Fourth industrial revolution set to benefit richest, UBS report says

The richest stand to gain more from the introduction of new technology than those in poorer sections of society, according to a report that warns of the impact on low-skilled roles from increased use of automation.

The so-called fourth industrial revolution, following on from the introduction of steam power, electricity and electronics, will have less of an impact on developed economies, but emerging markets will suffer when artificial intelligence and robots become widely used, reducing the competitive advantage of their cheap labour.

The report by Swiss bank UBS, published on Tuesday to coincide with the start of the World Economic Forum in Davos, warns that some skilled work is also at risk as robots become sophisticated.

“Near-term polarisation in the labour force and greater income inequality imply larger gains for those at the top of the income, skills and wealth spectrums,” the report says. “These individuals are likely to be best placed from a skills perspective to harness extreme automation and connectivity; they typically already have high savings rates and will benefit from holding more of the assets whose value will be boosted by the fourth industrial revolution.”

Last year, a report by Bank of America Merrill Lynch also pointed to the potential for a rise in inequality as a result of increased automation. That report cited research by Oxford University which said that up to 35% of all workers in the UK, and 47% of those in the US, are at risk of being displaced by technology over the next 20 years.

The theme of this year’s gathering of business leaders and policymakers in Davos is the introduction of new technology. The WEF organisers have already predicted that 7 million jobs could be lost in five years, with women losing out the most.

The report by UBS points to downward pressure on the wages of low-skilled workers. “By contrast, the potential returns to highly skilled and more adaptable workers are increasing,” the report says.

“Many labour-­intensive firms should be able to boost profit margins as they substitute costly workers for cheaper robots or intelligent software ... For nations, the largest gains from the fourth industrial revolution are likely to be captured by those with the most flexible economies, adding a further incentive for governments to trim red tape and barriers to business.

“Automation will continue to put downward pressure on the wages of the low skilled and is starting to impinge on the employment prospects of middle-skilled workers. By contrast, the potential returns to highly skilled and more adaptable workers are increasing.”

Workers already displaced by automation, such as those on assembly lines, could also feel the impact of the latest technology, as robots which are able to move around – so-called cobots – are able to perform more intricate tasks.

“The greatest disruption, however, could be experienced by workers who have so far felt immune to robotic competition, namely those in middle­-skill professions,” the report says. It points to clerical work, such as customer service, being replaced by artificial intelligence. Insurance claims could also be settled without human intervention.

The US could “onshore” work back from low-cost labour markets, the report added.

Powered by article was written by Jill Treanor in Davos, for on Tuesday 19th January 2016 15.45 Europe/ © Guardian News and Media Limited 2010


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