Historically, large technological shifts have often been accompanied by fears of job displacement and increased social inequalities. The threat to employment represented by the modern technologies ( AI and automation) is no different.
All advanced economies have always experienced significant shifts in sectoral employment during the previous industrial revolutions. These shifts, such as the move from agriculture to industrial manufacturing during the First Industrial Revolution, and more recently from manufacturing to Services, can transform the structure of an economy( for example, sectoral employment shifts can drive urbanization, which increases the demand for transport and infrastructure)
The fact that this wave of automation and AI will bring negative consequences in the short term (some people’s jobs will become replaced by machines and then becoming unemployed ) is widely accepted, but the net impact of new technologies on employment long term will likely depend on a variety of economic factors.
The displacement effect will be relevant in some industries (manufacturing, financial services ect) not so relevant in others (communication, IT, education, social work). What it goes missing in the story is the positive income effect of AI .
As Companies implement AI because it reduces cost, increases productivity (the increase in the efficiency of work) and creates new task; then they have to pass on consumers some of these savings. The real income of consumers will increase (increased Demand) and the supply demand feedback loop kicks in (creating additional demand for new jobs). Additional benefits include shorter working hours and the creation of new industries and occupations
If this holds true, the mass technological unemployment scenario is not going to happen although AI will probably favor initially those who already have strong digital skills and are in the right industry. This will increase further income and wealth inequality. To mitigate displacement effect of AI, Corporations should invest more in ‘STEAM’ skills that will be most useful to people in the increasingly automated world of tomorrow. On the other hand, to maximize the income effect Government should instead create/favor an environment where competition thrives and consumers benefits through lower prices . Policies should also aim to target job creation.
The real challenge related to unemployment will be the emergence of new occupations and a demand for different skill sets. Task automation and job automation are 2 different things; jobs are composed of many different tasks, and not all tasks related to a job can be automated.
Response strategies
What can be done about technological unemployment, and how can some of the negative effects of this structural change be mitigated ? There are 4 possible response strategies each with different costs and benefits to individuals, businesses, and society as a whole.
Ensuring education and lifelong learning (what to teach, how to teach when to teach) .
Given that there will be a transformation of traditional job roles as various industries adopt new technologies upskilling (Learning new skills in order to meet changing requirements in an existing role, or adding certain skills to support career progression) and Reskilling (Learning a new skill-set to transition into a completely new role) will play an important role in ensuring a flexible and adaptable workforce, particularly in industries that are highly disrupted
2 Improving the flexibility of labor markets through increased labor mobility
With the increase of automation many functions will move online but other type of jobs depends on the physical location. Remote working is on the rise but only for some high skilled people
3 Providing fiscal support through mechanisms such as a universal basic income
To avoid the risks of Human Capital becoming less valuable the State will probably implement support strategies to avoid that.
4 Regulating or restricting technological innovations for fears of increased inequality
If this were to happen tech innovation, growth and employment will be slowed down. From a market perspective this is not a good idea but from a political perspective is not so obvious.
The future of work in Banking
Consumers‘ changing habits (demanding new way to use financial services) and increased automation in the banking sector could lead to unemployment for bank workforce because digital technologies can perform the work at cheaper cost, without depending on physical branch staffs. Workers using basic cognitive skills (data input and processing) will likely decline (tellers, accountants, and brokerage clerks) as automation is adopted (Structural changes)
Faced with the changing nature of the business (tech transformation and changing business models) skills mismatch will be a big problem. IT Professional will have a brighter future in new banking sector (analytics, cyber security specialist, robot programmer, blockchain architect).The problem of reskilling and upskilling roughly more than 50% of the employees without technical knowledge to perform the work is relevant (Frictional changes)
Education
The financial institutions that thrive in the future will flexibly combine intelligent technology with the human touch. Ongoing training and upskilling and reskilling will be necessary to keep up with industry's shifting pace.
By adopting a culture of lifelong learning (soft skills) banking employees will become more adaptable. When you upskill your workforce creating a team work culture, your employees are more engaged, collaborative (conflict decrease), innovative (exchange of ideas) and happy employees work harder and stay at their companies longer, which cuts turnover costs for organizations improving brand’s reputation
The new world of banking is about new skills and curricula (computing and finance) but the biggest limitation is the quality of the supply and effectiveness of re-training that is not up to the required standards. There is a shortage/lack of market competences and banks might find less costly to acquire new competences instead
Labor mobility
Virtual Banks and remote working means employees won’t be stuck in road traffic or dense public transport. Employers will extract their benefits with increased labor productivity time, lower real estate costs and a new business model: physical branches being operating points will become consulting points focusing on gaining more new customers, where customer experience is improved, customer-oriented financial advisory.
The main challenge of home working today is the work-life balance: when everything takes place at home, it becomes difficult to switch the internal button from work to home and back again to concentrate on your professional activities without being interrupted by private coincidences.
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