The anxiety about robots stealing jobs is overblown. Policymakers need to focus on more immediate threats

Uhoh: Pepper, the Japanese android. Image: Getty.

“The robots are coming to take our jobs”, the Evening Standard told Londoners in December 2016. In case that didn’t depress their readers enough, the article went on to spell out the coming doom: “The sheer pace of change in computational power and grinding efficiencies of automation will alter or eliminate many of our jobs, far faster than we anticipate.”

And then, to ensure the anxiety was sufficiently widespread, they reminded their middle-class readers that “many of the relatively fortunate in the professional class in London will face upheavals too”.

Anxiety about the impact of robots on the world of work has been a hot topic across Western countries for several years. You couldn’t move at Davos last year without seeing grown men (it’s always men) with their heads in their hands predicting the end of work. Bill Gates is so worried that he has called for a robots tax.

But is the rise of the robots really what the mayor and other London policymakers should be spending their time thinking about? Here are three reasons why we might want to dial down the robot angst and focus our anxiety elsewhere.

First, if the robots are taking all our jobs, they’re doing a really bad job of it. Far from falling, the proportion of Londoners in work has risen fast in recent years, with the London employment rate now three percentage points higher than it was on the eve of the financial crisis. London’s employment rate currently stands at a record high of almost 74 per cent, significantly higher than all other major UK cities bar Bristol.

Second, London is less at risk of automation abolishing work than most parts of the UK. That’s because of the kind of work that actually gets done within the M25. Manufacturing jobs are famously prone to being replaced by robots because of the repetitive and physical nature of much of the work: think of a modern car factory filled with robot arms, compared to the world of Henry Ford. But manufacturing jobs make up a much smaller share of the work done in London than across Great Britain as a whole. London has instead a far greater share of professional and finance jobs, which are much less susceptible (though not totally immune) to being automated.

Third, robot scares are far from new. Back in the 1980s, the headlines were focused on a new-fangled thing, the computer chip, that was threatening to destroy work. “Robots to take over the world” was another Evening Standard headline. That was printed on 11 September 1995, and they’ve not done it yet.


None of this means that there are no serious public policy implications of automation. Industries that are affected can see big changes in employment levels – especially where the related forces of globalisation and automation come together, as they have for clothes manufacturing in the UK. The nature of specific jobs can also change, even if the work is still there. For example, there are questions about the extent to which technology is used to control workers.

But the big picture is that most of the current bout of robot anxiety over the London economy is overdone. That matters – not just because the anxiety is misplaced, but because it distracts London’s policymakers from the real issues that need addressing.

For example, London has seen an increase in the number of people engaged in various forms of precarious work in recent years. There are now 120,000 people on zero-hours contracts in London, the second-highest number in any region (though the proportion of Londoners on a zero-hours contract is similar to the UK average). Many of these workers will be putting in regular hours, but without the guarantees that would help them plan.

London has also seen a much bigger pay squeeze than the UK average since the financial crisis – something that should be at the top of the list of policymakers’ concerns. Pay is down a shocking 13 per cent in London since 2009, compared to less than 7 per cent across the UK. Indeed, average weekly earnings have not increased at all in London between 2011 and 2016, whereas house prices are up by 60 per cent and rents up by 20 per cent. Meanwhile, the main national policy to raise wages for low earners, the National Living Wage, will have less impact in London than elsewhere.

For policymakers wanting to ensure that London’s labour market remains a success in the years ahead, worrying about the right things is crucial. Yes, technology brings challenges, as always – but let’s focus on the very real problems of stagnant pay and precarious work, rather than the science fiction of robots taking all our jobs.

Torsten Bell is director of the Resolution Foundation.

This article is an extract from London Essays, a journal published by Centre for London, supported by Capital & Counties Properties. The full set of essays can be found here

 
 
 
 

The ATM is 50. Here’s how a hole in the wall changed the world

The olden days. Image Lloyds Banking Group Archives & Museum.

Next time you withdraw money from a hole in the wall, consider singing a rendition of happy birthday. For today, the Automated Teller Machine (or ATM) celebrates its half century.

Fifty years ago, the first cash machine was put to work at the Enfield branch of Barclays Bank in London. Two days later, a Swedish device known as the Bankomat was in operation in Uppsala. And a couple of weeks after that, another one built by Chubb and Smith Industries was inaugurated in London by Westminster Bank (today part of RBS Group).

