So does increasing productivity really destroy jobs?

An automated car factory. Image: Getty.

There’s been a lot of debate about productivity in the last couple of mnonths, off the back of our new report on the ‘long tail’. In and amongst this discussion, one thorny question that has been raised is whether improving productivity is bad for inclusive growth. In particular, do improvements in productivity come at the cost of jobs?

The concern about these issues is understandable – in some sectors, improvements in productivity have come through the introduction of machines which destroy jobs. Manufacturing is a case in point. There are many fewer people employed in manufacturing today than in the past – 4m, which is 60 per cent fewer than 1978. What is less well known, however, is that the amount that UK manufacturing produces has actually gone up in that period by 17 per cent, as a result of improvements to productivity.

There are two reasons why productivity improvements don’t mean job losses across the economy. The first is that, while the sectors that have been responsible for productivity growth in recent years have not been directly responsible for jobs growth, they have spurred employment in other sectors. As the chart below shows, ‘exporting’ sectors (those that sell to a regional, national or international market), for example in the manufacturing and finance sectors, have seen large productivity growth but a fall in employment.

Those sectors that have been responsible for employment growth, on the other hand, tend to be local services: accommodation and food services, and arts, recreation and entertainment. These firms, as our briefing shows, have seen little or no productivity growth in recent decades. The one clear exception to this is information and communications, which has managed to provide both productivity and employment growth.

But the performance of these sectors is linked. While exporting businesses don’t create jobs directly, research suggests that the wage-increases they create through productivity growth also increases demand for local services, which in turn boosts employment in these sectors. This is known as the multiplier effect.

Growth in productivity and jobs, 1990-2017. Source: ONS.

The second reason is that these fears are based on what the economy looks like today, rather than what it will be tomorrow. Different sectors grow and decline through time; and it’s the rise of new sectors that historically have more than replaced jobs lost in those declining ones.

Looking at 100 years of economic development in UK cities, as we did in Cities Outlook 2018, shows this. There have been huge changes in the economy over that period, including large increases in productivity and an unabated rise of automation. Despite this, there are 60 per cent more jobs in urban Britain today than there were in 1911. And few would argue that we aren’t better off than our great-grandparents.


Increases in productivity may well mean that jobs decline in some sectors. It’s easy to envisage that retail will employ fewer people in 10 years’ time than it does today. But these productivity improvements also create new opportunities, new types of economic activity and new jobs. And they ultimately lead to improvements in standards of living – again, compare life in 1911 to today.

While this is good for the economy overall, it obviously isn’t good for individuals who lose their jobs as a result of these changes. The challenge, then, for policy makers, is not only to address the UK’s poor recent productivity performance – it is to ensure that people who miss out can benefit from the new jobs that this growth would create.

Paul Swinney is head of policy & research at the Centre for Cities, on whose blog this article first appeared.

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Uncertainty is the new normal: the case for resilience in infrastructure

Members of the New York Urban Search and Rescue Task Force One help evacuate people from their homes in Fayetteville, North Carolina, in September 2018. Image: Getty.

The most recent international report on climate change paints a picture of disruption to society unless there are drastic and rapid cuts in greenhouse gas emissions. And although it’s early days, some cities and municipalities are starting to recognise that past conditions can no longer serve as reasonable proxies for the future.

This is particularly true for America’s infrastructure. Highways, water treatment facilities and the power grid are at increasing risk to extreme weather events and other effects of a changing climate.

The problem is that most infrastructure projects, including the Trump administration’s infrastructure revitalisation plan, typically ignore the risks of climate change.

In our work researching sustainability and infrastructure, we encourage and are starting to shift toward designing man-made infrastructure systems with adaptability in mind.

Designing for the past

Infrastructure systems are the front line of defense against flooding, heat, wildfires, hurricanes and other disasters. City planners and citizens often assume that what is built today will continue to function in the face of these hazards, allowing services to continue and to protect us as they have done so in the past. But these systems are designed based on histories of extreme events.

Pumps, for example, are sized based on historical precipitation events. Transmission lines are designed within limits of how much power they can move while maintaining safe operating conditions relative to air temperatures. Bridges are designed to be able to withstand certain flow rates in the rivers they cross. Infrastructure and the environment are intimately connected.

Now, however, the country is more frequently exceeding these historical conditions and is expected to see more frequent and intense extreme weather events. Said another way, because of climate change, natural systems are now changing faster than infrastructure.

How can infrastructure systems adapt? First let’s consider the reasons infrastructure systems fail at extremes:

  • The hazard exceeds design tolerances. This was the case of Interstate 10 flooding in Phoenix in fall 2014, where the intensity of the rainfall exceeded design conditions.

