In Dongguan City, an industrial heartland about 75km from Hong Kong, a factory offers a chilling example of the power of technology. The cellphone manufacturer, owned by China’s Changying Precision Technology Company, once employed 650 people. But by 2015, just 60 people managed 60 robotic arms, which now do much of the work producing parts for cellphones.
For those who still believe robots can’t reproduce what humans do, these Chinese robots are vastly more productive than the humans were — and turn out phones with far fewer defects. Of the workers left, "three are assigned to check and monitor the production line, and the others are tasked with monitoring computer control systems", Futurism editors Kristin Houser and June Javelosa wrote in a report earlier this year.
And even the 60 humans at the plant could drop to just 20, says general manager Luo Weiqiang.
That would be a 97% reduction in the original workforce. It’s a disturbing case study of the disruptive power of the fourth industrial revolution — the name given to the convergence of technologies such as artificial intelligence (AI), machine learning, robotics, biotechnology and additive manufacturing.
Though SA has many high-skilled workers, its poor education system will count against its ability to adapt
"The speed of current breakthroughs has no historical precedent ... the shift from simple digitisation (the third industrial revolution) to innovation based on combinations of technologies (the fourth industrial revolution) is forcing companies to re-examine the ways they do business," says Klaus Schwab, founder of the World Economic Forum (WEF).
The problem for SA is that it is already facing a jobs crisis. Just 16.1m people have jobs, with unemployment now officially at 27.7%, growth at 1%, and more than half the country (30.4m people) living on less than R34/day.
The WEF predicts that the fourth industrial revolution means 5.1m jobs could evaporate globally between 2015 and 2020. And there’s more to come.
In theory, the mantra of capitalism — "creative destruction" — means other, more sophisticated jobs will rise up to replace those that disappeared. But in this case, the WEF warns that any new jobs will be far more highly skilled and, crucially, "will be unable to absorb job losses coming from other parts of the market".
In SA, the WEF says, no less than 41% of all work activities are susceptible to automation, in line with global trends.
"That doesn’t mean these jobs will disappear — it means 40% of people will need to adapt to new ways of doing things," says global chief economist at UBS Wealth Management, Paul Donovan.
"About 8%-9% of jobs will disappear altogether to be replaced by robotics and artificial intelligence, which is a social challenge we will have to face up to," Donovan said on a recent trip to Johannesburg.
This implies that of the 16.2m South Africans currently employed (according to Stats SA’s labour force survey, done among households), between 1.3m and 1.45m stand to lose their jobs. If these people were added to the unemployment queue immediately, it would push SA’s official unemployment rate as high as 34%. Add in the 2.36m "discouraged job seekers" and, using a wider definition of unemployment, this figure could be as high as 44%.
It’s so much worse, partly because SA’s unemployment rate is already much higher than in other emerging markets (India 5%; Russia 5.1%; Brazil 13%; China 4%) and also because SA’s already dwindling workforce doesn’t appear to be especially well prepared for the new world.
If you don’t think your job is on the line, honestly answer the questions posed by futurist Martin Ford in his book Rise of the Robots: "Could another person learn to do your job by studying a detailed record of everything you’ve done in the past? Or could someone become proficient by repeating the tasks you’ve already completed, in the way that a student might take practice tests to prepare for an exam? If so, then there’s a good chance an algorithm may someday be able to learn to do much, or all, of your job."
It’s terrifying — showing it’s not just low-skill workers who are at risk. The relentless advance of technology means, says Ford, that "the machines are coming for the high-wage, high-skill jobs as well". So accounting, law, and actuarial science are now facing encroachment from artificial intelligence – the very degrees that school-leavers are encouraged to pursue because of the perceived high income and job security implied.
Divya Chander, a physician and neuroscientist at Stanford University, tells the Financial Mail that not even her profession is out of reach of robots.
"I would trust a human-plus-AI much more than a human alone. And at some point, I’ll trust the AI alone," Chander said, on the sidelines of the recent Singularity University summit in Johannesburg. A machine is, after all, far less likely to make a mistake than a sleep-deprived human doctor.
Some SA companies are taking the challenge seriously. Discovery Health, the country’s largest medical aid administrator, is already experimenting with DrConnect – effectively a more sophisticated version of Dr Google. DrConnect gives medical aid members access to online medical information from a worldwide network of more than 105,000 doctors – and facilitates personalised interactions between patients and doctors using video, voice or text.
Discovery says it doesn’t expect this to replace the doctors and health-care practitioners. But it’s not difficult to imagine that AI could, over time, learn the responses given by doctors to thousands of health problems and then create an algorithm that does the same thing. Without the humans.
