This speech was delivered at the German British Forum conference on Digitalisation and The Future of Work at Liverpool Town Hall, Liverpool, L2 3SW . Please check against delivery.
Mr Ambassador, ladies and gentleman good morning. Guten morgan meine damen und herren, willkomen in England.
It’s lovely to be here in Liverpool and to be able to speak to you this morning.
Bob, thank you so much for inviting me to speak at your conference.
I know that you had wanted me to talk about Brexit – and I will say something about Brexit – but I think the future of work is such an important issue, that I would like to speak on it. It goes to the heart of so many of our problems and it is critical for our future prosperity.
Mr Ambassador your opening address admirably sets out the opportunities and risks of the 4th Industrial Revolution on a note of optimism. I share your outlook and I value your comments about Germany’s approach. We can learn from your country’s commitment to co-determination, vocational education, and to government, business and trade unions cooperating in planning your future.
Ladies and gentleman, the focus of this conference is how you will meet the business challenges of the digital age, so I want to contribute with some thoughts from a British perspective.
The value of work
Just down the road from here, 53 years ago my late father arrived at the docks from Nigeria. He came to study and to make his fortune. He came to work hard and he succeeded and built up his business. He instilled in me the belief that if I wanted a good home and to support my family I must work hard for it. Nothing would come free. That work ethic, his belief that work gives us dignity and respect, is part of our British culture.
It is the way we contribute to society, and it is part of a reciprocal social contract - the giving of our effort and our taking when in need - that holds our society together. We work, we build our society, we share in its prosperity.
But ladies and gentleman this social contract around work has broken down.
In the decades after my father arrived here parts of our country have been devastated by deindustrialisation. This wave of globalisation and the first fruits of technological innovation destroyed certain forms of work or exported them overseas to low wage countries. This loss of work has had a devastating impact.
Some say, good riddance to the dangerous work in the coal mines, the hard labour of the steel mills, the monotony of the factory floor, particularly families who worked in them.
They want something more for their future generations and I have every sympathy with that.
But we must never forget the value of work because without it people are denied a sense of dignity and of community when this was happening. People felt they were paying their way and contributing to the common good of the country. When they lost work, the meaning and purpose of life was taken away from them.
Across former industrial regions benefit take up for chronic illness multiplied. Because when people lose their mission in life research shows they are at greater risk of sickness, or substance abuse. Families can start breaking apart under the pressure, crime rises, mental illness rises, educational achievement collapses.
During this wave of globalisation the returns to capital also reached an all-time high, while returns to labour fell to an all-time low. The last thirty years has seen a fall in the labour share of national income. And now the Bank of England predicts 15 million workers are at risk of losing their jobs through automation. The OECD forecasts automation will replace tasks in jobs impacting an average 9 per cent of jobs across the OECD countries. Whichever prediction proves correct the future of work is going to be volatile and insecure.
We are already feeling the affect as populism exploits people’s insecurity and Europe’s electorates turn against mainstream political parties. Here in Britain the broken social contract around work is a prime cause of Brexit.
I campaigned passionately for Britain to remain part of the EU. I am convinced that we are better off as a country inside. But I understand the discontent that led to Brexit. People voted against the rich and powerful elites in London who they believe take from the country and give nothing back in return. They believe the EU is run by and for these elites.
And ladies and gentleman it is in this state of political turmoil that we are entering a new machine age. A digital revolution that promises both boundless opportunity and unpredictable levels of disruption. But let me say that the British people do not want a return to the industrial past. And there is no appetite to pull up the drawbridge. They want their leaders to learn the lessons of our recent history. Despite the difficulties many face they are ready for change - providing the costs and benefits are fairly shared.
The new machine age
When we look into the future we see science fiction becoming fact. Some predict humanity will change more in the next 20 years than in the previous 300. They point to the iPhone – only ten years old. The Google self-driving car project begun only in 2009. IBMs Watson computer won the game show Jeopardy in 2011 and today it provides cancer treatment diagnostics.
Moore’s Law states that every 18-24 months computing power will double. Technology grows exponentially - in 6 or 7 years time we will have computers a million times more powerful than those today.
An Exabyte is a multiple of the unit of digital information. The entire printed content of the Library of the US Congress, the largest library in the world, can be stored in an exobyte 100,000 times. Last year we exchanged 11000 exobytes of information over the internet.
