Jobs for Bots - Why the UK must grab the automation opportunity

Profile picture for user cmiddleton By Chris Middleton September 23, 2019
Summary:
Whilst the media obsesses over how robots are coming for all of our jobs, a new government-backed report claims that we actually have too few robots in the workplace.

Image of a robot

On 9 September, the day that Parliament was adjourned in the UK amid scenes of political uproar, something took place in a side room at the Palace of Westminster, away from all the noise about Brexit. It was the presentation of an important report on Automation and the Future of Work, issues that are at the heart of the nation’s economic prosperity. 

Commissioned by the government, the draft document seeks to explain the UK’s productivity problem, set out the opportunities presented by robotics and artificial intelligence, and identify risks. That such a critical strategy report was sidelined by the gamesmanship and political infighting over Europe illustrates the national tragedy that Brexit has become. 

The sharpest pang in that self-inflicted wound is that the UK has had the foundations of a smart, forward-looking Industrial Strategy for the past three years, but its chances of succeeding are diminished by the country tearing itself apart over Europe. 

Not enough robots

The Automation and the Future of Work report kicks off with a statement that is starkly at odds with the media’s obsession with Terminators, malignant AIs, and job-killing machines: 

The problem for the UK labour market and our economy is not that we have too many robots in the workplace, but that we have too few. In 2015 the UK had just 10 robots for every million hours worked, compared with 167 in Japan. By 2017, we represented just 0.6% of industrial robotics shipments.
 

Indeed. According to the International Federation of Robotics (IFR), the UK is the only major economy with a below-average robot density: 71 robots per 10,000 workers, versus a global average of 74. By contrast, South Korea has 631 – and a human unemployment rate of just 3.1%, as of August 2019 [https://tradingeconomics.com/south-korea/unemployment-rate], lower than the UK’s.

According to IFR statistics, the top 10 most automated countries in the world are: South Korea, Singapore, Germany, Japan, Sweden, Denmark, the US, Italy, Belgium, and Taiwan. The UK is 22nd in that global league, with an urgent need to invest, modernise, and increase productivity, said the IFR last year. 

The Automation and the Future of Work report continues:

The UK led the First Industrial Revolution because we embraced new technologies and the opportunities that they create. The risk we face is not a robot takeover of our workplaces, but that our lack of adoption and the reluctance of businesses and the government to lead the way in the Fourth Industrial Revolution means other countries will seize the initiative and take the advantage of new technologies, not least the growth and jobs they bring, while we are left behind.

China (3.6% unemployment) is one example. Its strategies of entering the global automation top 10 by 2020 and selling 100,000 industrial robots a year are achievable goals. By contrast, the UK is overly concerned with ‘the three Cs’: cost, certainty, and capability in robotics, suggests the report. In other words, it knows the cost and risk behind everything, but not the value of decisive action. A very British kind of navel gazing.

Hysteria vs facts

Another challenge is the British media’s focus on robots destroying jobs, rather than on new technologies’ ability to create jobs, services, and opportunities – a debate that has bled into public perception of robotics. 

For example, when the World Economic Forum published its 2018 report The Future of Jobs, news sites screamed about the 75 million jobs that the WEF said would be displaced by 2022 in an apparent bloodbath of middle-class careers. But few noted the 133 million new jobs that would be created, according to the WEF: a net gain of 58 million. As broadcaster James O’Brien once observed, it’s easier to sell tickets for the Ghost Train than to the Speak Your Weight machine. 

The perception that ‘robots in’ equals ‘humans out’ is not supported by recent studies – or by the 97% human employment rate in South Korea. According to PwC analysis of US Bureau of Labor Statistics data, the most robotics-intensive manufacturing sectors in America (automotive, electronics and metals) employ 20% more mechanical and industrial engineers than other manufacturing sectors, and pay them higher wages – in other words, more skilled human jobs, more money.

In 2015-16, US manufacturers purchased 60,000 industrial robots, but according to the IFR, 250,000 jobs have been created in, or brought back to, the US manufacturing and supply chain sectors since then. Meanwhile, a 1993-2007 study by the London School of Economics revealed that robotics increased productivity in 17 European countries by the same amount as steam technology did during the Industrial Revolution – but in one quarter of the time. 

The UK government report acknowledges both the perception problem and workers’ legitimate fears over their jobs and skills, saying: 

While we do not want to dismiss fears about technology replacing workers, we also urge policy makers, businesses and the public to think about the alternatives. If we fall further behind in productivity and the adoption of new technologies, then future investment decisions will not follow. 

Businesses, investment and jobs will move overseas. The UK’s low automation adoption is part of our lagging productivity, especially for SMEs, which is preventing a much-needed rise in economic growth, wages and living standards. Efforts to remedy this have been slow.

The report urges the government to prioritise SME adoption of automation, and ensure that regulators in industries impacted by new technology have the necessary expertise. Significantly, it also recommends that the government and universities should work with spinout businesses on alternatives to selling themselves off, including help with access to finance, networking, and business advice. Retaining UK entrepreneurship is critical. 

The report continues:

The UK missed its chance to lead on developing industrial automation, but it should be adopting it. Where we have a new chance to lead and succeed is with service robotics and in AI, but only if we are supporting British businesses and researchers to innovate.

