with the purchasing power to spend on the goods and services that businesses produce with the aid of machines.