Government figures tell us that over the next five years people will retire from 12.5 million jobs, and there will be only 7 million young people to fill them. Somehow the authors of the report also assume that another two million jobs will be created. Oh yes, and last year our blessed fellow countrymen decided that they didn’t want Johnny Foreigners coming over ‘ere and taking our jobs. The inference seems to be that we need to get our ageing baby boomers out of retirement to go fill these jobs.
Now a cynical Ermine thinks to self firstly ‘when Hell freezes over’ and secondly – a number of things that are wrong with this scenario. It’s not just investments where past performance is not supposed to be a reliable guide to the future. I’d say there’s this problem with economic prognostications too.
Let’s take a look at what’s been happening with jobs over the last few decades, shall we?
Once upon a time, like when an Ermine first rocked up for work in the early 1980s, you could apply for a job, and you’d actually be working for the company on their payroll. That was the case whether you were a graduate engineer or if you were the toilet cleaner. Said firm would also invest in you – they would train you, which was of particular relevance if you had a generalist degree or the company worked in a technical specialism that had unusual quirks. They would also pay into your defined benefit pension – for The Firm at least this even applied to the janitors until the mid 1980s.
The something called neoliberalism showed up, and communications and IT improved significantly. A whole bunch of blowhards like Peter Drucker came along and pretty much said that pitch everybody against everyone else, let the devil take the hindmost and may the best man win.
As a result, CEO pay shot up as a multiple of the average employee’s wage, and that was after they hived off the janitors et al to supply services companies and drove wages down to the lowest levels, so the average employee is drawn from a smaller pool of higher qualified staff. That CEO ratio still shot up, not because CEOs add any more value to companies now, indeed looking at stock market returns they’re adding less than before the millennium, but because they are top dog and they can.
A quick detour through Globalisation, BPO and All That
Then in the 1990s and early 200s we had wave upon wave of business process outsourcing which sent anything you could send off to lower wage economies, this afflicted the English speaking world more than others because of a ready global pool of decent English speakers. This has very materially improved global pay and reduced global poverty in a big way, as the the right-wing nutjob Tim Worstall correctly opines. And repeats himself thusly. As do the not left-of-centre Adam Smith Institute.
It isn’t true that everyone benefits from free trade and globalisation. The net effect on all humans is vastly positive, but there are still those that lose. And that’s a political problem, not an economic one. For the people who don’t win are, largely speaking, those below median incomes in the already rich countries.
Now Tim’s probably rich enough not to give a shit, I figure TW is well over the median income in a rich country. So was (and possibly am) I, but I am far closer to the edge than him, so I am more twitchy. None of these fellows are wrong. All other things being equal, for the sum total of humanity globalisation delivers the goods in the way Bob Geldof and so-called aid just didn’t. It probably wasn’t Sir Bob’s fault – the sort of corruption and baksheesh that aid generates is remarkable, there are many problems in the world that helicoptered money just can’t fix. But even the distorted version of free market capitalism that goes now left all that do-gooding in the dust when it came to alleviating global poverty.
Globalisation also needed a population explosion because it needs growth.
There is some argument to be made that it also enabled a shocking population explosion which has made a lot of things like food, water and climate change a lot tougher to nail in future than they were when I was at school, when there were half as many people in the world. I suspect globalisation only works when there is economic growth, and to have economic growth you need growth in the number of consumers, but I am not smart enough to say that is categorically the case. At the moment the score is Oxfam-nil:Globalisation-1
Communism was also a great idea in theory. Trouble was it went against the grain of human nature. So the trouble with globalisation is that people don’t care evenly about humanity in general. They care about the humanity that is closest to them. Within rich countries we have institutions that sort of temper this instinct, but when the people who are getting the uplift are far away, then the people below median incomes in rich countries who are drifting backwards economically get really, really, pissed off. They let people know, through Brexit and Donald Trump among others. In general they want to put a spanner in the works, because nothing pisses people off more than not getting ahead while seeing other people are.
The effect of globalisation on First World Jobs
It makes lovely jobs lovely, and pretty much the rest of them shit. Q: What’s worse than a zero-hours contract job? A: A ZHC job where you get fined £250 a day if you can’t find a replacement if you’re sick. Or only £150. Welcome to the lousy jobs. I am glad that I had my career while the Iron Curtain was still down – true, we had to watch films like Threads and worry about being nuked in four minutes but at least I wasn’t competing with Vladimir and 1 billion in India, and I was working in an analogue world where the cost of replication was higher than now. That suited me very well, because while I am on the right hand side of the bell curve I am not that far to the right of it, and I am an introvert which is maladapted to the interconnected and always-on world of work now. Collaboration and teamwork – meh. You get ahead by having an edge, and you get an edge by spending time understanding what is going on IMO. Chatter on SMS and social media is for gossip, and meetings aren’t much better 😉
Back to the original premise – a deficit of 7 million jobs?
