ING VIEW

Highly skilled jobs are at risk

Research by ING DiBa in Germany predicts that new technology will have a huge effect on employment in Germany in the future and says that society needs to start thinking about how it will address the challenges to come.

Almost 60% of jobs in Germany – or around 18 million – could disappear in the coming years, according to The Robots are Coming, a report by ING DiBa. The research, which is based on methodology developed by Frey and Osborne (2013) to assess the impact of technological change in the US, looks at the potential impact of automation, robotisation and digitisation on the German labour market. It draws some startling conclusions that suggest society will need to consider how wealth will be distributed in the future.

“The German market is slightly more industry focused and less focused on services than the US, where Frey and Osborne estimate that 47% of jobs are vulnerable to technological advances. However, the methodology is applicable and the conclusions are broadly similar,” says Carsten Brzeski, chief economist at ING DiBa and author of The Robots are Coming.

Germany has already experienced significant automation, especially in the auto sector, which is critical to the country’s industrial economy: in the 1950s and 1960s around half the labour force worked in manufacturing; now just 25% of workers do. “But the changes to come will be bigger and more wide ranging,” says Brzeski. “We will continue to see low-skilled jobs replaced by automation and technology such as drones and robots in areas such as deliveries or cleaning. But technology will also begin to replace highly-skilled labour for the first time.”

Many roles associated with knowledge or expertise that were previously thought to be irreplaceable are expected to be eliminated, according to Brzeski. “Secretarial, office and accounting jobs and even doctors, lawyers and journalists could see a large part of their roles disappear,” he notes.

Not all jobs are equally at risk. Business executives as well as academics in the scientific and creative professions are least likely to be impacted by automation: of the 241,500 doctors (human and dental physicians) in Germany only 3,100 posts, or 1%, of jobs are thought to be at risk, for example. In addition, jobs with a high social or personal contact element will be largely spared: there will continue to be many jobs in sectors such as hospitality (although the overall number is likely to fall) and employment in call centres, for example, could increase because of “the value consumers place on a personal touch when solving problems,” says Brzeski.

Brzeski acknowledges that some academics have criticised Frey and Osborne’s methodology for focusing on jobs rather than skills and consequently producing headlines about apocalyptic job losses. “One argument is that skills will change but that jobs will remain,” he says. “So another way to interpret the findings is to say that over 50% of jobs will change in terms of skills. Even if that is the case, it still implies huge upheaval in the labour market. It is, of course, also possible that new jobs will emerge in new sectors in the future and moreover, it is important to note that change will be gradual rather than abrupt. Nevertheless, we are living through a time of dramatic change. Certainly many low skilled jobs – and some high skilled jobs – will disappear and overall workers will have to become more flexible and adaptable,” he adds.

Brzeski says that the report provides no answers about how to manage the implications of new technology on society, but instead provides important “food for thought”. He explains: “Discussion in Germany about the social implications of innovative technologies is still at an early stage. But research like ours helps people to understand the scale and pace of change.

“When the research was published in Germany, it generated a great deal of attention because it hit a nerve."

When the research was published in Germany, it generated a great deal of attention because it hit a nerve. That’s a welcome development because people need to think about the challenges new technologies will create: the risk is that automation and other technologies could exacerbate the divide between haves and have-nots. Society must have a discussion about these issues so that the public’s priorities are reflected in policy.”

According to Brzeski, some countries in Europe could provide a model for how Germany and other countries can successfully adapt to change. “In Scandinavia and the Netherlands the positive benefits of new technology are already being exploited. For example, new distribution channels and digital services are helping to create jobs and mean that those societies are better placed to withstand further change,” he notes. “Nevertheless, no country has all the answers to these challenges and all have individual circumstances.”

More generally, Brzeski says that there is no room for complacency, despite the success of some countries in managing change. “Some optimists believe that technology will simply replace the retiring baby boomer generation so that there will be little impact on existing workers,” he notes. “That would be ideal. However, it’s much more likely that younger workers will also be hit. That’s why government and others need to start planning for the future right now.”

The View is the online magazine of ING Wholesale Banking