Retresco’s response to PwC’s UK Economic Forecast

Earlier this month, professional services firm PwC released its latest edition of its UK Economic Outlook. Tucked in at the end of the report, there is a chapter on what effect AI and automation are going to have over the next twenty years.

 

There are a number of headline discoveries. Firstly, the overall change is expected to be largely neutral, although with a slight gain. There will, however, be a division between industries that will see jobs created and those that will see roles reduced.

As PwC says in the release accompanying the report: “While the overall net effect of AI on UK jobs may be broadly neutral, this varies significantly across industry sectors. The most positive effect of AI is seen in the health and social work sector, where PwC estimates that employment could increase by nearly 1 million, equivalent to around 20 per cent of existing jobs in the sector. On the other hand, PwC estimates the number of jobs in the manufacturing sector could be reduced by around 25 per cent, representing a net loss of nearly 700,000 jobs.”

 

Also interesting is that PwC has revised its estimate of the proportion of roles displaced by AI and automation. As the authors admit, “In our previous research, we estimated that 30 per cent of existing jobs were at high risk of automation, however in practice we estimate the percentage that will be displaced by 2037 is around 20 per cent.”

In conclusion, the authors write, agreeing with what we’ve written on extensively, “It’s likely that the fourth industrial revolution will favour those with strong digital skills, as well as capabilities like creativity and teamwork which machines find harder to replicate.”

 

That’s also an interesting point, and one that we’ve also written on. We’ve made clear over the last eighteen months that there are areas that robots cannot replace humans, but can only buttress their work.

 

The most-interesting part of the report looks at the geographic effects of AI and automation, and this raises a bunch of new questions to be answered and challenges to be overcome. The biggest benefit within the UK, according to the authors, will be in London, which will see the number of roles increased by 2 per cent. This is because London is home to more than a quarter (28 per cent) of the country’s professional, scientific, and technical activities, plus nearly a third (31 per cent) of the information and communication sector.

“In contrast,” says PwC, “regions in the North and Midlands, with somewhat higher weightings towards relatively automatable industrial jobs, have marginally negative estimated net impacts, but only by around 1 per cent or less of existing job numbers since even these regions are now dominated by service sector employment. However, there could be larger regional variations linked to factors other than industrial structure (e.g. relative skill levels across regions for jobs within a given industry sector), which are not reflected in this analysis for data availability reasons.”

That’s a fairly-interesting statistic that’s also fairly glossed over. They are hard to measure, but the populations of the North and Midlands areas of the UK amount to something like 25.2 million people. London, in contrast, has a little over 8 million people. That means a slide of 1 per cent in roles within the North and Midlands will affect more there than will benefit in the capital from a 2 per cent increase.

 

There will be a very real political cost within economically-poorer regions, especially if the capital and other larger cities are seen to benefit. This means that governments, companies, and other organisations need to look at what needs to be put in place before this effect begins to bite.

 

PwC also acknowledge this, saying that government should:

  1. Invest more in STEAM (science, technology, art and design, engineering, and mathematics) skills.
  2. Encourage people to continually update and adapt skills.
  3. Strengthen the safety net for those unable to adapt to technological change.

 

Further recommendations from the firm include:

  1. Support for sectors that will generate new jobs, such as university research centres, science parks, and other enablers of business growth.
  2. The implementation of an AI strategy that puts forward a broad range of policies to support the development of the AI sector.
  3. The promotion of effective competition between AI companies.

 

There’s more that governments and the service industry can do to focus on the AI revolution that is coming down the pipe. Along with investing in the created roles, they need to look at the industries that will be created secondary to AI jobs. That may include compliance officers and legal roles, computer engineers, telecommunications, and mechanics and tech repair jobs.

 

The coming revolution should make companies and organisations reassess how they do business. Instead of focusing on quantity, they will be able to pivot to a more quality-centric approach. That quality will come from humans, who will remain integral to the economy because of the things they can do that robots cannot.

 

 

[one_fourth]  [/one_fourth] For more information, please contact:

Pete Carvill (@pete_carvill)
Communications Manager
+49 (0)30 555 781 999
peter.carvill@retresco.de

 

 

About Retresco

Founded in Berlin in 2008, Retresco has become one of the leading companies in the field of natural language processing (NLP) and machine learning. Retresco develops semantic applications in the areas of content classification, recommendation, as well as highly innovative technology for natural language generation (NLG). Through nearly a decade of deep industry experience, Retresco helps its clients accelerate digital transformation, increase operational efficiencies, and enhance customer engagement.

 

Sources

© James Pond via unsplash.com

 

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