Progressives must craft an agenda to ensure society can reap the
benefits of technology and robotisation while ensuring that opportunity
is open to all
As a parent of three young children, I have often appreciated drawings of a tadpole figure, brought home from school. This endearing sketch represents a human being, whose arms and legs are growing straight out of his head, because his body has been playfully and conveniently omitted. All children draw human beings by this typical formula; it is how they see the world.
As a representation of society, the tadpole metaphor is not endearing and harmless. On the contrary, it shows us as a society from which the core, a strong middle class that typically binds the upper and lower echelons, has disappeared. Unfortunately — unlike my children’s drawings — the tadpole society is becoming ever more realistic, especially now that technology is advancing and the age of the robots is dawning.
Although we do not know precisely what the future will bring us, it is a bad idea to wait and see what happens. We need to craft a new progressive agenda as quickly as possible that is both stout and flexible enough to face the uncertain future that awaits us.
The age of the robots
Robots are becoming more accessible, reliable and affordable. Compared to humans, they are cheaper, faster, never get sick and work 24 hours a day. They also never ask for pay rises, do not belong to trade unions and do not go on strike. They have the potential to replace employees in many existing jobs, particularly middle-income positions. Computers are already faster and more efficient than humans when it comes to the handling of administrative and repetitive work tasks. For this reason, jobs in administration are decreasing.
The advent of artificial intelligence, big data, faster internet connections and the smartphone open up an even greater range of new applications. Robots could soon become cleaners, warehouse workers and taxi drivers.
Perhaps this still sounds like pie in the sky to you. Yet we should not underestimate the current pace of technological development. The scholars Erik Brynjolfsson and Andrew McAfee illustrate the power of exponential development in a seminal book, in which they argue that exponential growth goes relatively unnoticed for some time, and suddenly explodes into view. Digital development has now reached this point, expanding at an incredible rate and with its far-reaching effects now becoming evidently clear. In their own much-discussed publication, Carl Frey and Michael Osborne conclude that, due to technology, almost half of the jobs in the United States are at risk of disappearing in the coming two decades.
Opportunity as a luxury item
After the second world war, our accumulated wealth was more or less equally shared, providing opportunities for most people. From the 1990s onwards, however, income from work as a percentage of total wealth started to fall in comparison to income from capital. In developed countries, the labour share — wages as a percentage of national income — has fallen from 66 per cent to 62 per cent. At the same time, the share of the one per cent best-paid employees increased by 20 per cent. Even in more egalitarian societies like Germany, Denmark and Sweden, the gap between the richest 10 per cent and the poorest 10 per cent is widening. Owners of capital and the highest earners are benefiting most, with ordinary workers getting a smaller slice of the cake.
These trends mean that the wages of the average worker are lagging behind. Between 1999 and 2011, productivity grew twice as much as the average wage. Employees’ income security is also decreasing. In almost all developed countries the percentage of flexible workers is increasing, at the ever-increasing expense of permanent employees. Wage differentials between employees with different levels of education are also increasing. In 1995, a Dutch employee with a university education earned 37 per cent more than someone with a secondary vocational education. By 2009, this had risen to more than 50 per cent.
In the age of the robots, inequality may spread further. It is likely that companies will switch to new technologies en masse and their productivity will rise sharply. Yet the majority of the wealth this would generate would end up in the hands of the people who own the robots. Of course, highly qualified employees would also benefit, as their skills are required to ensure that the robots operate correctly. Yet middle-income earners and those at the bottom would lose out. This could lead to the real threat of prolonged technological unemployment.
Already, robots have eroded job security and income for some groups in the labour markets. Previously, the impact of technology was confined to low-skilled jobs, but now the middle class is really feeling the impact too. As a result of globalisation, ‘flexibilisation’ and recently ‘robotisation’, a squeezed middle class is threatened by migrant workers who are willing to work for less, by highly educated people working below their level, and by technology making jobs obsolete. For these people, the pathways to a better life are being barricaded one by one. Education is no longer a prerequisite for success, nor is hard work. Opportunity is becoming a luxury item only available to the well-connected few.
The power of the middle class
A recent report by the Netherlands Institute for Social Research stated that dealing with structural inequality is an urgent task for policymakers — especially when the social divide is still bridgeable.
Unfortunately, rightwingers urge us forward in a race to the bottom, while claiming that the left is as scared of robots as their forebears were of steam engines.
It is a cheap trick aimed at directing attention away from the real issue at stake. Indeed, it is not about whether we should choose for robots or for people, or whether or not we should stick to the past: it is about moulding the future in the way we want it to be. Under the right circumstances, people and robots are perfectly complimentary to one another.
Yet we need to create these circumstances. The fact is we cannot afford our middle class to dissipate. Historically, a strong middle class has always been our society’s tower of strength, the vital sinew for solidarity, emancipation and equal opportunities. The middle class offers those in the lower echelons of society a perspective to move up in life. It is of the utmost importance to strengthen our middle class and prevent the social divide from increasing, in particular now that the age of the robots is dawning.
