Technology has not been the swift ‘job destroying tsunami’ many predicted, and more of it will be needed to raise pay and productivity for everyone

Fears about robots taking people’s jobs are overplayed, as their negative impacts on some people’s pay and jobs have been offset by gains elsewhere, and the real fear to overcome should be Britain’s lack of productivity-enhancing robots, software, AI and other technologies, according to new Resolution Foundation and LSE research published today (Thursday).

Adopt, adapt and improve – the 31^st report for The Economy 2030 Inquiry, a collaboration with the LSE, funded by the Nuffield Foundation – examines how technological change over recent decades has led to changes in the labour market and productivity growth.

Fears about the spread of robots and wider automation driving a job destroying tsunami dominated economic policy debates in the 2010s, sparked in part by studies such as a seminal 2013 report by researchers Sebastian Frey and Michael Osborne which warned that over one-in-three (35 per cent) UK jobs were at risk of computerisation over the next 20 years. Occupations identified as being at higher risk of automation included car washers, farm workers and waiters.

But with the UK now a decade into this forecast, such fears look wide of the mark. Since 2013, the overall working age employment rate rose every year until the pandemic, reaching a high of 76.3 per cent in early 2020.

Furthermore, some jobs predicted to be highly automatable actually saw significant employment growth between 2013-19, with employment for car washers and kitchen assistants growing by 38 per cent and 18 per cent respectively over this period.

However, the report finds that over longer time periods those exposed to some technologies have seen slower wage and employment growth, compared to those who are less exposed. On average over the last 40 years, the jobs most highly exposed to robotization have experienced wage growth 10 percentage points lower than jobs with low exposure, and have seen employment fall (by roughly 50 per cent on average), while jobs with the lowest exposure have seen employment grow by a similar amount.

Jobs highly exposed to robots tend to be lower paid and involve routine tasks, while the workers doing them are more likely to hold low qualifications and have fewer transferable skills. The report notes that this poses challenges if they need to move into new sectors as their jobs are displaced.

However, it is middle and higher paying jobs that are more exposed to other forms of automation such as software and AI, and here there are limited effects of these technologies on pay and employment growth. While software has restricted employment growth in middle-paid jobs, the link between software uptake and wage growth is less clear, and the report authors note that it’s too early to assess the effects of AI on the labour market.

While increased automation does present risks, it also presents opportunities for growth and rising living standards. Industries with higher rates of robot adoption, such as the automotive sector, have seen higher productivity gains than those with lower rates, such as metal production. Between 1995 and 2019, an industry with one additional robot per thousand workers experienced 3 per cent faster productivity growth on average.

Yet while there is clear link between robot adoption and higher productivity, Britain has yet to take up this opportunity for growth. Although robot density in the UK – the number of robots per thousand workers – has more than doubled from 0.3 in 1993 to 0.66 in 2019, this is significantly lower than its European counterparts. For example, Spain had a similar robot density to the UK in 1993 – 0.31 – but by 2019 had nearly ten times that amount (3.07).

While industry and policy experts must remain vigilant to the challenges higher automation presents, the authors say that the most pressing problems facing the UK economy are not too much automation, but low investment and low productivity growth.

Rui Costa, Research Economist at the London School of Economics, said:

“Despite fears of technology driving a job destroying tsunami, the UK employment rate has remained high over the past twenty years, reaching a peak just before the pandemic. Several jobs predicted to be at high risk of automation – such as car washers and kitchen assistants – have actually seen high employment growth in recent years.

“Over longer time periods jobs that are most exposed to being replaced by robots have seen lower employment and wage growth than less exposed jobs, which is a concern when these workers tend to have lower qualifications and fewer transferable skills.

“Incorporating new technologies in the UK economy can bring about significant productivity gains, but ensuring that the benefits of these gains are more fairly distributed will be critical.”

Nye Cominetti, Senior Economist at the Resolution Foundation, said:

“The last decade saw economic policy debates dominated by worries about the impact of robots and machinery on people’s pay and jobs. But these fears are overblown, as were many of the predictions they were driven by.

“Britain’s actual economic problem is low productivity feeding into weak wage growth. Adoption of existing and new technology is more likely to be the solution to this problem, rather than the cause of it.”