IBM’s supercomputer, Watson — an earlier version of which famously beat world chess champion Garry Kasparov and then triumphed in a game of Jeopardy! — is now being used for medical diagnosis. In one astounding example, Watson was able to correctly diagnose a 60-year-old woman’s rare form of leukaemia in 10 minutes – a diagnosis that had otherwise escaped doctors at the University of Tokyo. "Watson offers the ability to extract precise answers from a staggering amount of medical information," writes Ford. "No single doctor could possibly approach Watson’s ability to delve into vast collections of data and discover relationships that might not be obvious."
An industry that has already been dramatically disrupted by technological advance is stock-market trading. The pictures you imagine of the JSE — the "open outcry" trading floors packed with testosterone-filled stockbrokers shouting buy and sell orders — are virtually gone. Today, most exchanges are entirely electronic. "There’s almost no process that we look at now, where we don’t ask: does this have to be manual or can it be automated," says JSE CEO Nicky Newton-King.
Algorithmic, high-speed trading has also completely changed the game. Stockbrokers now have to compete with machines that activate buy or sell decisions within seconds of a company releasing its financial results or making a potentially market-moving announcement. Algorithms execute more than 50% of the JSE’s trades, according to Shaun Nicholson, head of SA financial markets at software company Iress. Nicholson expects this to increase to 100% in time.
It’s a shift that has altered the way stockbrokers hire people. Today, brokers are far more interested in hiring data analysts and computer nerds than they are in Wolf-of-Wall-Street financial types.
And, if you thought the liberal and creative arts were out of reach of machines, consider that computer programs have written news articles, composed orchestral pieces (one that the London Symphony Orchestra performed back in 2012) and sketched artworks.
This means musicians, journalists, writers and artists are also in the firing line.
Ironically, says Ford, "because knowledge-based jobs can be automated using only software, these positions may in many cases prove to be more vulnerable than lower-skill jobs that involve physical manipulation".
But the implication is profound: the fourth industrial revolution challenges the notion that low-skill workers will have higher-wage, higher-skill jobs to fall back on. This throws the viability of the solution to the jobs crisis touted by many — "ever more education and training" — into doubt.
So what will the future of work in SA look like? At this point, it’s hard to say — other than that workers need to be tech-savvy and have a considerably different set of skills. The WEF’s Future of Jobs survey reveals that in SA alone 39% of core skills required across all occupations will be wholly different by 2020, against what was needed in 2015.
Worryingly, it finds that though SA has the largest number of high-skilled workers of any African country, our capacity to adapt to future jobs is below average. This is attributable to the poor quality of our education: the WEF ranks SA’s education system 24th out of 25 African countries, below Mozambique, Burundi and Lesotho.
Kenya, Rwanda, Mauritius, Côte d’Ivoire and Zambia nab the top five spots and are all above the global average.
The problem for SA is this: at the very time our education standards are dwindling, the work environment’s exposure to "future disruption" is considered "above average". In other words, we have the most to lose.
So how are business and government readying themselves for this tidal wave of disruption? Preparation is patchy, at best. There is no concrete local research on what the quantum of job losses could be, which industries will be worst affected and what steps should be taken to mitigate the fallout.
Fortunately, the fourth industrial revolution is at least on the radar of business, government and labour.
Economic development minister Ebrahim Patel seemed (at least in conversation with the Financial Mail) to have an astute handle on this challenge. He is doing "advocacy work" — presenting on the topic to parliament, engaging unions and commissioning a study into how SA’s tariffs might be affected, among other initiatives.
The Industrial Development Corp (IDC), one of SA’s foremost development finance institutions, has approved R227m in funding this year for new industries far more attuned to the fourth industrial revolution — such as additive manufacturing and nanotechnology. This is 52% higher than in 2016, with a 2018 funding target of R345m.
Sure, it’s small change relative to the billions spent on mining and manufacturing, but Christo Fourie, head of new industries at the IDC, says that once these projects are bankable, they could run into the "hundreds of millions, even billions".
Meanwhile, the Council for Scientific & Industrial Research (CSIR), with assistance from the department of science & technology, is developing new technologies to help SA step into the fourth industrial revolution. For example, the CSIR, says Martin Sanne, executive director of materials science and manufacturing, has come up with a way to make titanium powder (of which SA has vast reserves). This is for use in additive manufacturing to 3D-print aircraft parts — something the CSIR also does.
On how to reskill workers, SA’s skills development working group, in partnership with Brazil, Russia, India and China, has produced a white paper on the likely skills needed in manufacturing, where 1.2m people are employed now.