Some argue Moore’s Law will continue indefinitely, others that it may end in the next decade. We know that it has slowed.
But there is now Quantum computing.
If our current computers can read every book in the Library of Congress one by one, quantum computer technology will read them all at once. And big data is the new oil, fuelling machine learning and artificial intelligence.
90 per cent of the world’s data has been created in the last two years. So new machines are now speaking, seeing, understanding, hearing, writing. The technological revolution has swept through the music industry, the media, mobile phones and ecommerce. Sales, transport and logistics are feeling the impact. Routine medicine and teaching, taxi driving, chauffeuring, and delivery vans are under threat. Waiting in line are banking, energy and insurance.
What will happen to people?
Fox Conn builds around one third of the world’s consumer electronics. It has already replaced 60000 of its workers with robots.
In other words robots are now cheaper than human beings earning $5 a day.
The future of work
Technology may be the single most important force shaping the future of jobs and wages. Will job loss be compensated for by goods and services becoming cheaper? Will this increase incomes and boost demand for new goods and services which create new jobs? It is how past technological revolutions have behaved. But some do not believe the new digital economy will produce enough new jobs to replace the old ones.
Now, the truth is we do not know what will happen – there is little conclusive evidence. But, already, there is talk about a post-work society and the call for a Universal Basic Income, an idea embraced amongst others by Milton Friedman, Silicon Valley and some on the left. Some want to fund it by taxing robots, others by a tax on using customers data.
I believe UBI is a counsel of despair. A signal that we have given up on fixing the social contract that binds our society together. It would be the victory of selfish individualism.
Society can wash its hands of responsibility for the poor. The jobless can be abandoned. Across the country, workless neighbourhoods would become impoverished reservations of the dispossessed, subservient to and totally dependent on the state, denied any proper agency of their own.
When people come to my constituency surgeries without work, they want help to get back on their own two feet and to provide for themselves – they do not want to depend on the state for everything.
So our challenge here in Britain is to make work matter. We need to put people at the heart of business success. Automation could liberate people from drudgery, if the public and private sectors work in partnership to make it happen. Work could become more fulfilling. In the new economy our most valuable asset will be human beings.
Machines can only simulate. We have emotional intelligence, perception and the capacity to create, empathise, persuade and reason in abstract ways. We can make imaginative leaps, and we have intuition. In the new economy what will have added value is what is devalued today – the emotional labour of caring, communicating, connecting and creating.
We will not be able to achieve successful businesses in a failing society. There will be a few who believe otherwise but the headwinds will be against them. We do not want glittering technology in a shabby and run down country. The purpose of technology is to help us achieve human flourishing and the common good. There is such a thing as society so we must therefore protect the most vulnerable and ensure the benefits of these new technologies are apportioned in a social just way.
So we will need to work out together how we can best retain and retrain. How we can employ new technologies to enhance human connection not impoverish it. What kind of ethics of algorithms, data and privacy we need. Facebook, Google and Amazon are the new oil companies mining data and we need to regulate these platform monopolies, stop transfer pricing, and make sure they pay their fair share of tax.
Mr Ambassador your country is leading the way in this cooperative approach. In Germany your former Federal Minister of Labour and Social Affairs Andrea Nahles has called for a new ‘social compromise which benefits employers and workers alike’. I know your trade unions are playing an impressive role. Here in Britain our TUC recognise this and along with the CBI are following your example with a call for a Joint Commission on Artificial Intelligence to bring together business, employees and academics to examine the impact of AI on people and jobs – I fully support this.
Our Anglo Saxon economy has much to gain from co-determination, worker participation, and a national system of life long vocational education.
In the new age of knowledge we will need an education system that encourages our children to learn how to think creatively and learn emotional intelligence. We will need a skills system that provides lifelong learning for all of us far into adult life, so we can adapt to a fast changing labour market. We will need a national infrastructure fit for the 21st century. We will need a new model of social insurance based on contribution which will help enable each of us to acquire the assets and capabilities we will need for our security and prosperity, and much more.
Thank you again for inviting me today to open your conference. I wish you an enjoyable and productive day.
Whatever the final outcome of Brexit I trust we British and Germans will remain true friends. I would like to believe that we will work together and help one another to shape the future of our European continent.