Yesterday I had lunch at Artisan Manchester with the President of the Institute of Chartered Accountants along with a dozen or so other Chartered Accountants and bankers.
I have business meetings every day, but yesterday was interesting mainly because of one of the guest speakers was Andrew Haldane, who sits on the Bank of England monetary policy committee. In 2014 Andrew was voted one of the top 100 most influential people in the world, and so when he spoke, I listened intently.
He spoke about the world economy, and I now understand a little more about why the “slowdown” in China has affected us more now than it might have done in previous years. In a nutshell the emerging economies now make up 50% of the world’s GDP, whereas 10 years ago it was probably half that. And these economies are driving world economic growth, and so when they slowdown it affects us all.
One of the other interesting things he said was that automation across a number of industries will lead to several million jobs being lost in this country. Last November he addressed the TUC and in his speech he hypothesised that up to 15 million jobs could be at risk of automation here in the UK.See http://www.bankofengland.co.uk/ /Pag /speeches/2015/864.aspx for a full transcript of that speech – it’s fascinating and well worth a read.
I’ve known for a number of years that technology and automation will impact on my business and my clients’ businesses. At Jack Ross we’ve worked hard to use technology to automate basic processes and mundane tasks. In particular we use Xero to automate a lot of the basic accounting processes for both us, and our clients.
We’ve encouraged our clients to automate parts of their business. And it’s reassuring to know that we are already on the right path – we are certainly not King Canute fighting the inevitable tide of change.
But Andrew Haldane also spoke about something which I hadn’t appreciated. He spoke about how the labour market may “hollow out“. What he means is that the economy will create two types of jobs – low skilled, low paid jobs which robots can’t do or jobs we won’t accept to be done by a robot e.g. hairdressing, caring for our children and elderly etc. And the second type of job will be high skilled, highly paid jobs such as technology programmers etc.
The mid-skilled worker will either need to skill up, or skill down and take a job for which they are over qualified. In which case they will be under employed and underpaid.
Andrew predicts these changes will take place at “warp speed”.
It’s clear that change in workplace will happen, as it always has. The difference from prior Industrial Revolutions is the pace of change will rapidly increase. And the Government seem to be aware of these, hence the introduction of the National Living Wage from next month. If more and more jobs are going to be deskilled, at least the minimum rate of pay for that type of work will increase. And of course, with more automation, maybe we will have more leisure time, and be able to have a better work life balance …
So what was the lesson yesterday? Firstly not all bankers are boring. And secondly I, my business, my clients and my children should prepare for change at a rapid rate.