A focus on skills is needed to stop AI creating economic divides

2 Feb 18

Automation could be a good thing but we need to focus on improving skills in cities outside the South of England to stop it creating a greater economic divide between the North and South, says Centre for Cities’ Andrew Carter.

In her speech at Davos last week, the prime minister Theresa May spoke of the potential for artificial intelligence and other technological advances “to continue to revolutionise the possibilities for humanity”, and of the need to put frameworks in place to ensure everyone can benefit from them.

As a new Centre for Cities report shows, the prime minister is right to be optimistic about the opportunities that AI and automation will bring but also that a concerted response is also needed from policy makers to make sure people and places across the country can benefit.

The report, Cities Outlook 2018, is the Centre’s annual health check on UK city economies, and focuses this year on the impact of automation and globalisation in urban Britain.

In particular, the report looks at how these trends have affected jobs in British cities in the past, and how they are likely to do so again over the coming decades.

It shows that 100 years ago, British cities were heavily exposed to job losses from automation and globalisation, as they are now. Back then, it was occupations such as laundry workers, streetlamp lighters and domestic servants which were at risk, and which have all-but-disappeared as a result.

But despite these losses, the number of jobs in British cities has increased by 60% in past century – a growth of 6.7 million jobs in total – with the emergence of new sectors such as ICT and marketing more than offsetting the decline of traditional industries and occupations.

This brief foray into Britain’s economic history suggests that the Prime Minister’s emphasis on the job-creating and life-enhancing potential of technology is not misplaced.

Automation and globalisation will continue to displace jobs and occupations in the future, just as they have done in the past, but in all probability will ultimately create more jobs than they displace.

However, it’s not all good news.

Cities Outlook also shows that while almost all British cities have seen jobs growth overall in the past 100 years, the types of jobs they have created have varied greatly across the country.

Cities in the South have largely adapted well to the technological changes of the past century, and have successfully attracted new jobs in high-skilled, high-paying sectors.

In contrast, cities in the North and Midlands were badly hit by the impact of automation and globalisation on manufacturing and other traditional industries in the 1970s and 1980s.

They have largely replaced these jobs with routinised roles in call centres, retail and warehouses – the kinds of jobs which are mostly likely to be displaced in future.

These trends have big implications for the future.

For a start, cities in the North and Midlands are more exposed to potential job losses resulting from automation than places in the South.

Secondly, while all cities will see jobs growth in future, in Northern and Midlands cities that’s more likely to be low skilled jobs, while Southern cities are more likely to attract high skilled jobs – therefore further deepening already deep economic disparities across the country.

How can we stop that happening?

More than anything else, we need to focus on raising skills levels in cities outside the South of England – to help these places attract more of the quality jobs that could result from automation, and to ensure that their residents are able to access these opportunities.

That means improving school standards in cities across the North and Midlands, and reforming the education system to give young people in these places the cognitive and interpersonal skills they need to thrive in the future.

Alongside this, we need a much bigger focus on (and a significant increase in funding for) lifelong learning and technical education, to help adults adapt to the changing labour market, and to retrain those who lose their jobs because of these changes.

Finally, it’s clear that the usual one-size-fits all approach to running the country from Westminster isn’t helping places and people address the challenges they face – and will become increasingly inadequate in the future.

City leaders are best placed to develop solutions for the places and people they represent, but need more powers and resources to do so.

In recent years we have seen great progress on this front, but the government should go further and faster with devolution, to ensure that cities can meet the challenges they face in the coming years.

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