Well they’re not going to be getting old gits like me back out of retirement to go into the bear-pit of zero hours contracts, are they? The second word would the -off. Because all in all, working is increasingly a pretty shit proposal, and it’s particularly crap compared to my experience of working in the past. Fortunately, a whole different bunch of guys is telling us that Humans Need Not Apply and that the robots will be doing all these shit jobs. Hopefully this deficit of people desperate for crap jobs is going to do some good then, and people will automate the crap jobs they can’t get the retired baby boomers to fill. This will finally lift capital productivity in Britain although possibly not per-capita productivity. Pret a Manger say that 1 in 50 of their workers in British. Well, tough luck – Londoners are going to have to pay more of their bonuses for their coffee and snacks or brown-bag it, and some teenagers in London are going to get breaks they couldn’t get before, until the robots come. Or they will set up camp somewhere outside the citadel and bus in the serfs. I am not so sure I find that such a terrible thing.
There, Mr Government and your hired guns. Fixed that for you. Taking 7 million shit jobs out of the economy is A Very Good Thing in this humble Ermine’s opinion. There’s now’t wrong with encouraging those old gits to punch their cards one last time and clear off, even if there aren’t enough worker drones to fill their shoes. The balance had been swinging from Labour to Capital ever since the 1970s. There are too many crap jobs in the UK, and retirement of the Baby Boomers could be just what the workplace needs at the bottom end.
Simple Living In Somerset 
Hmmm…I reckon the robots will be doing all the jobs the day after we get the paperless office.
It seems to me that the future never looks like the experts predict, once we actually get there. We need a jolly good rerun of 1970s episodes of Tomorrow’s World. (I’m reading the TW Annual 1970 at the moment – apparently we should all be living at the bottom of the sea; and no-one saw the internet (or the Googles, Apples, Facebooks and Ubers that came on the back of it.) Hell, the credit card was barely around in the UK, and where would we be without credit? (Yes, in a better place, but you know what I mean…))
Given that the experts thought – all of a week ago – that May would have a 100 seat majority, I’ll take with a pinch on NaCl forecasts about a humanless workplace. Good article, though.
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hehe, I’m still sore about the way my schoolteachers told me we’d be working a couple of days a week. Fat chance of that, eh? Although Philp Brewer did make a good case that we have inflated our lifestyles massively, and I think I read the Adam Smith institute make the same sort of point in a different way.
I can’t help feeling somewhere we turned a left where we should have turned a right between those 1970s shows and now, but can’t really nail where.
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It never failed to amaze me [back when still playing dodge-the-axe in the corporate threshing machine that was our ‘work family’] …..how certain individuals high up the greasy pole were lauded as indispensable to the organisation. Then when they left for some reason everything seemed to trundle along just fine – so what were they doing that was so crucial for all that time? – like Y2K it was all you heard until the minute they vanished, then nobody even mentioned them again.
As I matured into the system, trying to grow as a cog in da machine, or be the best cog I could be, I realised those individuals had only excelled at one thing …..you know those muck-spreaders on farms that can carpet acres of fields with bullsh*t in an impressive time?
On the subject of bullsh*t, most charities I’ve had experience with seem to focus more on providing employment for their founders than whatever their alleged raison d’etre was meant to be. The top branded ones also just have a standard neoliberal structure with the parasites at the top reaping the same p*sstaking salaries as anywhere else in the private sector. Somehow nobody seems to have noticed this fact …..which can be very useful if you’re starting to get too slow to escape the most fired-up chuggers running you down on the high streets. [Top tip – If you’re cornered & desperate, use the get-out-of-jail-free card, tell them you’re unemployed & could they help]
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> how certain individuals high up the greasy pole were lauded as indispensable to the organisation. Then when they left for some reason everything seemed to trundle along just fine
I also wondered that too. Roughly about the same time as I jumped to the fact that reorganisations and management fads came round in cycles over about 10-15 years. I suspect I became unemployable soon after that. I don’t think it’s cognitive decline that limits the length of a working life. It’s cynicism about the cylicality.
