Robot revolution: World Bank: 57 per cent of jobs in the OECD could be automated by 2037

A robot revolution is coming to a workplace near you

Mc­Kinsey concludes 45 per cent of US workers are at risk of losing their jobs to automation in the next 20 years.

FERGUS HANSON The Australian 12:00AM July 8, 2017

Imagine a world where an algorithm replaces you on the board of directors, the pharmacist preparing your medication is a robot and the branch that used to calculate insurance payouts is made redundant by artificial intelligence. There is no need to imagine these scenarios as all of them are real.

This year Fukoku Mutual Life Insurance bought an AI system to assess insurance payouts, replacing 34 employees. A Hong Kong venture capital firm, Deep Knowledge Ventures, appointed VITAL (Validating Investment Tool for Advancing Life Sciences) to its board in 2014. And in 2011 a university hospital in San Francisco installed robots to process medications. During initial operations it prepared 350,000 doses of medicine without making an error.

Speaking to The Australian this week on the impact of AI and robotics, Seek chief executive Andrew Bassat said: “My view is that we have enough warning to know that we need to act with urgency to address this issue and can no longer afford to wait.”

We are in the early stages of understanding how many Australians will lose their jobs. Overseas research suggests big changes lie ahead. Mc­Kinsey concludes 45 per cent of US workers are at risk of losing their jobs to automation in the next 20 years while the World Bank estimates 57 per cent of jobs in the OECD could be automated in that period. In March, an Massachusetts Institute of Technology study found each new robot added to the US economy reduced employment by 5.6 work­ers, and this was based on pre-AI data.

Consulting groups such as BGA predict the world stock of robots may quadruple by 2025. There is also concern that new jobs created will not be enough to offset the losses. The MIT study authors expressed surprise at the negative effects they found because “they indicate a very limited set of offsetting employment increases in other industries and occupations”.

Initial modelling conducted in Australia is similarly eye-catching. The Committee for Economic Development of Australia estimates two out of every five working Australians faces a high probability of having their jobs made redundant in the next 10 to 15 years, with an estimated 3.2 million jobs that today involve driving on the immediate chopping block as driverless vehicles arrive.

How do we retrain Australians at scale and into what industries? If there is no demand for human pharmacists, paralegals and surgeons the corresponding university courses won’t be of much use. Nor is it likely that, as artificial intelligence surpasses human cleverness, we could all shift into STEM (science, technology, engineering and mathematics) jobs.

Some analysts express hope that the changes afoot will create room for more of us to engage in creative pursuits that computers know nothing about. But robots already produce artworks, compose music we can’t distinguish from that produced by human maestros and write news stories. The more confronting challenge is what we do if the new economy fails to produce enough jobs to keep everyone employed.

The initial ideas on how to respond have been unconvincing. A universal basic income has been floated but if far fewer of us have jobs and pay taxes, who exactly will fund this? This is especially so as the companies that produce and profit from robots and AI are unlikely to be Australian. OECD modelling finds a universal income would be full of problems and fail to cut poverty rates.

Notions the unemployed will be happy to amuse themselves with immersive 3-D experiences and games also seem far-fetched. If the jobless rate is anything like that suggested by the more aggressive models, revolution seems far likelier without dramatic changes. As MIT economist Andrew McAfee told a retreat of the world’s leading artificial intelligence researchers in January: “I am less concerned with Terminator scenarios. If current trends continue, people are going to rise up well before the machines do.”

Australia is coming at this challenge from a reasonably strong position. In nominal and purchasing power parity terms it is a top 20 global economy. It has an educated population and resources likely to be in demand well into the future. Our neighbours in Southeast Asia are not so fortunate. A recent study found more than half the salaried workforce from Cambodia, Indonesia, The Philippines, Thailand and Vietnam, 137 million people, are at high risk of losing their jobs from automation in the next 20 years. The consequences for regional stability could be serious.

Profits from AI and automation are likely to be narrowly concentrated. In an opinion piece for The New York Times, Kai-Fu Lee, chairman and chief executive of Sinovation Ventures, a venture capital firm, and president of its Artificial Intelligence Institute, painted a stark picture. The bulk of the spoils, he argues, will go to China and the US because other countries face an insurmountable obstacle. “AI is an industry in which strength begets strength: the more data you have, the better your product; the better your product, the more data you can collect; the more data you can collect, the more talent you can attract; the more talent you can attract, the better your product.”

Chinese and US tech giants are already so far ahead it would be extremely difficult for any Australian firm to join this elite club. For Lee the consequences point in a single direction: “If most countries will not be able to tax ultra-profitable AI companies to subsidise their workers, what options will they have? I foresee only one: unless they wish to plunge their people into poverty, they will be forced to negotiate with whichever country supplies most of their AI software — China or the US — to essentially become that country’s economic dependent, taking in welfare subsidies in exchange for letting the ‘parent’ nation’s AI companies continue to profit from the dependent country’s users.”

The fact such wild ideas are getting mainstream airtime shows how much we need a serious debate. In previous technological revolutions, new jobs have been created; hoping this will happen again is not a plan. Australia should invest in better understanding the consequences of AI and automation at home and in our neighbourhood, then plot a realistic way forward.

Fergus Hanson is head of the International Cyber Policy Centre based at the Australian Strategic Policy Institute. He is author of Internet Wars: The Struggle for Power in the 21st Century.


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