ourEconomy: Opinion

The robots are already here, so why is unemployment so low?

Unemployment is at a 45 year low. But the official statistics conceal a growing crisis of joblessness and underemployment.

Phil Jones
24 January 2020, 10.01am
CC0 Public Domain

The unemployment rate in the UK is jarringly low. At 3.8 per cent – the lowest in nearly 45 years – the last quarter’s figures appear to spit in the face of automation ‘doomsters and gloomsters’. If robots are out to steal our jobs, they’re not doing a very good job of it.

Yet, the recent slew of factory closures, including Swindon’s massive Honda plant and Ford’s Brigend facility, tells a far less reassuring story. This story starts in the 1980s with the huge job losses in dock work and the automotive and textiles industries, concluding with the wasteland that is UK industry today. Now we are seeing the same disruption affect the retail positions that not long ago replaced manufacturing jobs.

As big tech companies like Amazon hollow out the high street, the empty shop spaces once housing Debenhams, Maplins and Toys R Us stand like melancholic testaments to the success of online shopping.

Those that remain promise little in the way of jobs, likely operating along the same lines as Amazon Go's ‘just walk out’ shopping where customers simply tap in then leave with their purchases. Retail workers have already experienced significant job losses at the hands of automated tills, but stores where the customer’s smartphone takes the role of cashier, like the one recently opened by Sainsbury’s in London, are establishing staff-less shopping as a new kind of commercial norm.

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Chatbots are taking call centre positions; automated tractors are replacing farmers; and in that great modern day utopia, Milton Keynes, robots are already transporting food and parcels around the city.

Year on year, we hear airy pronouncements about a ‘second machine age’, or talk of a ‘fourth industrial revolution’ that is set to make an already ailing workforce entirely superfluous. But in response to any anxieties we might feel about our imminent redundancy, the jobless rate – stubbornly hovering at around 4% for the last few years ­– offers a resounding ‘all is fine’.

But are these statistics trustworthy? There are reasons to believe the real rate is actually far higher, at around 8% ­– more than double what government figures say. This discrepancy lies in the fact that the official rate conceals a significant amount of ‘hidden unemployment’. These are workers that tend to wrongly classify themselves in government surveys as ‘economically inactive’ – a category that includes the ‘long-term sick’, ‘retirees’ and ‘students’.

A recent report by the OECD and Centre for Cities thinktank found that a disproportionate number of this category live in the places hit worst by factory and mine closures. This suggests that many of the ‘economically inactive’ are not jobless due to sickness or age, but because they’ve been discouraged from finding work by the decline of local industry.

Arguably a far more intractable problem than unemployment is the number of people not getting enough hours, which since the 2008 financial crash has skyrocketed. What looked to be a recovery in employment was in fact the creation of a job market increasingly centred around a tech-intensive ‘gig economy’ and zero-hour contracts. Although not captured by the headline unemployment rate, ‘zero-hour’ and ‘gig’ workers are frequently no better off than the totally jobless. Earning hardly enough to get by, but too much to claim universal credit, the ‘barely employed’ find themselves trapped in what the writer Ivor Southwood calls the ‘non-stop inertia’ of insecure work and low life chances.

The same situation is reflected across the EU. Most obviously in Germany, where underemployment stands at a staggering 1 in 5 people, and in-work poverty is the norm. Due to the state strategy of creating low-hour and low pay ‘midi jobs’, massive job losses have been avoided, but only through a national decrease in average working hours, with no associated gains in pay.

Despite the fact that underemployment is chronic and widespread, governments are not treating the issue with the seriousness it deserves. Unlike unemployment, no official measure of underemployment exists, meaning that by default this problem becomes something for the individual to manage as opposed to the state.

This myopic view of the job market means that governments are blind to the real and present threat smart machines pose. AI does not only replace jobs, it partially automates and disintegrates them into tasks, which are then outsourced on platforms like Uber as ‘rides’ or Clickworker as ‘microwork’.

If current trends in the UK persist, we are heading towards Elon Musk’s dream of ‘lights out’ fully automated factories, supermarkets eerily thin on workers, and a population where many are left to survive on ‘gigs’ and ‘tasks’, waiting for their jobs to be replaced or reorganised by robots. Any credible state response to automation must tax the Googles and Amazons of the world which, due to their monopoly status in the tech industry, would function as a kind of AI levy. At the same time, we must institute a shorter working week to make sure the jobs lost and hours gained are spread evenly across the population.

Labour’s election manifesto promised to enact both policies, and the next leader must take these pledges forward. The party’s loss does not change the crisis of hidden joblessness and underemployment that make these policies so urgent – a crisis that no amount of government statistics can hide.

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