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Robots replace some humans in some jobs, but they also create new jobs, mainly in IT. They need a lot of maintenance, since as soon as anything changes – even if it’s the layout of reports they’re processing – robots have to be reprogrammed before they can deal with it. Robotics poses a threat to big business boring job office drones, but it’s not going to kill off entrepreneurship, innovation and properly skilled work that bright people do.
The issue of course is what if you’re not exceptionally bright, but a good diligent little worker bee with as good a right to a decent living as the next worker bee such as myself. I don’t have an answer to that.
I also have no answer to population growth. I’m hoping we might be able to dodge the worst impacts with the help of robotics (robots don’t need to get paid). Our tax system however is problematic. Welfare state relies heavily on taxing labour because governments everywhere – through a lack of balls or a presence of special interests or both – are very bad at taxing the capital. And with Brexit and Trump and such I don’t see how they can get any better at it anytime soon.
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> robots have to be reprogrammed before they can deal with it
but, but ,but–AI, and The Singularity, Ray Kurzweil, all that jazz.
No, I don’t believe it either. But it disturbs me that a load of guys a hell of a lot cleverer than me do 😦
> The issue of course is what if you’re not exceptionally bright, but a good diligent little worker bee with as good a right to a decent living as the next worker bee such as myself.
I fear I was that guy 😉 But then I have probably earned pretty much all the money I will ever earn, so I got lucky. Average wages being lower than 10 years ago in real terms worries me though, although at leats people are racking back spending on frippery it seems!
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I suspect the rise of the robots/AI will benefit the rentiers who invest in the markets, as our capital will be in demand. And there will be many jobs for the IT teams implementing it all. But all those cookie-cutter jobs implementing policies, whether they are serving lunch, processing claims or cutting cloth will be at risk. Globalisation allows the single person or company with the superior idea such quick scalability that we’ll have a few very rich people doing stuff, a wider cohort who do nicely investing in them, and lots of others with nothing to do.
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Concentration is the thing. Removing 10,000 (ordinary living wage) jobs and creating 100 new (very highly paid) jobs.
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“I also have no answer to population growth. I’m hoping we might be able to dodge the worst impacts with the help of robotics (robots don’t need to get paid).”
Robots require energy and energy adds to climate change. Doesn’t matter if the robot is physical or merely bits in the ether serving our whims.
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One of the consequences of Moore’s law is energy per unit of computation keeps falling, especially if you can introduce parallel processing systems, which can run at lower clock speeds per chip. Much of our energy use is for space heating, which robots don’t require. Robot transport systems should require less energy than human ones as the robot does not need similar levels of environmental protection, and weighs less that a human driver.
But if robots lead to rapid economic growth, more energy will be used.
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> Robot transport systems should require less energy than human ones
It’s funny how one of the proposals for freight convoys via robotics which is often touted as an easy win has invented the train 😉
The trouble with robotic transport systemswill be in the humans on the roads, unpredictable and capricious devils that we are!
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Just wanted to say thanks for the blog. Recently read all the posts from the beginning to current. A great read and I really love the sense of humour plus wise thoughts (you also have some great readers who post thoughtful replies). In the current post I particularly liked the reference to Threads. I recently bought it on dvd to show to the DGF who hadn’t seen it before and for a bit of reminiscence. The 80’s styles gave us a bit of a laugh, but it was a grim watch. Let’s hope that things don’t come to that (although with Trump and Putin around, things are closer than we would like). Anyway, cheers once more and keep it up. p.s. good luck with the putative house move.
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> Recently read all the posts from the beginning to current.
I hope there is a message of hope there, I thank you for your dedication! I confess that BitTorrent was my friend for Threads, but I do recall seeing it go out, I had a skanky Betamax tape for a while. And I do hope it never comes to pass!
And I have learned so much from my readers – if there is a SLS equivalent to the Time magazine ‘person of the year‘ it is for my commenters – I am a far wiser investor and human for the insight shared – thank you all!
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“And I have learned so much from my readers ….”: oh, for fuck’s sake, an Oscar acceptance speech.
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I think the robot-thing is still a bit overated. I worked in the council tax section of local gov in 1998. That was supposed to be ‘paperless’, the letters being scanned as they came in. What a joke, I’ve never seen so much paper in all my life. The grounds maintenance company that I worked for recently used to have a robot mower – they managed to break that within a week. Would like to see a robot mowing those reservoir banks. I call BS, yet another thing pushed to scare the scoundrel rabble. Even that robot video I keep seeing looks like it’s just shit itself.
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It’s easy to scoff at the idea of literal robots and AI taking jobs from humans, but just read it as algorithms and business processes instead. Uber’s routing & match making servers, DPD milking their “staff” because they can.
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