2/11/2020: Technological Deepening and De-globalization post-COVID

Interesting insights from McKinsey on changes in technology adoption in response to COVID19 pandemic:

In the ed, I marked two types of technological frontier shifts: the ones relating to displacement of status quo-ante in supply chains - re-orientation from China; and the ones relating to technological deepening. Both are the legacy of the U.S. political and economic shift toward de-globalization. 

4/10/20: Technological Deepening Is Coming for Our Jobs

 

In my recent article for The Currency (link here: https://trueeconomics.blogspot.com/2020/09/my-recent-article-on-potential-long.html), I argued that COVID19 will act as an accelerator of technological capital deepening in the modern economies, with a resulting faster displacement of workers (including highly skilled ones) by technology. 

McKinsey survey of the developing trends in businesses strategic responses to the pandemic confirms my hypothesis:

Per above, across all sectors, and (peer charts below) across specific sectors, businesses are planning to prioritize deployment of technology in addressing long-term change in response to the current pandemic. 

McKinsey state that "Fifty-five percent of leaders anticipate that at least half of their organization’s workforce will be fully or partially remote postcrisis. While the expectations vary widely by industry—from 69 percent predicting this level of remote work in technology, telecommunications, and media to 43 percent in advanced industries—even in the industries where manufacturing, patient care, and sales transactions often require people at offices, stores, plants, and other company facilities, a significant portion of the workforce may be partially or fully remote." Source: https://www.mckinsey.com/business-functions/organization/our-insights/the-need-for-speed-in-the-post-covid-19-era-and-how-to-achieve-it. And "Our survey results show that executives are focused on three courses of action ... making good decisions more quickly, improving communication and collaboration, and making greater use of technology."

26/9/20: Workers Should Brace Themselves for the post-COVID19 New World

 

My recent article on potential long-term impacts of COVID19 pandemic on corporate development and investment strategies for The Currency: https://www.thecurrency.news/articles/24259/workers-should-brace-themselves-things-will-only-get-worse. 

11/3/15: The looming computerisation of European jobs

Two and a half years ago (http://trueeconomics.blogspot.ie/2012/08/2882012-challenging-constant-growth.html), I highlighted the research by Robert J. Gordon on the secular slowdown in economic growth awaiting the global economy, linked to the 'flattening out' of returns to technological innovation hypothesis.

Recent research from the Bruegel Institute (see: http://www.bruegel.org/nc/blog/detail/article/1394-the-computerisation-of-european-jobs/#.VQAET3EABEU.twitter) attempted to provide some estimation of the related topic: the topic of jobs displacement via technological innovation.

This represents a very important and interesting piece of work, quantifying risk exposures across the European economies to computerisation, robotisation and automation trends. The map Bruegel provides clearly shows the link between lower value-added sectors activity share of country GDP and the risk of jobs displacement due to technological innovation. However, even at the lower end of displacement scale, 47-49 percent of jobs are at risk, and this is a significant number. Worse, as authors correctly (in my view) suggest, the impact will be more pronounced for lower quality jobs, more reliant on labour and less related to human capital and complementarity between human capital and technology. In other words, already sizeable economic impact is likely to be magnified by an even larger social impact.

This topic is one of the key ones to focus on when thinking about the future economic, social and political developments. Just to give you a taster for the thinking ahead of us: in the majority of peripheral economies and indeed across the EU, jobs losses during the recent crises - the Global Financial Crisis, the Great Recession and the Sovereign Debt Crisis - were relatively concentrated in lower skills end of jobs spectrum, although this concentration was not as high as the bias expected for exult from technological displacement of jobs. Still, the relatively benign polarisation of the employment markets during the crises produced a prominent backlash in political sphere across the EU, with strengthening of the extreme political forces. Now, imagine the effect a much more socially concentrated disruption will cause to the traditional political systems.

Note: some links to related research

• http://trueeconomics.blogspot.ie/2014/06/2462014-us-productivity-slowdown-its.html
• http://trueeconomics.blogspot.ie/2013/11/14112013-human-capital-age-of-change.html
• http://trueeconomics.blogspot.ie/2014/05/1552014-innovation-employment-growth.html
• http://trueeconomics.blogspot.ie/2013/11/11112013-great-tech-future-for-ireland.html
• And a series of links specific to the Financial Services sector being disrupted by technological innovation: http://trueeconomics.blogspot.ie/2015/03/8315-fintech-entrepreneurs-reshaping.html