The richest stand to gain more from the introduction of new technology than those in poorer sections of society, according to a report. The World Economic Forum in Davos predicts that 7 million jobs could go in five years, with women losing out the most.
The so-called fourth industrial revolution following on from the introduction of steam power, electricity and electronics, it refers to the fusion of technologies across the physical, digital and biological worlds which is creating entirely new capabilities and dramatic impacts on political, social and economic systems. The focus on understanding this shift is vital, particularly because the speed, scale and systemic nature of this transformation has the potential to disrupt all sectors.” This economic transformation will have less of an impact on developed economies, such as Switzerland, Singapore and the UK. Emerging markets – notably in parts of Latin America and India – will suffer when artificial intelligence and robots become widely used, reducing the competitive advantage of their cheap labour. The US could “onshore” work back from low-cost labour markets, the report added, putting emerging countries at a disadvantage. But the report by Swiss bank UBS, warns that some skilled work is also at risk as robots become more sophisticated. Last year, a report by Bank of America Merrill Lynch also pointed to the potential for a rise in inequality as a result of increased automation. That report cited research by Oxford University which said that up to 35% of all workers in the UK, and 47% of those in the US, are at risk of being displaced by technology over the next 20 years.
Axel Weber, the chairman of UBS, said: “Inequality increases not just between developed and developing and emerging countries. It’s also within our society. It will have an impact not only between the rich and the poor but also the young and the old.” The report outlines a polarisation in the labour force and “greater income inequality implying larger gains for those at the top of the income, skills and wealth spectrums”.
“These individuals are likely to be best placed from a skills perspective to harness extreme automation and connectivity; they typically already have high savings rates and will benefit from holding more of the assets whose value will be boosted by the fourth industrial revolution,” the report says.
The report by UBS points to downward pressure on the wages of low-skilled workers. “By contrast, the potential returns to highly skilled and more adaptable workers are increasing,” the report says.
“Many labour-intensive firms should be able to boost profit margins as they substitute costly workers for cheaper robots or intelligent software ... For nations, the largest gains from the fourth industrial revolution are likely to be captured by those with the most flexible economies, adding a further incentive for governments to trim red tape and barriers to business.
“Automation will continue to put downward pressure on the wages of the low skilled and is starting to impinge on the employment prospects of middle-skilled workers. By contrast, the potential returns to highly skilled and more adaptable workers are increasing.”
Workers already displaced by automation, such as those on assembly lines, could also feel the impact of the latest technology, as robots which are able to move around – so-called cobots – are able to perform more intricate tasks.
“The greatest disruption, however, could be experienced by workers who have so far felt immune to robotic competition, namely those in middle-skill professions,” the report says. It points to clerical work, such as customer service, being replaced by artificial intelligence. Insurance claims could also be settled without human intervention.”