TECHNOLOGY at WORK the Future of Innovation and Employment
Total Page：16
File Type：pdf, Size：1020Kb
TECHNOLOGY AT WORK The Future of Innovation and Employment Citi GPS: Global Perspectives & Solutions February 2015 Carl Benedikt Frey Michael Osborne With contributions from Citi Research Citi is one of the world’s largest fi nancial institutions, operating in all major established and emerging markets. Across these world markets, our employees conduct an ongoing multi-disciplinary global conversation – accessing information, analyzing data, developing insights, and formulating advice for our clients. As our premier thought-leadership product, Citi GPS is designed to help our clients navigate the global economy’s most demanding challenges, identify future themes and trends, and help our clients profi t in a fast-changing and interconnected world. Citi GPS accesses the best elements of our global conversation and harvests the thought leadership of a wide range of senior professionals across our fi rm. This is not a research report and does not constitute advice on investments or a solicitation to buy or sell any fi nancial instrument. For more information on Citi GPS, please visit our website at www.citi.com/citigps. Citi GPS: Global Perspectives & Solutions February 2015 Carl Benedikt Frey is Co-Director for the Oxford Martin Programme on Technology and Employment and Oxford Martin Citi Fellow. He is a Doctor of Economic History at Lund University, an Economics Associate of Nuffield College, University of Oxford and Specialist Advisor to the Digital Skills Select Committee of the House of Lords. His research interests include the transition of industrial nations to digital economies and subsequent challenges for economic growth and employment. In particular, his work focuses on technology shocks and associated impacts on labour markets and urban development. His work has been covered by the BBC, CNN, The Economist, Financial Times, Wall Street Journal, Bloomberg, BusinessWeek, The New York Times, The Washington Post, Der Spiegel, Scientific American, TIME Magazine, Forbes, and many other outlets. Michael Osborne is Co-Director for the Oxford Martin Programme on Technology and Employment and Associate Professor in Machine Learning at the University of Oxford. He is an Official Fellow of Exeter College, University of Oxford and a Faculty Member of the Oxford-Man Institute for Quantitative Finance. He is an expert in the development of machine intelligence in sympathy with societal needs. His work on robust and scalable inference algorithms in machine learning has been successfully applied in diverse and challenging contexts, from aiding the detection of planets in distant solar systems to enabling self-driving cars to determine when their maps may have changed due to roadworks. He also has deep interests in the broader societal consequences of machine learning and robotics, and has analysed how intelligent algorithms might soon substitute for human workers. Robert Buckland Natalia Mamaeva Managing Director Director Chief Global Equity Strategist Head of European Engineering Research +44-20-7986-3947 +44-20-7986-4077 [email protected] [email protected] Graeme McDonald Ebrahim Rahbari Director Director Japanese Machinery & Shipbuilding Global Economics Team Analyst +81-3-6270-4732 +44-20-7986-6522 [email protected] [email protected] Joe Seydl Robert Garlick Senior Associate Managing Director Global Economics Team Global Equity Product Head +1-212-816-2473 +44-20-7986-3547 [email protected] [email protected] Contributors James Ainley Klaus Bergelind Scott T Chronert European Hotels & Leisure Analyst European Machinery Analyst US Small/Mid-Cap/ETF Strategist Andrew Coombs Jason Gursky Keith Horowitz, CFA European Banks Analyst US Aerospace & Defence Analyst US Banks & Brokers Analyst WIliam R Katz Arthur Lai Dr. Alex Leveringhaus US Brokers & Asset Managers Analyst Asian Display and Touch Panel Analyst Oxford Martin School Atif Malik Mark May Itay Michaeli European Semiconductor Analyst US Internet Analyst US Autos & Auto Parts Analyst Justin Morris Walter H Pritchard, CFA Ashwin Shirvaikar, CFA European Med Tech & Services Analyst US Software Analyst US Computer Services & IT Consulting Analyst Jim Suva, CPA Philip Watkins Kenneth Wong, CFA US IT Hardware & Supply Chain Analyst European Autos Analyst US IT Hardware & Software Analyst February 2015 Citi GPS: Global Perspectives & Solutions 3 TECHNOLOGY AT WORK The Future of Innovation and Employment It is a pleasure to introduce Technology at Work: The Future of Innovation and Employment. This report is the second in a long-term series of Citi GPS reports co- produced by Citi and the Oxford Martin School at the University of Oxford in order to explore some of the most pressing global challenges of the 21st century. This report follows the launch report in the Citi Oxford Martin School collaboration that was entitled Future Opportunities, Future Shocks: Key Trends Shaping the Global Economy and Society which outlined not just the key trends that we see shaping global markets, society and technology