Innovate UK – part of UK Research and Investment – has been investing in the UK’s robotics and AI sectors via the Industrial Strategy Challenge Fund (ISCF). For example, it has invested £93 million in robotics for extreme environments over the past two years – robotics, AI, and autonomous solutions for industries such as space, offshore energy, deep mining, and nuclear decommissioning. 

Meanwhile, the formation of the UK’s four robotics hubs, linking academic research with commercial opportunities, has seen the UK win the respect of its research peers worldwide.

Show us the money

But while these investments and policy initiatives – the Sector Deals, the Grand Challenges, the ‘Eight Great Technologies’, and more – have been smart and well targeted, they have been small and piecemeal in global terms. 

The report acknowledges this investment lag, which has been obvious since 2016 when the UK announced at a Japan-UK Robotics and AI Seminar that it would be investing £300 million in the sector by 2020. At the same event, Japan announced investment of £161 billion. Japan has more than 297,000 industrial robots in use, a 23% share of all the robots in the world – and a human unemployment rate of just 2.4%. The message couldn’t be starker: robots don’t mean mass unemployment.

The report says:

The ISCF’s £93 million contribution to robotics is positive but small. It is a welcome first step that many of the projects invested in as part of the Robots for a Safer World Challenge have been funded as part of the UK’s increasing support for low-carbon energy. [...]

In the past two years the UK has managed to secure only around £250 million of venture capital (VC) funding for automation, despite a total global investment of around £10 billion per year. The government has repeatedly promised to do more to help [...] but what is needed now is the promised government support.

Having ignored calls to build and support leadership for the automation sector, the government now has a chance to rethink its attitude. Using the Sector Deals approach, on which it has focused the Industrial Strategy, the government has a chance to bring together the industry, drive investment in the sector, and demonstrate actual support for a sector in which we can be world leading. 

We recommend that the government establish a robotics leadership group, co-chaired by a Minister and an industry leader, to bring together government, business and academia in support of a Robotics Sector Deal.

Whitehall has taken small steps in this direction. In July, the government announced the creation of a Robotics Growth Partnership led by Paul Clarke, Chief Technology Officer of Ocado, and Professor David Lane, Director of the Edinburgh Centre for Robotics, who also runs the UK’s ORCA Hub [Offshore Robotics for Certification of Assets].

Industrial-strength criticisms

The report criticises a lack of detail in the Industrial Strategy itself:-

While this approach has been seen as ‘moving in the right direction’, robotics and automation have only a handful of mentions in the Industrial Strategy White Paper. [...] The strategy lacks any actions or strategies on how risks can be managed or how automation can be exploited to benefit the UK.

This strengthens the case for a UK Robot Strategy, says the report; one that supports British innovation as well as encourages automation. To remedy this, the government should ensure that a UK Robot Strategy is core to the Industrial Strategy, and robotics is an integral part future Grand Challenges.

The report then offers some surprising perspectives, given that it has been commissioned by a government that is widely seen as being too much on the side of big business, and too little on that of the average Briton.

The ownership and use of new technologies, processes and robots is likely to make businesses richer and more powerful. For a fairer society, it is important that we consider ownership models of technologies whilst being cautious not to stifle innovation. 

We have seen from previous inquiries that the practices of businesses such as Amazon and Uber can lead to workers being exploited by increasingly monopolistic firms who earn huge returns that do not flow back to the workers who help create that wealth. 

More co-operative ownership models, as well as greater employee engagement, stronger employment legislation, and a fairer corporate tax regime are key to ensure public support for the benefits of a growth in automation, a rise in living standards, and a fair economy and society.

Indeed, and whenever the UK’s Labour Party has placed the same issues on the table, the UK media has wrongly portrayed its leader as a Luddite. The report does reject the concept of ‘robot tax’, however – something Jeremy Corbyn was criticised for demanding, despite the fact that he did not, as explained in a previous diginomica report.

The report recommends that the government should collaborate with industry to identify the sectors and skills most at risk from automation and develop an action plan. It also suggests that the government supports those most affected and provides local areas with incentives to enable the transition to a modern economy.

It then has another surprise in store: a stark message to those who believe that immigration and Europe are at the root of the UK’s problems: 

Government’s immigration policy should provide certainty and ensure that as we leave the EU, we can recruit and retain researchers from around the world to support the sector, including where they earn below the £30,000 threshold recommended by the Migration Advisory Committee.

We recommend that the government seeks to ensure that the UK has at least associate membership of EU research projects and can effectively collaborate with neighbouring states.

The Government should seek to ensure that our future relationship with the EU and future deals with the rest of the world support new collaboration between institutions, including the free flow of researchers and academics.

My take

If the transition to a new economy is managed badly, entire groups and regions could be left behind, British companies will find themselves uncompetitive, SMEs will form a long tail of unproductive businesses, and academics will be left working in isolation from both industry and their peers – the report’s predictions, not mine.

If only the government could have spent the past three years focusing on these challenges – and could focus on them in the future – the Industrial Strategy might have a chance of succeeding. That this demands partnership with Europe is not in doubt.