Innovation is not a fate that befalls us, but an opportunity we need to embrace on our own terms.
First, we should invest in human capital (social innovation) rather than just in technology. We are far too busy with the question of ‘what will robots bring us’ that we tend to forget about upgrading human skills.
Education is a crucial factor. We are finding ourselves in a race between education and technology, as the economist Jan Tinbergen predicted years ago. We have to invest in education and stimulate students to complete their higher education. This can be done by offering individual learning paths and the possibility of online education so people can combine their studies with work and family responsibilities.
It is also important to make our education system future-proof, enabling us to acquire the right skills for the future. Robots are already better than humans in performing many routine tasks. Yet we can make a difference with our creativity, negotiation, communication and analytical skills. Workers can acquire the relevant skills if we invest in our education system. We should not be afraid to make the necessary changes. Only by stimulating informal learning, developing more flexible education, and customising curricula, can we build a responsive society that can cope with future challenges.
Innovation should involve more than just technological advances. Between 60 and 80 per cent of successful innovation is determined by social innovation. If companies only invest in technological innovation, employment will decrease by 5.8 per cent, as employees are unable to apply the new technology. Yet if companies also invest in social innovation, employment increases by 8.3 per cent on average. By investing in employees, collaborating and tapping into new knowledge together, we are embracing innovation in a way that allows everyone to profit from it.
Second, embracing innovation means that we should invest in the types of innovation that we want. Technology has the potential to solve the world problems and truly help mankind. They can perform dangerous and arduous tasks, ranging from the dismantling of bombs to laying paving slabs. By investing in entrepreneurship, we can create a fertile breeding ground for this type of innovation. Europe is full of young entrepreneurs with creative, fresh ideas. The number of startups in the Netherlands is growing fast and some of them have already become major companies, such as Adyen, Coolblue and Wetransfer. Also, an increasing number of foreign investors want to invest in Dutch startups. It is now important that the startups expand themselves, so that they can employ more people.
Lastly, embracing technology means that we take the lead in creating a labour market of our choice, instead of letting technology take control. This means anticipating future challenges, as technological developments are bound to have an impact on our labour market as a whole, potentially leading to unemployment and income security.
We need advanced labour market reform. By this I mean the radical decision to opt for higher productivity rather than cheaper labour. We should opt for work security rather than job security. In addition, we should opt for the right to training as a fundamental right for workers, but also a fundamental duty. I want to explore the option to earmark a fixed share of the payroll for vocational training.
The Netherlands is already preparing itself for a better future. With regard to employment-protection legislation and unemployment benefits, current reforms introduce work-to-work transitions and the transition allowance, which unemployed people can use to finance training. It will help them in finding another job in another sector and it also strengthens incentives to pick up work.
It is important to stimulate work-to-work transitions (job mobility) even more, as it strengthens the labour market position of workers. It should be easier to start a second career during your working life, for example by creating life-course savings schemes that can fund training during your career or by introducing educational loan systems for adults. Changing your career path in time can prevent unemployment.
At the same time we have to take care of the social consequences of technological development. What does the rise of the robots imply for our income distribution and job security? Extreme inequality is undesirable and harms economic growth. In the long run, a fair division of welfare is a key ingredient for an inclusive society with opportunities for all. This can only be accomplished by redistribution of wealth.
If you believe the globalists, opportunity is a self-managing unit that will sort itself out along the way. Everyone will get their fair share — and if you did not get yours, then you must have done something terribly wrong. This is of course contentious logic. Opportunity is not a guaranteed fait accompli, but a political choice regarding the redistribution of wealth. It is like shuffling the cards before a poker match. Redistribution ensures everyone gets a fair deal; an equal opportunity of winning the game.
It is very easy to respond reflexively and rashly to technological advances, either by simplistically seeing robots as money-makers that will bring us lots of cash, or by seeing them as intruders that we should keep out. Such Pavlovian reactions will only soothe short-term worries and desires. It is okay to smell the opportunities, but let us not be blind to the drawbacks. It is time to develop as swiftly as possible a progressive agenda that crosses national borders, as well as the borders between government and social partners.
Progressives need to unite themselves against the neoliberal forces that are pulling Europe into a race to the bottom, while bartering the value of work away in the marketplace. Only by teaming up can we preserve the precious social attainments that we have fought so hard for in the past decades. We need to introduce and commit ourselves to a ‘robot directive’ — a package of measures regarding redistribution, education, social innovation, and advanced labour market reform. Together, we need to make the employment of low-skilled workers cheaper, prevent tax evasion by multinationals, and reinject the profits of these big companies back into society. Only then can we reap the benefits of technology and robotisation on our own terms, while ensuring that opportunity remains a luxury everyone can afford. In the future of our choice, there is no room for a tadpole society.
Lodewijk Asscher is deputy prime minister of the Netherlands and minister for social affairs and employment