The Future of Jobs

The 4th Industrial Revolution has got everyone buzzing. We at the Young Malaysian Engineers have seen it to be so important a topic that our biggest flagship event this year, the Malaysian Students’ Technology Conference 2017, focuses solely on it. Yes, a future filled with robots, flexible cell phones and superfast online shopping where the delivery is done using drones seems cooler than anything imaginable. However, behind the shine of polished chrome lie a few serious issues that must be dealt with before it’s too late. Chief amongst these it seems is the prospect of massive job losses.

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Figure 1: An automated McDonald’s kiosk. SOURCE: Youtube

Many jobs that exist today require skills that, for all intents and purposes, could be replicated through mechanical robotics and driven by sophisticated artificial intelligence. In fact, this is already evident in many industries. In automobile manufacturing plants we see one-armed automatons lifting, riveting and welding at an efficiency that can’t be matched by humans. In fast-food chains, we are beginning to witness the end of cashiers and the rise of touch-screens, enabling the ordering of food in a direct, streamlined manner. It does not take a significant stretch of the imagination to envision a world where everything from deep-fat fryers to dentistry drills are manned by AI created to undertake a specific role each.

AI is becoming so sophisticated nowadays that we are witnessing the genesis of true self-governance. Just a few weeks ago, Facebook reported that its AI was observed to have developed its own language to communicate with other AI. Though this sounds groundbreaking, AI creating its own language has existed before the Facebook incident. Technocrat billionaire Elon Musk’s research in this field had resulted in a similar result. In fact, much used Google Translate has been using a neural network to translate between pairs of languages it has not been explicitly trained to. To do this, it seems it has created its own Artiificial Language.

What this means is machines are getting better and better at work traditionally done by human beings. It is feared then that this will lead to job losses amongst the masses who will be left with little scrap to fight over. This, again, is already evident in certain businesses.

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Figure 2: Dr. Carmelo Ferlito. SOURCE: Free Malaysia Today

A fellow of the Institute for Democracy and Economic Affairs Malaysia (IDEAS), Dr. Carmelo Ferlito, recently wrote an economic argument why an increase of the minimum wage would lead to more harm than good. One of his points was that a higher minimum wage would result in a higher cost of running businesses, forcing businesses to search for means by which to better their profit margins. A simple way to do this is replace workers with automatons. It is estimated that they payback period for automation would be around 2 years whereas the maintenance costs would be relatively low compared to increased wages.

It is seen then that automation has caused wages to remain stagnant whereas the cost of living steadily rises. Is it right for businesses to hold their workers ransom by threatening to replace them altogether if they ask for higher wages? This is not a simple problem to solve as businesses have generate healthy profit margins to remain competitive in their field of work while driving innovation and higher wages simply does not help. What can be done?

This is the reality of today. With greater manufacturing innovation, the cost of working with automation is going to steadily decrease. With it, wages will also have to decrease automatically to keep people employed in the same jobs. It seems the only way out of this quandary is to embrace the fact that people will just have to find other jobs to earn a living.

Let us not be led to believe that this is a new problem. We are talking about the 4th Industrial Revolution after all, there have been 3 previous ones. What can learn from them? The first industrial revolution introduced mechanisation. Tasks usually done by hand were brought together in a single location, giving birth to factories. The second industrial revolution introduced a mastering of the assembly line (by Henry Ford) which gave birth to mass production. The third industrial revolution gave birth to a digitisation of manufacturing, using electronics and information technology to automate production. The fourth industrial revolution builds on the third with greater speed, scope and impact on systems.

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Figure 3: The Four Industrial Revolutions. SOURCE: LinkedIn

In each of the previous revolutions, old jobs were lost to be replaced by new ones. Thousands were lifted out of poverty and people generally benefitted greatly from them. In the beginning, there is going to be some level of strife due to a lag in the adaptation of individuals and systems from old routines to new realities. People will suffer for a short period of time. But humanity is a flexible, adaptable creature, capable of finding new opportunities amongst the ashes of outdated traditions. The question is, how?

In the first panel of MSTC 2017 you will encounter speakers who will elaborate on this topic. Make sure to ask them the right questions. Ask them about social security concerns including Universal Basic Income, where every citizen receives a stipend from the government automatically. In a future driven by efficient machines, we can rely on the generation of wealth to be stable and growing. Hence, the distribution of this wealth will allow a near utopia-like existence where the average individual can at least survive in a world where traditional jobs are scant. A variety of taxes, sovereign wealth funds and decreases in spending on other areas, such as the military, could fund the idea.

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Figure 4: UBIs. Realistic or Fantasy? SOURCE: Kickass Facts

Of course UBIs are not without their detractors. Some fear governments would not be able to secure the funds necessary for UBIs in perpetuity. Others theorise that UBIs might cause inflation as it is a global distribution exercise. Finally, there is also the usual capitalist argument where the removal of an incentive to work would encourage people to not be productive.

To dispel these fears, one can look to the UBI experiments that have already taken place. In Alaska, a form of basic income named the Permanent Fund Dividend (PFD) has been reported to have caused increased purchasing power resulting in a creation of thousands of jobs, greater spending and saving and a significant reduction of poverty. On the flip-side, only 1% of those polled said that they were less willing to work due to the PFD.

What we need to realise is UBIs can work only if we can ensure people still want to work. Proponents say that risk-taking and entrepreneurship will be fuelled by UBIs as there is more security. This seems like a viable means of employment in a world where most 9-to-5 jobs are taken by robots. But again, regulations revolving around small businesses and new enterprises have to be open and encouraging. This includes tax breaks and streamlining compliances.

Along with this, greater transparency laws regarding the management of sovereign funds have to be implemented to make sure UBI money is not utilised by corrupt or inept officials. We have already read too many cases of billions being lost in either shady or unintelligent deals. In a world of smart phones, we have to be ready to be smart ourselves.

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