  • During these times there is less extra capacity across the system: When something goes wrong there are fewer options for managing the stressor, such as rerouting flows, whether it’s water, electricity or even traffic.

  • We often demand the most from our infrastructure during extreme events, pushing systems at a time when there is little extra capacity.

Gradual change also presents serious problems, partly because there is no distinguishing event that spurs a call to action. This type of situation can be especially troublesome in the context of maintenance backlogs and budget shortfalls which currently plague many infrastructure systems. Will cities and towns be lulled into complacency only to find that their long-lifetime infrastructure are no longer operating like they should?

Currently the default seems to be securing funding to build more of what we’ve had for the past century. But infrastructure managers should take a step back and ask what our infrastructure systems need to do for us into the future.


Agile and flexible by design

Fundamentally new approaches are needed to meet the challenges not only of a changing climate, but also of disruptive technologies.

These include increasing integration of information and communication technologies, which raises the risk of cyberattacks. Other emerging technologies include autonomous vehicles and drones as well as intermittent renewable energy and battery storage in the place of conventional power systems. Also, digitally connected technologies fundamentally alter individuals’ cognition of the world around us: consider how our mobile devices can now reroute us in ways that we don’t fully understand based on our own travel behavior and traffic across a region.

Yet our current infrastructure design paradigms emphasise large centralized systems intended to last for decades and that can withstand environmental hazards to a preselected level of risk. The problem is that the level of risk is now uncertain because the climate is changing, sometimes in ways that are not very well-understood. As such, extreme events forecasts may be a little or a lot worse.

Given this uncertainty, agility and flexibility should be central to our infrastructure design. In our research, we’ve seen how a number of cities have adopted principles to advance these goals already, and the benefits they provide.

A ‘smart’ tunnel in Kuala Lumpur is designed to supplement the city’s stormwater drainage system. Image: David Boey/creative commons.

In Kuala Lampur, traffic tunnels are able to transition to stormwater management during intense precipitation events, an example of multifunctionality.

Across the U.S., citizen-based smartphone technologies are beginning to provide real-time insights. For instance, the CrowdHydrology project uses flooding data submitted by citizens that the limited conventional sensors cannot collect.

Infrastructure designers and managers in a number of U.S. locations, including New York, Portland, Miami and Southeast Florida, and Chicago, are now required to plan for this uncertain future – a process called roadmapping. For example, Miami has developed a $500m plan to upgrade infrastructure, including installing new pumping capacity and raising roads to protect at-risk oceanfront property.

These competencies align with resilience-based thinking and move the country away from our default approaches of simply building bigger, stronger or more redundant.

Planning for uncertainty

Because there is now more uncertainty with regard to hazards, resilience instead of risk should be central to infrastructure design and operation in the future. Resilience means systems can withstand extreme weather events and come back into operation quickly.

Microgrid technology allows individual buildings to operate in the event of a broader power outage and is one way to make the electricity system more resilient. Image: Amy Vaughn/U.S. Department of Energy/creative commons.

This means infrastructure planners cannot simply change their design parameter – for example, building to withstand a 1,000-year event instead of a 100-year event. Even if we could accurately predict what these new risk levels should be for the coming century, is it technically, financially or politically feasible to build these more robust systems?

This is why resilience-based approaches are needed that emphasise the capacity to adapt. Conventional approaches emphasise robustness, such as building a levee that is able to withstand a certain amount of sea level rise. These approaches are necessary but given the uncertainty in risk we need other strategies in our arsenal.

For example, providing infrastructure services through alternative means when our primary infrastructure fail, such as deploying microgrids ahead of hurricanes. Or, planners can design infrastructure systems such that when they fail, the consequences to human life and the economy are minimised.

The Netherlands has changed its system of dykes and flood management in certain areas to better sustain flooding.

This is a practice recently implemented in the Netherlands, where the Rhine delta rivers are allowed to flood but people are not allowed to live in the flood plain and farmers are compensated when their crops are lost.

Uncertainty is the new normal, and reliability hinges on positioning infrastructure to operate in and adapt to this uncertainty. If the country continues to commit to building last century’s infrastructure, we can continue to expect failures of these critical systems, and the losses that come along with them.

The Conversation

Mikhail Chester, Associate Professor of Civil, Environmental, and Sustainable Engineering, Arizona State University; Braden Allenby, President's Professor and Lincoln Professor of Engineering and Ethics, School of Sustainable Engineering and the Built Environment, Ira A. Fulton Schools of Engineering, Arizona State University, and Samuel Markolf, Postdoctoral Research Associate, Urban Resilience to Extremes Sustainability Research Network, Arizona State University.

This article is republished from The Conversation under a Creative Commons license. Read the original article.