Lockdown 2: Balancing job retention with automation

During the Forrester Technology &  Innovation online summit, the analyst firm discussed the negative aspects of government furlough schemes to keep staff employed.

While it is clearly beneficial for people to receive their salary, or part of it, while businesses are closed due to lockdown restrictions, Forrester warned that such schemes prevent companies from taking the drastic measures needed to reinvent themselves.

Dan Bieler, principal analyst at Forrester, said that while governments intervene with recovery funds to help businesses keep their current workforce intact, “what are their incentives to automate?” In effect, he said, furlough schemes encourage businesses to operate the same as they have always done, rather than shift and adapt to take advantage of new technologies such as automation.

Forrester recently asked 3,000 decision-makers about the maturity of artificial intelligence (AI) and automation in their businesses. Its survey found that across all the metrics measured, European organisations lag behind the American and Asia-Pacific regions. The survey found that while 23% of American and 28% of Asia-Pacific businesses say they have set key performance indicators to measure the success of AI and automation, the equivalent number for Europe is 19%.

Similarly, 24% of American and 28% of Asia-Pacific businesses say their organisations have articulated a strategy to re-engineer business processes through automation, but for Europe, the figure is 20%.

According to the paper A better future for work: the world after Covid-19, published by the Institute for the Future of Work, the coronavirus crisis has introduced new demands for the use and application of technology. For example, tasks need to be performed or augmented by data-driven technologies to reduce human contact; remote work needs to be monitored and overseen by data-driven technologies; and rationales for investment in technology are changing as the economy contracts.

The report’s authors wrote: “From changing the need for certain tasks, skills or jobs, to changing forms of communication and management, each of these factors will affect the quantity, quality, type and experience of work. Overall, the adoption and use of technology is accelerating and transforming work and labour markets at a pace which is likely to be unprecedented. The extent, nature and pace of technology adoption will vary by size of firm, sector and occupation, and it will partly depend on the course of the lockdown.”

In a recent blog post, Chris Pissarides, regius professor of economics at the LSE and co-founder of the Institute for the Future of Work, explained why the UK’s furlough scheme had done little to address the macroeconomic conditions that lead to a long-term downturn in employment.

In a blog, he said labour markets have been experiencing a structural change, with workers losing activities and jobs to technologies such as robots and other intelligent machines. “Until the pandemic, people in these jobs had been transitioning to roles mostly in sectors that involved high levels of human interaction,” he said.

But according to Pissarides, Covid-19 has accelerated the use of automation, with companies that have the technical capabilities trying to reduce their dependence on labour.

Pissarides said there is little evidence that new roles will be created for the newly unemployed. “So, we face a situation in which the pandemic is accelerating the job loss but slowing down the job creation,” he said. “The transition of workers from the shrinking sectors to the expanding ones was a challenge enough before the pandemic, as the expanding sectors required a different set of skills. Now the challenge is exacerbated – skills gaps will remain and there will be fewer vacancies.”

To bridge this skills gap, Forrester believes countries need to focus on bolstering skills in science, technology, engineering and maths (STEM) subjects. Bieler said: “If we compete with machines, we cannot win.” To save jobs, he predicted that people will need to find job functions that machines are unable to do well.

The Institute for the Future of Work believes that technological innovation and adoption underpins growth and needs to be encouraged. It reported that during the first lockdown, new jobs were being created in IT and research and development.

The authors of A better future for work: the world after Covid-19 wrote: “Our analysis of this trend highlights complementary demands for policy-makers. First, the government must incentivise use and applications of technology for SMEs to support growth, new jobs and an economic mix of activities across the country. Second, this must be done in a way that addresses adverse impacts and ensures human experience first and improves work for people.”