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Automation may not lead to job loss, but it is likely to depress wages and lead to a wider gap between lower and middle earners and senior pay, according to a report from Barclays Bank PLC.
The report, Robots at the gate: Humans and technology at work, explores the ways technology is fundamentally re-shaping the nature of work and the implications of this re-shaping process accelerating in coming decades.
It argues that robotics and Artificial Intelligence do not mean a jobless future, but could mean wage disinflation, which will likely continue in the years or even decades to come. It states that wages have been suppressed since the turn of the millennium in every major economy, despite an increase in employment. “For the first several years or decades, even the most path-breaking technologies end up automating specific tasks within a job, not the job itself. In doing so, technology frequently ends up lowering the skillset needed to do a job, in turn expanding the pool of potential workers, which then acts as a drag on wage growth,” says the report.
It concludes that the main impact initially will be soft automation, where only parts of a job are automated and that new technologies do not necessarily lead to job losses. It says automation often lowers costs to produce goods and services, which in turn increases demand for them, resulting in new job growth. It adds that it is also common for technological advancements to create entirely new related industries and professions.
The report also says automation may not lead to any increase in productivity in the first year. It states: “It can take years or even decades for an economy to figure out how to best use a new technology. Eventually, economies of scale are reached, consumer behaviour adapts, companies refine their business models and productivity growth finally kicks in.”
“Technological acceleration has sparked both apprehension and intrigue in terms of its impact on the future of work. Much of the impact of technology in an economy depends not just on what is technically feasible, but also on how human attitudes evolve,” said Ajay Rajadhyaksha, Head of Macro Research at Barclays. “Ultimately, society has always found a way to absorb the positive effects of technological change while responding to the challenges such changes pose; that is likely to be true in the future as well.”