The department of trade & industry’s chief director of skills, Jocelyn Vass, says the next industrial policy action plan will provide more clarity on how particular sectors will be affected.
Critics might say it’s far too late – but it’s something at least, for a government seemingly far more concerned with who leads the ANC than making sure the economy works.
Interestingly, even though thousands of jobs have already been lost in manufacturing over the past year, companies with large workforces in this sector do not foresee mass retrenchments related to technological disruption – or, if they do, they aren’t forthcoming about it.
At BMW’s plant in Rosslyn outside Pretoria, the German car manufacturer will next year have nearly 300 robots assembling the luxury sedans — an increase from the existing 190. The "Body-in-White" facility where the shell of a car is assembled is already 96% automated. Here, "multitasking robots" and a small team of specialists ensure that a completed body shell leaves this initial part of the manufacturing process with 412 components, 5,500 welding spots, 297 stud welds, 2.7m of laser welding and 25m of sealer. The time taken to do all of this? 200 seconds per station. The paint shop also makes extensive use of robots to ensure consistent application. It’s only in the assembly line, where all the extra features are added to the ready-painted body shell, where the most human workers are present.
The Rosslyn plant will begin producing the next year, but spokesman Diederik Reitsma doesn’t expect the rise of the robots to influence the size of the human team at the plant. "These employees have been trained both locally and at our plants abroad to achieve even higher skill levels to operate the new technology," he says.
Coca-Cola Beverages SA, which employs 4,000 people in its supply chain alone, says it is adopting a cautious approach to new technologies, many of which are still in their infancy and are more expensive than labour.
However, it is experimenting with what it calls "machine-learning equipment" to improve the production quality of plastic bottles and will soon introduce virtual-reality software that will allow technicians and operators to repair faulty machines faster.
"We’re very aware of employment in our decision-making around a lot of the technologies that are becoming available," says Andrew Ferrett, supply chain director.
That may be so. But at some point, automation will be necessary to remain competitive. Customers also demand it.
Woolworths, the food and clothing retailer, is already using data analytics and "machine learning" to ensure the right mix of fashion, home and beauty products gets to stores at the right time. Needless to say, this was a job formerly done by people.
"Customers are rewriting the rules of engagement and have come to expect personalised, relevant and connected experiences," says Lawrence Pillay, group head of sourcing at Woolworths.
It is in mining, where the number of jobs has already fallen 13% in a year to 434,000 people, that the impact of automation could be felt particularly keenly. Mxolisi Mgojo, CEO of mining company Exxaro, admits SA has fallen behind in mining innovation. Global companies such as Rio Tinto and BHP have done the opposite — and landed on the right side of the cost curve.
"We live in a highly unionised country, where innovation and mechanisation talk leads to strikes," says Mgojo. But new technologies must be embraced and used, including teaching workers new skills, he says. After all, as mines get deeper they become even more dangerous places to work. It would be far preferable to send machines down that deep and have humans operating them from the surface.
Not surprisingly, the fourth industrial revolution’s power to destroy jobs has not been lost on labour. Cosatu spokesman Sizwe Pamla says the body will push for amendments to the Labour Relations Act to ensure any automation process is "consultative" and "gradual", and that companies are obliged to reskill workers. Last year, Cosatu vehemently opposed a Pick n Pay trial of self-service checkouts at a Cape Town store over alleged lack of consultation.
Pamla says Cosatu is "there to fight on behalf of workers", but admits "you can’t fight off technological advancement; we have to welcome it in a sense".
Cosatu has come a long way. Years ago, it opposed the introduction of cellphones because of threats to workers in constructing and servicing landline infrastructure.
"We want to ensure that companies, when they venture into the fourth industrial revolution, do not just dump people onto the employment scrapheap without taking responsibility ... for people who have carried the sector or company for quite some time," Pamla says.
It’s not an unjustified concern. In his book, Ford warns that digital technologies risk creating a "winner-takes-all" scenario where a few giant companies, with a handful of employees, enjoy a disproportionate sum of the spoils of innovation that were, in many instances, funded with taxpayer money to begin with.
Consider that when social media goliath Facebook bought WhatsApp for US$19bn in 2014, the mobile messaging company had a workforce of just 55 people, giving it a valuation of $345m/employee. Yet 50 years ago, a company worth $19bn would have employed thousands.
The inconvenient truth is that emerging industries are unlikely to be highly labour-intensive.
So which are the industries likely to win and which will fall by the wayside? In other words, what should you not be encouraging your children to study?
