Ryan Shorthouse is the Founder of Bright Blue.
Sometimes it is easy to forget how profound an impact the pandemic had on the way we lived. That is not to downplay the lasting detrimental consequences – on schoolchildren’s attendance and learning, and on physical and mental health inequality.
But, for most people, everyday life seems to have pretty much gone back to normal, perhaps with a few more days a week of work from home. It was as if it were all just a bad dream. Yet big changes this decade will significantly impact the world of work – technological and demographic.
First, the dramatic developments in generative AI, especially in this year already, will transform how we work, largely for the better. As the US entrepreneur and investor Marc Andreessen optimistically argues:
“What AI offers us is the opportunity to profoundly augment human intelligence to make all of these outcomes of intelligence – and many others, from the creation of new medicines to ways to solve climate change to technologies to reach the stars – much, much better from here.”
The existing and potential cognitive and creative capabilities of AI are quite phenomenal. We will be able to learn and produce much faster and more accurately.
A recent MIT paper, found that mid-level professionals significantly improved the time and quality of their writing task by using ChatGPT; when Italy banned ChatGPT for a month in the Spring, fearing for data privacy and non-compliance with GDPR, productivity amongst software developers initially nosedived by 50 per cent
Professionals will be freed to invest more time in deeper thinking, collaboration and experimentation, aiding innovation and the creation of new businesses and jobs. The predicted enhancements to individual productivity and economic growth are quite considerable too.
As with all major technological progress, there will be a big boost to net human prosperity and wellbeing. But it won’t be without any pain.
AI will substitute – not just complement – a considerable number of roles: BT announced only last month that approximately 10,000 jobs in the company will be cut by 2030 because AI will do a better job of call handling and network diagnostics. Across the Atlantic, a survey of 1,000 US business leaders using or planning to use ChatGPT in their company found that just under half had already replaced workers with it.
The brutal truth is that employers, almost always eyeing up efficiencies, will be able to get AI to do work much quicker and cheaper than certain current people. Goldman Sachs recently forecast that seven per cent of workers could lose their jobs entirely in the decade after generative AI reaches half of all employers, with advanced and white-collar markets more affected.
Onward noted in their excellent recent report that the jobs that are most threatened by this very high up the occupational ladder:
“It is service-based, white collar, high paid work which is looking most at threat. From graphic designers to lawyers and strategy consultants, the outlook has fundamentally changed.”
Conservatives seek to protect the individual amidst the wider quest for socioeconomic progress. Even though the long-run impact of AI to average individual and national prosperity is likely to be positive, there will be those who struggle; the likely short-term spike in unemployment from the mass deployment of generative AI will increase demands for assistance with unemployment and retraining.
In the UK state assistance during unemployment is, relative to comparable countries, low. This is inequitable for the individuals affected, but inefficient for the economy too.
Skilled people are not given the time to match with a next job that suits their skills, instead often being forced out of desperation to take the first thing that becomes available, depressing productivity.
A stronger social security system should thus be there to support them, giving a much more generous replacement rate to those who have contributed more into the system previously. This will mirror the social insurance, furlough-style systems that exist in countries across the Channel.
On retraining, in contrast, government is doing good – albeit expensive – policymaking.
The ground-breaking Lifelong Loan Entitlement (LLE) will be introduced from 2025, providing individuals with a facility equivalent to four years of post-18 education for any modular or full-time higher technical or degree-level course at a university or college. Recently, the Department for Education confirmed they will now enable recipients to pay for equivalent or lower qualifications through the LLE, which will benefit those displaced by AI.
The second big change affecting the world of work this decade derives from demographics. The lucky baby boomer generation are about to get lucky again, living much longer. The oldest of them are now elderly. The youngest, particularly since the pandemic, are retiring relatively early, especially those from high-paying, professional jobs.
We are therefore about to see a marked rise in the costs that the state bears servicing them: pensions, health and social care.
The age dependency ratio keeps rising, although interestingly, because of our high net migration levels, less so than the average across advanced economies. All this is exacerbated by a falling birth rate, with millennials – now in the prime of childbearing age – struggling to find the financial security to start a family.
Basically, there are two main credible ways to rectify this unsustainable pressure on the public purse: less cost, by reducing taxpayer-funded universal services and benefits for those who are older; or more work, which will increase tax revenues.
Policymakers should hedge their bets and do both.
On reducing costs, government needs to be bold and radically reform the financing of the benefits and services older-aged people rely on, by shifting to a model which better factors in their assets and consumption. The NHS should have more co-payments; a greater amount of social care should be paid for by an individual user’s assets, even after death.
On increasing the quantity of work, there are three main ways of doing this. First is expanding the numbers in the working-age population, principally through greater parental and migrant employment.
Second is expanding the length of time people are working-aged, especially by increasing the age at which people can draw down both their state and private pensions. The recent rise in early retirement is the very opposite of what should be happening with an ageing population.
Windfalls that are now possible from rising house prices, when empty nesters who are mortgage-free downsize, are doubtless fuelling this. So too pension freedoms, where those aged 55 or over access handsome defined contribution pension pots without annuitisation and up to 25 per cent tax-free.
Third, and what could be most transformational, is enabling more people – especially those who are mid-level and mid-career – to do more work in the week, through multiple jobs.
Now, particularly lower down the income spectrum, this is often out of necessity. But at the top of the income spectrum, having supplementary work is often a choice and a luxury, as current or ex c-suite people moonlight as non-executives and consultants.
Portfolio careers, centred around and supported by an anchor main employer, could and should be normalised and democratised.
Covid-19 accelerated growth in flexible and hybrid working, with people having more options about where and when they work: ONS data shows that just before the pandemic, 12 per cent of working adults reported working from home at some point in past seven days; after the pandemic, at the start of this year, it was 40 per cent.
Coupled with the positive productivity-enhancing effects of generative AI, this theoretically gives people more time in, and control over, their working week.
The private benefits are clear: the chance to gain new skills and networks, avoiding financially costly career changes or psychologically costly career stickiness. The public benefits are also evident, in terms of increased revenue.
It is a little more ambiguous for employers. There is the fear of informational, attention, or talent loss. But if employers trust their employees, it might also serve as a tool to aid retention training and new commercial opportunities.
If we are to keep up with the pace of change, policymakers need to be thinking through now how to mitigate existing cultural, regulatory, contractual and administrative barriers to facilitate this shift.
Alas, there is no respite from consequential change after the pandemic, especially when it comes to the world of work. There will be big pressures on and opportunities for work this decade – and no rest for the wicked.