What does the future hold?

“Accurate predictions” and “economists” are not words which always go together and the longer the time period, the less accurate are predictions likely to be. Last year, it was predicted that driverless cars would soon be with us and we would be summoning our driver-free Uber with as little worry as ordering a take-away via Deliveroo. However, following the death of a 49-year-old woman in Arizona, as a result of a collision with an Uber vehicle being driven in autonomous mode, (with a human behind the wheel), both Uber and Toyota have suspended trials and a number of American states are reviewing their attitude to trials of driverless vehicles.

A worry which has been with us for longer is the impact of technological progress and more recently AI, on employment prospects. Keynes, in 1930, during the Great Depression, wrote an article predicting a 15 hour working week by 2030. For him, this was not a worry since he suggested that the average person would be significantly richer in 2030 than in 1930, since businesses would still be producing goods and services and workers enjoying their increased leisure. However, he did raise the possibility of technological unemployment where the fall in demand for labour from technological progress was greater than the increased demand for labour needed to produce new goods and services. Trying to estimate the costs and benefits of new technology in terms of employment has been a problem since the Luddites in the 19th century – English textile workers and weavers who destroyed machinery which they thought would take their jobs away. On the other hand, technological optimists see the arrival of robots as an advantage since they will allow tedious, repetitive jobs to be undertaken by machines while the humans focus on rewarding, creative areas.

Examples support both views. The rise of online shopping is a cause of the decline in high street retailers. However internet shopping has created jobs in warehouses for workers to fulfil orders and among van drivers. But, in the future, will the goods ordered be collected from the shelves by robots and delivered by drones? What will happen to the number of workers in supermarkets if the technology used in Amazon’s cashless store becomes more widespread? There is a consensus that the types of jobs most at risk are those which are routine and repetitive while the safest are those which involve creativity, judgement and manual dexterity. An area which should be secure, and in which the UK is currently strong, is the creative sector, which covers such things as advertising, film and television programme making, architecture, and fashion, employing two million people and contributing over 5% to GDP. One might also think that teaching is a safe occupation since, so they tell me, it involves judgement, empathy and creativity. But if the school of the future is based round individualised learning with students working in large open-plan spaces, supported by “facilitators”, will so many people be needed? How long before we get the department blog generated with no human involvement? How do we take account of the jobs which have not yet been created?

What is clear is that there will need to be resources put into re-training existing workers to allow those who have lost their jobs to move into new areas and, more importantly, those entering school in September, will need to be taught to be adaptable and creative so they can learn new skills, rather than being trained in the skills in use today.

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Are apprenticeships a solution to the UK’s low growth rate?

Last month, in case you missed it, we had National Apprenticeship Week. In 2015 the government set a target of creating three million apprenticeships by 2020 to improve the skills of the labour force and, in 2017, they established an apprenticeship levy which made businesses with a wage bill of £3m or more pay 0.5% of their labour costs into a fund to pay for training.

Apprenticeships are not new, dating back to medieval times, and, in the 1960s, about 1/3 of school leavers took this route into employment. However the raising of the school leaving age, the desire of governments to promote university education and a view that they are inferior to university degrees, have caused a decline in the importance of apprenticeships. More recently, as the cost of university education has risen and the UK’s productivity growth has fallen below our competitors, the government has seen apprenticeships as an alternative to university, which would meet the skill shortages which have plagued the UK economy in recent years and boost productivity.

A survey in March 2018 suggests that the target will not be met and businesses have called for a review of the apprenticeship levy which is intended to fund the scheme. Part of the problem is the low wage offered to apprentices in the first year of training compared to those in work (£3.70 versus £4.20 per hour for those under 18, £5.90 for those aged 18 – 20 and £7.38 or over for those aged over 21). In some cases, apprentices were paying more to travel to work and other expenses than they were receiving and complaints were also received that they were being used as a form of cheap labour, doing the same work and having the same responsibilities as non-trainees.  Poor mathematical and linguistic skills are also a bar to completing an apprenticeship and, despite a desire to help younger workers into employment, there is evidence that some firms are using their apprenticeship fund for re-training older workers or providing management training.

We are still a long way from the success of the German vocational training programme which is seen as an attractive alternative to higher education, catering for about 60 per cent of the country’s young people. Their programmes are three-year schemes, either school-based with work placements or more business-based with training also undertaken in school and result in nationally-recognised qualifications which have the same status as academic qualifications and are not regarded as being second-class and more suitable for the less academic.  Although their schemes are not the only reason, it is worth noting that the German unemployment rate for those under 25 has averaged approximately 1/3 of the EU average.