What’s the point of the tech industry?

Introduction and wealth creation

The Internet of Things, big data and even the cloud are all about one thing only; cutting costs. By streamlining, automating and increasing efficiency, the tech industry creates wealth but only for a tiny minority.

A study by the Oxford Martin School shows that less than 0.5% of US jobs have been created by the tech industry since the turn of the century, making Silicon Valley wealth seem largely meaningless on a national scale. It also appears to add to regional disparities in wealth. So what is the point of the tech industry?

Is the tech industry just about wealth creation?

Uber, AirBnB and Facebook are all about wealth, not job creation, according to ‘Industrial Renewal in the 21st Century: Evidence from US cities’ by Dr. Carl Benedikt Frey and Thor Berger at the Oxford Martin Programme for Technology and Employment.

The study examined jobs that did not exist in official classifications in the 20th Century, using data on 1.2 million workers in the US to identify new tech industries. The majority of the 71 new tech jobs discovered relate to the emergence of digital technologies (such as online auctions, video/audio streaming and web design), and also the study found that new jobs cluster in skilled cities – like Silicon Valley in California, or London in the UK.

Uber is about creating wealth, not jobs (Image: Uber)

“Because digital businesses require only limited capital investment, employment opportunities created by technological change may continue to stagnate as economies become increasingly digitised,” says Dr. Frey. “Major economies like the US need to think about the implications for lower-skilled workers, to ensure that vast swathes of people don’t get left behind.”

Will automation make it worse?

As society becomes more digitised, the automated robotics and software created by the tech industry will threaten many jobs. Should we all be fearful? Or is this natural and normal?

“If you go back to 1860, 80% of the world’s population was employed in agriculture,” says James Hall, CEO and Founder of robotic process automation company, Genfour. “By the end of World War II that had dropped to 40%, and it now stands at 2% – it’s taken 150 years for humans to adapt and re-skill.”

That makes it sound like a natural, even inevitable consequence of human progress, but the 21st Century does present a much bigger challenge because the speed is that much quicker.

“The challenge with these new technologies is the dramatic shift in what people are doing over the next 15-20 years, which gives us a tenth of the time to re-skill and find new things to do,” adds Hall. That squeezed time-frame means only one thing – the wealth generated by new technological innovations will be condensed into a fraction of the population.

Toyota is investing in artificial intelligence (Image: Toyota)

What about artificial intelligence?

Will you be replaced by an algorithm? Will robots and AI render the tech industry an even smaller employer? “No,” says Hall, who thinks that AI will reduce overall employment only until we shift to new ways of working.

“It will massively increase demand for people with the right technical skills over the next 15-20 years … the overall goal is to make technology easier to work with, enabling people without technical skills to put ideas in motion.” IT staff needn’t worry; they will need to adapt and re-skill, but haven’t they always done so? Machine learning may well take hold, but the machines will still require humans to teach them.

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The paradox of tech

Defining the future of work

Still, some think AI is critical for employment. “AI will define the future of work,” says Abdul Razack, SVP & head of big data and analytics, Infosys, who thinks that even in 2016 the pace at which enterprises more widely adopt AI to replace manual, repetitive tasks will rapidly increase.

“We’re already seeing enormous investments from companies like Toyota to use AI for more precise decision making, and we’ll only see more companies taking this approach to foster higher productivity and business profits, and also streamline responsibility for high-skill jobs,” he says. Today, every company has armies of problem-solvers. Tomorrow’s key skill will be problem-finding; machines will do the rest.

The creative gap

The tech industry may be helping create demand for new kinds of jobs, but the skills needed just don’t exist yet. Job site Indeed reports that there’s currently an industry-wide shift towards jobs that combine technology and creative skills, with far more job listings than searches for such roles. For example, the role of Application Developer has 47% more postings than searches, Software Developer has 23% more, and UI/UX Designer/Developer/Engineer/Director has 19.5% more.

“We are dealing with a constantly developing job market, largely brought about by advances in technology,” says Paul D’Arcy, SVP at Indeed. “Our data points to the future-proofed jobs combining different skill-sets, matching technical knowhow with creativity,” he added, calling it a ‘missed opportunity’ for jobseekers in the UK.

Much of the DVLA's admin is being automated (Image: Wikimedia)

The paradox of tech

“Tech inevitably replaces jobs because usually it is designed to tackle inefficiencies,” says Sam Parton, Co-Founder of grassroots sports marketplace OpenPlay, which makes it easier to find and book sports venues and activities. “Most of these inefficiencies tend to be due to administration or people, so the result will be huge reductions in jobs … in some areas this could be catastrophic,” he adds.

In this context, automation is largely about doing away with the need for paperwork or computer work, and replacing the need for phone calls. As an example, Parton cites UK government agency the DVLA (Driving and Vehicle Licensing Authority) in Swansea, South Wales, which currently employs around 5,000 people, but wants to modernise and use technology to streamline the organisation’s call centre, which is currently massively over-subscribed.

“The result of that is that 2,500 jobs, mainly in administration, will go in Swansea, and what else are those people going to do?” asks Parton about the effect of the tech industry on employment. “It’s a huge paradox and I don’t think politicians have truly thought about the impact on local areas like that.” The same could apply to other administration-heavy areas, such as the criminal justice system and health.

On the one hand the tech industry delivers everything we ever dreamed of to make our lives easier, while on the other, it threatens to automate workers out of the equation altogether only to concentrate wealth in a tiny minority.

With the coming era of AI, the pace of change is about to ramp up – and it’s up to politicians to organise re-training and skilling-up on a huge scale. The changes the tech industry forces upon society may be inevitable, but they’re also far from comfortable.

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