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Speed of innovation could send economies towards stagnation



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A new report launched by Citi and the Oxford Martin School, University of Oxford, argues that secular stagnation in the digital age can only be avoided by a shift towards inclusive growth.

The latest Citi GPS Report, Technology at Work: The Future of Innovation and Employment, explores trends in automation and points to sluggish job creation caused partly by increasing automation.

The report highlights the key challenges, explores some of the new technology brought on by the digital age and sets out an agenda for change, calling for long term thinking to mitigate the negative effects of an ever more automated and digital economy.

The digital age brings with it innovation and technological change that is affecting both the way we live and work. Citi Research analysts explore how this change is affecting different sectors. Big data and the digitisation of industries are driving disruptive change in banks, advertising, software and IT services. The introduction of the Internet of Things and the advancement of sensors are helping progress intelligent robots with implications for the defence, manufacturing, healthcare, and consumer industries, while the advent of autonomous robots is drastically changing the auto, mining and printing sectors.

Dr Carl Benedikt Frey and Associate Professor Michael Osborne, the report’s Oxford Martin School authors, have collaborated with Citi analysts to investigate the extent of automation, its effects on the labour market, and the potential risk of long term stagnation. Technology at Work marks the start of a new programme of research supported by Citi, the Oxford Martin Programme on Technology and Employment.

New analysis by Frey and Osborne in the report highlights how the digital age will transform the nature of work across industries. For example, up to 87% of jobs in Accommodation & Food Services are at risk of automation. Even in some relatively skilled industries, such as Finance and Insurance, up to 54% of jobs could be displaced over the next decade or two.

Carl Frey, Co-Director of the Oxford Martin Programme on Technology and Employment, and co-author of the report, explains a key trend: “So far the digital age has not created very many new jobs.  According to our estimates only 0.5% of the US workforce is employed in industries that did not exist at the turn of the century.

“Digital companies need very little capital to get started and not much labour to grow their financial value. For example, WhatsApp had just 55 employees when it was acquired for $19bn. While new technologies create new occupations, they are higher skilled jobs and are not created at scale.”

Michael Osborne, Co-Director of the Oxford Martin Programme on Technology Employment, and co-author of Technology at Work, spells out just how quickly change is happening: “The successes of autonomous driving, speech recognition and machine translation have, in the space of little more than a decade, disproved long-held ideas about the distinction between human and machine. Many of these advances, that enable better data and networking, are improving our ability to innovate. This is likely to lead to further acceleration in the rate of technological change.”

Kathleen Boyle, Citi GPS Managing Editor, acknowledges that mindsets need to change, saying: “A key challenge of the 21st century will be to make growth inclusive again. This is in everyone’s interest, as rising inequality not only divides society but also threatens macroeconomic stability. Reduced investment and consumption increase the risks of a period of stagnation.”

Technology at Work outlines the options available, including access to education and training, examining the potential for MOOCs (Massive Open Online Courses) to allow people to study at their own rate and without the huge costs attached to traditional education.

As to where the new jobs might come from, the authors are hopeful and positive.Carl Frey concludes: “Predicting the type of new jobs that will emerge is difficult. Nobody in the early 20th century would have predicted many of the jobs and industries we have today, such as software engineer or tourism.

“Public investment in promising technologies could help drive job creation. Solar energy systems engineers, wind energy engineers, informatics nurse specialists, and biomass plant technicians are new and emerging occupational titles, where public spending could help facilitate new job creation. These are all very different jobs, but they share one characteristic: they are significantly more skilled than most jobs of the past. Although education alone is unlikely to solve the problem of surging inequality, it remains the most important factor.”

Technology at Work: The Future of Innovation and Employment is available online here.

Find out more about the Oxford Martin Programme on Technology and Employment here.

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For interviews, images and further information, please contact

Carole Scott, Head of External Relations and Media, Oxford Martin School:

+44 1865 287438

+44 7825 931579

carole.scott@oxfordmartin.ox.ac.uk


Citi

Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.
 
Additional information may be found at www.citigroup.com | Twitter: @Citi | YouTube: www.youtube.com/citi | Blog: http://blog.citigroup.com | Facebook: www.facebook.com/citi | LinkedIn: www.linkedin.com/company/citi

 

Oxford Martin School

The Oxford Martin School is a world-leading centre of pioneering research, debate and policy for a sustainable and inclusive future.

It supports teams that cut across disciplines because this century’s challenges cannot be understood and addressed by any one academic field alone. The School invests in research that conventional funding channels can’t or won’t take on but which could have a major impact on the wellbeing of this and future generations.

The Oxford Martin School seeks to have an impact through new approaches to big challenges, scientific discovery, technological innovation and evidence-based policy recommendations. It also aims to increase public understanding of the most pressing challenges of our time.

Find out more at: www.oxfordmartin.ox.ac.uk on Twitter @Oxmartinschool and on Facebook at: www.facebook.com/oxfordmartinschool