These events fired the starting gun for today’s self-service banking culture – long before the widespread acceptance of debit and credit cards. The success of the cash machine enabled people to make impromptu purchases, spend more money on weekend and evening leisure, and demand banking services when and where they wanted them. The infrastructure, systems and knowledge they spawned also enabled bankers to offer their customers point of sale terminals, and telephone and internet banking.

There was substantial media attention when these “robot cashiers” were launched. Banks promised their customers that the cash machine would liberate them from the shackles of business hours and banking at a single branch. But customers had to learn how to use – and remember – a PIN, perform a self-service transaction and trust a machine with their money.

People take these things for granted today, but when cash machines first appeared many had never before been in contact with advanced electronics.

And the system was far from perfect. Despite widespread demand, only bank customers considered to have “better credit” were offered the service. The early machines were also clunky, heavy (and dangerous) to move, insecure, unreliable, and seldom conveniently located.

Indeed, unlike today’s machines, the first ATMs could do only one thing: dispense a fixed amount of cash when activated by a paper token or bespoke plastic card issued to customers at retail branches during business hours. Once used, tokens would be stored by the machine so that branch staff could retrieve them and debit the appropriate accounts. The plastic cards, meanwhile, would have to be sent back to the customer by post. Needless to say, it took banks and technology companies years to agree common standards and finally deliver on their promise of 24/7 access to cash.

The globalisation effect

Estimates by RBR London concur with my research, suggesting that by 1970, there were still fewer than 1,500 of the machines around the world, concentrated in Europe, North America and Japan. But there were 40,000 by 1980 and a million by 2000.

A number of factors made this ATM explosion possible. First, sharing locations created more transaction volume at individual ATMs. This gave incentives for small and medium-sized financial institutions to invest in this technology. At one point, for instance, there were some 200 shared ATM networks in the US and 80 shared networks in Japan.

They also became more popular once banks digitised their records, allowing the machines to perform a host of other tasks, such as bank transfers, balance requests and bill payments. Over the last five decades, a huge number of people have made the shift away from the cash economy and into the banking system. Consequently, ATMs became a key way of avoiding congestion at branches.

ATM design began to accommodate people with visual and mobility disabilities, too. And in recent decades, many countries have allowed non-bank companies, known as Independent ATM Deployers (IAD) to operate machines. The IAD were key to populating non-bank locations such as corner shops, petrol stations and casinos.

Indeed, while a large bank in the UK might own 4,000 devices and one in the US as many as 12,000, Cardtronics, the largest IAD, manages a fleet of 230,000 ATMs in 11 countries.


Bank to the future

The ATM has remained a relevant and convenient self-service channel for the last half century – and its history is one of invention and re-invention, evolution rather than revolution.

Self-service banking and ATMs continue to evolve. Instead of PIN authentication, some ATMS now use “tap and go” contactless payment technology using bank cards and mobile phones. Meanwhile, ATMs in Poland and Japan have used biometric recognition, which can identify a customer’s iris, fingerprint or voice, for some time, while banks in other countries are considering them.

So it’s a good time to consider what the history of cash dispensers can teach us. The ATM was not the result of a eureka moment of a single middle-aged man in a bath or garage, but from active collaboration between various groups of bankers and engineers to solve the significant challenges of a changing world. It took two decades for the ATM to mature and gain widespread, worldwide acceptance, but today there are 3.5m ATMs with another 500,000 expected by 2020.

Research I am currently undertaking suggests that ATMs may have reached saturation point in some Western countries. However, research by the ATM Industry Association suggests there is strong demand for them in China, India and the Middle East. In fact, while in the West people tend to use them for three self-service functions (cash withdrawal, balance enquiries, and purchasing mobile phone airtime), Chinese customers consumers regularly use them for as many as 100 different tasks.

Taken for granted?

Interestingly, people in most urban areas around the world tend to interact with the same five ATMs. But they shouldn’t be taken for granted. In many countries in Africa, Asia and South America, they offer services to millions of people otherwise excluded from the banking sector.

In most developed counties, meanwhile, the retail branch and the ATM are the only two channels over which financial institutions have 100 per cent control. This is important when you need to verify the authenticity of your customer. Banks do not control the make and model of their customers’ smart phones, tablets or personal computers, which are vulnerable to hacking and fraud. While ATMs are targeted by thieves, mass cybernetic attacks on them have yet to materialise.

The ConversationI am often asked whether the advent of a cashless, digital economy heralds the end of the ATM. My response is that while the world might do away with cash and call ATMs something else, the revolution of automated self-service banking that began 50 years ago is here to stay.

Bernardo Batiz-Lazo is professor of business history and bank management at Bangor University.

This article was originally published on The Conversation. Read the original article.