Perspectives

Technology and people: The great job-creating machine

August 2015

Deloitte economists Ian Stewart, Debapratim De and Alex Cole study employment data from the last 144 years to assess how technological change has affected employment in England and Wales

On 8th October Ian Stewart participated in The Guardian’s Tech Weekly podcast, entitled “Robots are coming for you job, and that’s not all…”. The podcast hosts a lively discussion on what effects the rapid rise in automation could have on our economy and asks if we are about to be hit by a robot revolution. Fellow guests included Martin Ford, author of new book, Rise of the Robots: Technology and the Threat of Mass Unemployment and Dr Joanna Bryson, expert in robotic ethics at Bath university.

Key findings

  • Technology has created more jobs than it has destroyed in the last 144 years
  • It has been saving us from dull, repetitive and dangerous work. Agriculture was the first major sector to experience this change. In 1871 it employed 6.6% of the workforce of England and Wales. Today that stands at 0.2%, a 95% decline
  • Overall, technological innovation has resulted in fewer humans being deployed as sources of muscle power and more engaged in jobs involving the nursing and care of others. Just 1.1% of the workforce was employed in the caring professions during the 1871 census. By 2011, these professions employed almost a quarter of the England and Wales workforce
  • Technology has boosted employment in knowledge-intensive sectors such as medicine, accounting and professional services
  • Finally technology has lowered the cost of essentials, raising disposable incomes and creating new demand and jobs. In 1871, there was one hairdresser for every 1,793 English and Welsh citizens; now there is one for every 287.

In a world of driverless cars, self-checkouts and telephone banking, would humans have any jobs at all?

We study data from the England and Wales census since 1871 to see what history has to say about technological innovation and its effects on employment. The data show that technology has created more jobs than it has destroyed in the last 144 years. We also identify four mechanisms through which technology has affected employment in the past.

The debate on technology has many aspects, encompassing everything from education to inequality, productivity to jobs. Our analysis focuses solely on employment.

We argue that the role played by technology in boosting employment often goes overlooked because of its more conspicuous destructive effects. The stock of work in the economy is not fixed. The last 144 years demonstrate that when a machine replaces a human the result, paradoxically, is faster growth and, in time, rising employment. Indeed, one only need look at the UK's employment figures, which have more than doubled since 1871, to see that technological change has coincided with the creation, not destruction, of work.

However, technological change does create policy challenges. If the pace of adoption of technology is accelerating, society will need to prepare for higher levels of technological unemployment. And the way in which change increasingly rewards high-level education and skills suggests that income inequality may yet widen. Rapid advances in technology mean that education, training and the distribution of income are likely to be central to the political debate for many years to come.

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