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Knowing this, what jobs are the jobs affected by automation, and what do businesses and government alike need to commit to?

Jobs that will be automated

Offshoring and automation have been taking opportunities away in the manufacturing sector for some time. Today, it’s often robots instead of humans who work on the assembly line. Poorly managed, disruptive technologies can lead to even greater inequality, more polarization and increasing skill gaps, warns the World Economic Forum in its report “The Future of Jobs.”

A 2018 paper by the OECD estimated the risk of automation for individual jobs and found that work in the manufacturing sector has a high probability of becoming automated, exceeded only by work that doesn’t require any specific skills or training.

Are white-collar industries at risk?

"White-collar workers are under threat,” says Bengt Holmström. “People that aren’t necessarily the most innovative but do relatively routine tasks that require some decision making, but the decisions are more or less the same and don’t require a huge amount of creativity. Those middle-class jobs are disappearing."

The World Economic Forum agrees that it is not only factory workers and low-skilled jobs that are, and will be, affected by automation. The proportion of jobs that offer a secure standard of living for the middle class will shrink, which is especially worrisome for middle-class heavy societies such as in the United States. Financial analysts, accountants, bank tellers, general managers, executive secretaries—all of these jobs are at risk of automation, and may not exist a couple of years from now.

So what is the future of work in an automated world?

The fact that jobs will be lost doesn’t mean you have to bury your head in the sand. Human history has seen this happen again and again. Some of the most important inventions – the steam engine, the printing press, electrical power – brought about drastic changes in labor markets, and yet there is more prosperity in the world today than ever before. The future of work will be very different from the present, but Nobel Laureates say that there are ways for societies to respond.

One way is to train young people in particular to develop the skills that will prepare them adequately for the future of work.

"We can make young people able to have the skills to adapt to technology,” says James Heckman. “It’s inevitable that we think about training, education and workforce preparation that allows workers to have what are called transferable skills."

Bengt Holmström shares a similar view. “Society needs to invest in schooling and giving education opportunities. There’s an issue about older people. They haven’t seen all the opportunities that are out there.”

What about people who lose their job as a result of advanced technology and increased automation?

“Certainly for people who are trained to a given level of technology, especially older people, it is very difficult to learn a new skill if your old skill has been replaced,” says Heckman.

The World Economic Forum points out that by 2022, 54 percent of all employees will require significant re- and upskilling. It’s not only a proficiency in new technologies that will be needed; so-called soft skills, from emotional intelligence to critical thinking, will also gain importance.

“I think most of the attention in a business should be on the human capital that you develop amongst your employees,” says Paul Romer. “The people who work for us, if they’ve got the right ideas in their hands, then we collectively will be able to do something that’s much more valuable.”

Unfortunately, the World Economic Forum points out that not all companies are willing to invest in the training of existing employees but simply expect workers to adapt. “There will never be efficient incentives for employers to train workers,” says Eric Maskin. The Nobel Laureate is well known for his work in mechanism design, a field in economics that looks at creating appropriate incentives for people.

“If I come to your company applying for a job, you could train me, but then with that training I could go off and work for your competitor, in which case your investment in me is lost,” Maskin explains. “And so, the private sector on its own may not have sufficient incentive to do the retraining, and that’s why government programs to at least subsidize retraining may prove to be very important.”

Romer, who spent part of his career in Silicon Valley, agrees. “I did a tech startup, and I remember the optimism of that time. This optimism that somehow people acting collectively outside of the usual institutions of government could achieve what would be great for everyone. That optimistic vision hasn’t been realized, and my retrospective on this is that I was wrong to think we could do this if we bypassed government. We can control the direction of technology if we work together.”

Though a profound transformation of labor markets is to be expected, and already underway, there’s a positive message to be taken from many conversations. The future of work won’t look all that bleak if people are open to lifelong learning, if businesses commit to invest in human capital and if policymakers and regulators accept the fundamental role they play in making sure that no one gets left behind.

“As each generation passes, I think we will be in better shape,” says Holmström.

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