There were once people who smashed machines

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Did you know that there was once a group of people who hated technology so much, they went around violently destroying machines? They were called the Luddites, a group of English textile workers that went around destroying power looms (modern weaving machines of that time) because they erroneously feared that these new machines were taking their jobs and livelihoods.

When Uber’s self-driving truck awed the world with a delivery of 50,000 beers, waves of online criticisms could be read. People were vocalising their unhappiness and fear with what is to be job loss on an unprecedented scale.

Uber is no stranger to protests and anger. When they debuted in the world, taxi drivers and unions around the world fought on the streets and in the courts to resist the private hire company’s growing dominance.

Uberisation is a magnificent specimen of Schumpter’s Creative Destruction. Through the eyes of our modern day Luddites however, it is Destructive Creation. 

The modern day Luddite doesn’t physically destroy machines. Their weapon of choice is a court decision, a trade union or a consumer safety body. The tools are different, the fears remain the same.

These are genuine concerns.

Norwegian economic researchers have demonstrated1 that displacement of workers increases the probability of them leaving the workforce by 31%. The drop out rate is particularly high in the first years following displacement.

The studies also show substantial negative earnings effects both in the short and in the long run. The earnings loss begins at least three years before displacement and persists for many years. The results indicate substantial negative earnings effects both in the short and in the long run. The earnings loss begins at least three years before displacement and persists for many years.

Unsurprisingly, their studies reveal middle-aged workers, that is, the age group 45 to 57, displacement has a long-term effect on the probability of leaving the labor market of about 4.5 percentage points. In this respect, this is the group that is most severely affected.

Here’s a quick TL/DR for the above: if your industry is wiped out and you’re above the age of 45, you’re kinda screwed. Even if you get a new job in a different industry, chances are your income will be lower.

Don’t let sympathy and fear start to brew in you just yet. Although tearful job losses for an entire class of workers is painful, consider also how the gains realised has dramatically improved human lives. Can you imagine a world without Netflix, Spotify or iPhones? These are all destructive technologies are guilty of widespread job losses. Netflix killed a video rental industry by collapsing 153,000 in 2005 to fewer than 11,000 in 2013 – that is a 93% decrease in a decade2!

Creative destruction is nothing new. But when the frequency of creative destruction increases, governments have better get their ears perked up to listen. The workers afflicted by the ill effects described above at least have had the benefit of time to get back on their feet

On the 28th of October, the Straits Times published a report carrying the Monetary Authority of Singapore’s warning that “skills mismatches in the labour market are on the rise”.If jobs are lost faster than workers can re-train or draft up plan-B for, then we have a huge problem.

“The unpredictability of demand and technology will result in companies facing a higher rate of turnovers. They will have to reorganise and re-strategise. In some instances, some may even have to close shop. Workers must therefore be aware that the days of job longevity in life long companies is gone. (I foresee) this very rapid change will continue to persist”, says Patrick Tay, Assistant Secretary General of the NTUC giving a check on the reality of the jobs market.

So what is an ordinary salaryman to do? Patrick shares his theory of equipping yourself with “PI (π) shaped skills”.

Above what you’re trained in, go out and learn two other new crafts. Together you’ll have two deep skills and one horizontal skill. Throughout the peaks and throughs of economic cycles, you’ll be well insured. If the one thing you were trained in becomes obsolete, you have another two to fall back on and remain employable.

The Labour Movement had been hard at work bridging the gap that exists between displaced workers and the abundance of jobs. There are more than 68,000 jobs on the Singapore Jobs Bank. That number far outstrips the total number of 60k unemployed Singaporeans3.

“The ability to change, the ability to be agile…these are skills which workers need to have so that they can stay ready, relevant and resilient” reminds Patrick.

If workers do not reinvent themselves fast enough, if they do not prepare a Plan-B very early in their careers and in fact throughout their careers, they would find themselves in a precarious position when creative destruction hits.

 

Update: NTUC is setting up new capability on 1 Jan 2017 to look into future jobs, skills and training (FJST) to help unemployed of tomorrow find jobs of tomorrow, today. FJST will leverage LM’s extensive network to identify future jobs and skills needed for working people. Read bit.ly/NTUC-FJST

 

 

(Article first appeared on www.rangosteen.com)

 

 

Citation:

  1. Huttunen, K., Møen, J., & Salvanes, K. G. (2011). HOW DESTRUCTIVE IS CREATIVE DESTRUCTION? EFFECTS OF JOB LOSS ON JOB MOBILITY, WITHDRAWAL AND INCOME. Journal of the European Economic Association, 9(5), 840–870. http://doi.org/10.1111/j.1542-4774.2011.01027.x ↩︎
  2. Perry, M. (2016, November 1). The ‘Netflix effect’: an excellent example of ‘creative destruction’. Retrieved November 1, 2016, from https://www.aei.org/publication/the-netflix-effect-is-an-excellent-example-of-creative-destruction/ ↩︎
  3. Ministry of Manpower – http://stats.mom.gov.sg/Pages/Unemployment-Summary-Table.aspx ↩︎

 

 

About the author

Benjamin Chiang

Benjamin Chiang is an enthusiast of good advertising, deep thinking, labour issues and chocolate. He writes also at www.rangosteen.com and occasionally on Yahoo!

The views expressed are his own.

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