The WEF’s Future of Jobs report, which surveyed human-resources buffs from the world’s largest employers, expects that by 2020 we’ll see:
- Major job losses in office and administrative roles;
- A moderate decline in manufacturing and production; and
- Strong employment growth across the architecture, engineering, computer and mathematics job families.
But even within these broad categories there is considerable nuance. For example, information and communications technology (ICT) jobs will be hurt by cloud computing, even though ICT literacy and data analysis will remain in high demand in other industries. The WEF estimates that by 2025, SA could create 462,000 additional jobs by "going green" — including in clean energy generation, energy efficiency, pollution control and natural resource management.
Also, an increasingly flexible workforce is driving a decline in office and administrative roles, such as receptionists and personal assistants, where the WEF expects two-thirds of the 7.1m gross jobs to be lost by 2020 (2m jobs will be gained in smaller job groups). As more people work from home, economies will be profoundly affected in different ways — from demand for transport, to grocery stores and restaurants.
At the same time, the sharing or "gig" economy allows companies to outsource project-based work to eager online freelancers, trimming the number of full-time employees. There is a plethora of websites catering to this new way of working. For instance, via Cambly, English-speakers can get paid to have conversations with people trying to learn the language. Meanwhile, on Fiverr, freelancers can sell services ranging from reading a script "with a smooth male voice" to designing a company’s logo or writing an "attention-grabbing" press release.
There is upside for SA from this gig economy. The WEF estimates that this online platform work could, by 2025, result in an increase of 861,000 jobs and $20bn in GDP in SA alone. It’s less than the total number of jobs likely to be lost from the fourth industrial revolution, but it’s at least some consolation.
What, then, might the future look like?
For a start, it isn’t necessarily better for humanity. Elon Musk, founder of electric-car-maker Tesla, worries that AI-powered machines could one day threaten human civilisation — never mind jobs. Back in 2014, Musk warned that AI could be even more dangerous than nuclear weapons – in other words, the machines could take over.
It’s a bleak end-of-days view. Fortunately, disruption innovation expert David Roberts has a less dystopian outlook. The likelihood that we end up with intellect in machines that are exactly like human brains is small, Roberts contends.
Musk’s view, which is shared by many, is that governments will have to pay a growing number of jobless humans a "universal basic income" grant. Speaking to the Financial Mail, Roberts says that taxing the machines will cover this cost. "Governments will tax machines. Our GDP will grow because machines — and there will be more machines than people — will start making money," he said.
It’s a future in which crypto-currencies such as bitcoin, and the blockchain applications that power them, such as Ethereum, will allow machines to have their own money, and transact with other machines.
Roberts says that, for example, your self-driving car could drop you at work (assuming you’re still employed) and then do Uber work for the rest of the day, filling its tank and paying for fuel at a fully automated garage. It might sound nifty, but the reality is likely to be somewhere in between.
The debate on these transformations, says the WEF, has been polarised between those who "foresee limitless opportunities in newly emerging job categories" and those who "foresee a massive dislocation of jobs".
"The reality is likely to be highly specific to the industry, region and occupation in question and the ability of various stakeholders to successfully manage change," it says.
But imagining the highly sought-after jobs of the future is near-impossible, considering that social media managers, app developers, big data analysts and cloud computing specialists barely existed five years ago.
Today, an applications development manager is the eighth-highest-paid job in the US, according to recruitment site Glassdoor. Not bad, considering that the iPhone was developed just 10 years ago. This implies that the fourth industrial revolution will both create jobs that do not yet exist, and enable relatively uneducated people to do jobs they wouldn’t ordinarily be qualified to do.
Technology already allows people to create their own jobs, as with Uber drivers, who no longer need to have a mental picture of a city map – GoogleMaps does it for them.
It also makes existing businesses more lucrative – Lebo’s Soweto Backpackers is a case in point. Lebo Malepa, who runs the establishment, says 80% of its business now comes via the Internet, mostly from TripAdvisor. Malepa confirms a dramatic pick-up in business when Backpackers started building its online presence eight years ago.
Technology has reduced costs for business across the world. Today, open-source software powering some of the world’s largest tech companies is freely available on websites such as Hadoop, GitHub and StackShare. Just seven of the 57 apps in the tech stack of the world’s largest hotel group, Airbnb, are "slightly proprietary", says Larry Keeley, an innovation strategist at global innovation firm Doblin.
This means even though machines are sucking up jobs at a time when we can least afford it, innovation has never been easier, thanks to technology that was once the preserve of cash-flush corporates.
It’s a silver lining to an immense cloud over SA’s future, for which the country seems woefully ill-prepared. Depending on how we respond, millions more could be consigned to the unemployment line, where answering to a machine will no longer be only the stuff of science fiction.
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