Automation won't lead to 'doomsday' scenario - survey

A visitor looks at a robotic manufacturing arm from Chinese robot maker Han's Robots at the World Robot Conference in Beijing. Photo / AP

Survey respondents don't believe that automation will lead to a 'doomsday' scenario.

The conventional wisdom among much of the commercial commentariat has become that automation will destroy a great number of the economy's jobs in the coming years.

Yet, 44 per cent of New Zealand CEO respondents to the 2018 Mood of the Boardroom survey say the adoption of technologies such as automation and artificial intelligence will result in no change in their own staffing levels over the coming three years.

A further 15 per cent actually expect an increase in staffing levels within their business. This compares to one third that expect a decrease in staff numbers, with the remaining 9 per cent unsure.

This rebuke of the doomsday scenarios could be driven by a number of factors.

A number of executives intend to utilise emerging technologies to improve customer experience rather than slash costs.

"We will try and multi-skill our people who may be displaced, to work in teams to develop new ways to work with customers and improve the 'ease of doing business' rather than processing the spreadsheets," says Peter Reidy, CEO of KiwiRail.

A banking chief executive echoes these sentiments: "It will allow staff to focus more on value-added client-based servicing."

"The lift in productivity will lead to increased throughput with the same number of employees," says a tourism CEO.

Other chief executives suggest the focus should be on skill levels as opposed to the number of workers required. "The total number may not change," says an agribusiness executive. "But the skill set and type of employee will change significantly towards more digital and IS capabilities."

"The mix is expected to change and the skill base is expected to improve," says Thomas Pippos, chief executive at Deloitte.

The other reason could be the timeframe: a 2013 Oxford University report found "47 per cent of total US employment is in the high-risk category" when it comes to susceptibility to technological development; but the timeframe was "over the next decade or two", rather than the next three years.

More recent research suggests the future of work is a complex, multi-dimensional story for an economy such as New Zealand's and that adaptation rather than displacement will be the story for many jobs.

An OECD study in March this year found around 14 per cent of jobs in OECD countries are highly automatable (i.e. have a probability of automation of over 70 per cent). And though almost half of jobs are likely to be significantly affected by automation, the degree of risk varies from job to job.

"Thirty two per cent of jobs have a risk of between 50 and 70 per cent pointing to the possibility of significant change in the way these jobs are carried out as a result of automation," wrote the authors, Ljubica Nedelkoska and Glenda Quintini.

"A significant share of tasks, but not all, could be automated, changing the skill requirements for these jobs."

However, the median New Zealand worker is actually the least likely to have their job affected by automation in the OECD, at 39 per cent. This compares with 42 per cent likelihood for the median worker in the UK and 54 per cent in Germany.

One theory as to what drives New Zealand's relative insulation from these forces is that "New Zealand, more than other OECD countries, experienced a sharp rise in occupations that specialise in cognitive jobs: professionals since the early 1990s and managerial occupations since 2010."

Nevertheless, the numbers suggest no country can afford to ignore the impacts of emerging technologies, and that education is a key driver of which jobs will be automated.

"Educational attainment shows a very clear pattern in relation to automatability: a higher educational attainment translates into a lower risk of automation," wrote Nedelkoska and Quintini.

This sentiment is shared by New Zealand's business leaders.

"The future of work is as much about diversity of mindsets as it is to do with technology, the market, and social changes," says Reidy.

"Our future way of working will require a diversity of experience, knowledge, perspectives, and solutions. Government will need to support younger people to gain key skills using learning technologies. This will require a change from classroom processes, towards innovative education such as e-learning and skill clusters amongst schools and communities."

Mood of the Boardroom respondents were asked whose responsibility it is to plan for the impact of transformative change driven by technology: government, business, employees themselves, or all three? Perhaps unsurprisingly, an overwhelming majority (89 per cent) argued all three.

"Detailed long-term plans that extend beyond human capital (education) and ensuring policy settings promote growth, are likely to be futile," argues Roger Partridge, chair of the NZ Initiative. "This means the government should focus on (1) ensuring the education system is fit for purpose and (2) markets are able to operate efficiently and flexibly."

Transpower has been working with Massey University for the past five years to create robots that will be based at remote substations. Photo / Supplied

The future of work was a major focus of Finance Minister Grant Robertson in advance of last year's election. Robertson chaired a Labour Party commission on the future of work while in opposition, and proposed a number of initiatives as part of the prescription.

These included free tertiary education, piloting a universal basic income in a single town or region, and mandatory training for those who lose a job to help them develop new skills.

Though portions of this agenda are being enacted in policy, businesses are busying themselves with their own initiatives to future proof their workforces.

Three key themes emerge on this topic: increased training; agile and flexible ways of working; and a focus on wellness, mental health and resilience.

"100 per cent flexible working conditions, devolving more responsibility to individuals," says Sam Stubbs, managing director of Simplicity.

Katie Noble, managing director of Allied Medical, says her company has adopted "lean" operating practices to prepare for a dynamic future.

Simon Moutter highlights Spark's company-wide shift to agile working methodologies, "as the first Telco in the world, and first large company in this part of the world, to adopt Agile at scale, right across the company".

A real estate boss says the company is about to launch a wellness programme, "looking at how our people will need to adapt to change and how they can have a better life."

Others take a more traditional approach, such as David Mair of Skellerup Holdings, who answered, "The same as always, focus on skills improvement. Not sure about learning about life. We focus on relevant learning to our business goals. It is not our job to do anything else."

Ensuring diversity of the workforce is an imperative for many New Zealand's executives.
One finance sector executive said tracking bias in the workplace (such as in gender, ethnicity, and age) is key to future-proofing their business.

"We have to drive true inclusion to be able to tap into the limited labour supply," said the executive. "An example is employing plus-65s, which we are doing."

Which technologies will emerge fastest?

Executives were also asked to rank a range of emerging technologies in terms of whether they expect to adopt or increase them to remain competitive over the coming three years, on a scale of one (meaning "no plans to adopt") to 10 ("will have bedded this technology in").

Unsurprisingly, cloud computing (averaging around 8.6) and mobile computing (8.2) trump the rest, as technologies many companies have already adopted.

Next are automation (6.9), AI and machine learning (6.1), and remote sensors and the Internet of Things (6).

Blockchain technology has received ample coverage in the media over the past year, but executives are a little more reserved on its application.

Over half of respondents rate it from 1-4 on the scale, indicating limited or no plans for the technology.

Blockchain (4.6) and other technologies, such as 3D printing (3.5) and drones (3.4), receive relatively modest average rankings, but will likely have outsized impacts on particular industries.

"Different technologies and innovations have different degrees of benefit for different businesses," said a respondent from the professional services sector. "Drones have a role in infrastructure and construction but less so in other businesses."