but also the potential risks and shocks to the global system. In this new report, Oxford Martin School academics Dr. Carl Benedikt Frey and Associate Professor Michael Osborne examine a pressing subject increasingly in the headlines: the changing nature of innovation and work, and the associated implications for the future of employment and society more widely. We are also very pleased to say that this report marks the launch of the Oxford Martin Programme on Technology and Employment, a long-term programme of research at the University of Oxford supported by Citi that will focus on many of the areas covered in this report. The digital age is set to cause more upheaval than previous technological revolutions because change is happening faster than ever before and is fundamentally altering the way we live and work. Technology is now enabling not just the automation of repetitive tasks but also cognitive tasks involving subtle and non-routine judgment. Through robotics, big data, the digitisation of industries and the Internet of Things the nature of occupations and whole industries is changing and also the dynamics of economic growth. The economic benefits of recent technological developments are not being widely shared. Productivity has increased globally but real median wages have stagnated in many OECD countries leading to significant declines in labour’s share of GDP. Writing in partnership with Citi analysts, Carl Frey and Michael Osborne comprehensively assess the extent of automation and its effects on the labour market across industries and countries. Crucially, in addition to analysing the risks and opportunities of the digital era, the authors propose pathways and strategies that can help governments and societies adapt successfully. We hope that you enjoy this Citi GPS report. Going forward, further reports will share the results of the exciting collaboration between Citi and the Oxford Martin School. Andrew Pitt Ian Goldin Global Head of Research Director of the Oxford Martin School Citi Professor of Globalisation & Development University of Oxford © 2015 Citigroup The Changing Nature of Innovation and Work Addressing inequality brought on by technological change ANNUAL SUPPLY OF INDUSTRIAL ROBOTS BY REGION PERCENT OF US JOBS AT RISK DUE TO COMPUTERISATION Source: IFR World Robotics 2014 Source: Frey & Osborne (2013) 2017E 186,000 Asia Europe Americas HIGH 2014 47% 120,000 MEDIUM 2012 84,645 19% LOW 55,000 46,000 33% 40,000 41,218 33,700 28,137 PRODUCTIVITY HAS INCREASED FASTER THAN WAGES IN THE US Source: Bureau of Labor Statistics, Citi Research 250 210 170 130 90 50 1950 1960 1970 1980 1990 2000 2010 Real output per hour worked Real compensation per hour worked WHILE INCOME SHARE OF THE TOP 0.1% HAS INCREASED Source: World of Top Incomes Database, Citi Research 10 09 08 07 06 05 04 03 02 01 1950 1960 1970 1980 1990 2000 2010 US UK France Japan 6 Citi GPS: Global Perspectives & Solutions February 2015 Contents 1. The Changing Nature of Innovation 7 2. Technology at Work 15 3. Technology in the 21st Century 23 The Big Data Revolution and the Digitisation of Industries 23 The Internet of Things and Advanced Sensors 31 Intelligent Robotics 34 The Market for Industrial Robotics 40 Autonomous Robots 49 3D Printing 55 4. The World of Work in the 21st Century 57 The Expanding Scope of Automation 57 Technology and New Work 63 The Concentration of New Work and the Rise of Innovation Cities 64 Self-Employment: The New Normal? 65 5. Digital Transformation: Risks and Opportunities 67 Risks 67 Inequality 67 Macroeconomic Stability Risk 72 Secular Stagnation 72 Opportunities 78 Productivity 78 The Sharing Economy 80 A World of Leisure 81 6. Adapting to Technological Change: Pathways and Strategies 83 Planning for the Long Term 83 Tax Wedges and Active Labour Market Policies 84 Making Growth Inclusive 88 Transforming Education 89 About the Oxford Martin School 92 References 93 The Oxford Martin Programme on Technology and Employment is a new research programme established in January 2015 with support from Citi. It has been created to investigate the implications of a rapidly changing technological landscape for economies and societies. The programme will provide an in-depth understanding of how technology is transforming the economy, to help leaders create a successful transition into new ways of working in the 21st century. The programme is part of a wider research partnership between the Oxford Martin School and Citi, analysing some of the most pressing global challenges of the 21st Century. © 2015 Citigroup February 2015 Citi GPS: Global Perspectives & Solutions 7 1. The Changing Nature of Innovation In addition to providing remarkable The 21st century has already brought remarkable technological achievements in technology… achievements. The leading corporations of the digital age — including YouTube, Facebook and eBay — barely existed only a decade ago. The Human Genome Project was completed in 2003, the year Skype was first released. The first iPhone was launched in 2007 and in 2010 Google announced their first fully autonomous car.