Could Ernie replace Andy? The Bank’s take on automation

The Chief Economist of the Bank of England, Andy Haldane, has been in the news with his predictions that up to 15 million jobs in the UK are at risk of being lost to automation. This is a huge number, around half the total number of people in work today.

Haldane injected a note of humour into his address to the Trades Union Conference, by suggesting that his own job was not at risk. It was unlikely, he said, that an “Andy robot” would be giving this speech to the TUC even ten years from now. Given the Bank’s recent track record in economic forecasting, a cynic might respond in kind. Surely Ernie, the name of the original random number generator used to draw Premium Bonds, could do just as well.

His speech was far more thoughtful and balanced than the more lurid attention grabbing points seized on by the media. Haldane pointed out that since the start of the Industrial Revolution over 250 years ago, there has been a steady and continuous stream of labour-saving advances in technology. It is these which drive productivity, the amount of output produced per worker.   This has risen at an annual average rate of 1.1 per cent since 1750. In the UK, the employment rate today as a proportion of the total population is around 50 per cent, very similar to levels in the early 19th century. The same is true in other countries.

The good news does not end there. The share of wages in the overall economy is very similar to what it was in the 18th century. Real wages, living standards, have risen in line with productivity, in complete contradiction to Marx’s prediction that capitalism would make workers worse off. And technology has enabled people to work fewer hours and have longer holidays. Compared to a century ago, the average working week has fallen from 50 hours to 30.

The potential problem, according to Haldane, arises through the sheer scale of disruption which might take place. Eventually, automation will benefit society. But it might take a long time for the effects to be absorbed. Such pessimism may not be justified. The labour market is far more dynamic and evolutionary than most people imagine. The US Bureau for Labour Statistics describes the ‘vast amount of job churn’ which takes place every single quarter. Millions of companies decide to either expand or contract their workforce on a quarterly basis. Hundreds of thousands of firms open or close from one quarter to the next. Even in recessions, large numbers of jobs are created.

The net changes in employment, the difference between jobs created and jobs lost, in any single quarter are small. But they conceal a vast whirlpool of constant change and flux. The old Soviet Union had ‘secure’ jobs, but eventually it collapsed. Towns in our regions have a large proportion of the workers employed in ‘secure’ public sector jobs, but they are poor. Western economies are used to change. It is their life blood and it is what makes them successful.

Paul Ormerod

As Published in City Am on Wednesday 18th November

Image: red vs blue by Robert Couse-Baker licensed under CC BY 2.0

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Alex O’Byrne, Associate at Volterra, is an experienced economic consultant specialising in economic, health and social impact, economic strategy, project appraisal and socio-economic planning matters.

Alex has led the socio-economic and health assessments of some of the most high profile developments across the UK, including Battersea Power Station, Olympia London, London Resort, MSG Sphere and Westfield. He has significant experience inputting to EIAs and s106 discussions as well as drafting economic statements, employment and skills strategies and affordable workspace strategies.

Alex is also experienced at economic appraisal for infrastructure. He was project manager of the economic appraisal for the City Centre to Mangere Light Rail in Auckland. He also led the economic and financial appraisals of the third tranche of the Transport Access Program for Transport for New South Wales, in which Alex developed and employed innovative methodological approaches to better capture benefits for individuals with reduced mobility.

He is interested in the limitations of current appraisal methodologies and ways of improving economic and health analysis to ensure it is accessible to as many people as possible. To this end, Alex recognises the importance of transparent and simple to understand analysis and ensuring all work is supported by a robust narrative.

Alex holds a BSc (Hons) in Economics from the University of Manchester and he was a member of the first cohort of the Mayor’s Infrastructure Young Professionals Panel.


Senior Partner

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Ellie is a partner at Volterra, specialising in the economic impact of developments and proposals, and manages many of the company’s projects on economic impact, regeneration, transport and development.

With thirteen years experience at Volterra delivering high quality projects to clients across the public and private sector, Ellie has expertise in developing methods of estimating economic impact where complex issues exist with regards to deadweight, displacement and additionality.

Ellie has significant experience in estimating the economic impact across all types of property development including residential, leisure, office and mixed use schemes.

Project management of recent high profile schemes include the luxury hotel London Peninsula, Battersea Power Station and the Nova scheme at London Victoria. Ellie has also led studies across the country estimating the economic and regeneration impact of proposed transport investments, including studies on HS2 and Crossrail.

Ellie holds a degree in Mathematics and Economics from the University of Cambridge.