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The robots are taking control – but not in the UK

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Advances in robotics are about to destroy millions of jobs. Tens of thousands of people will be thrown out of work. Industries will be turned upside down by intelligent machines, and economies will struggle to cope with a tidal wave of change comparable only to the Industrial Revolution. There is certainly no shortage of frenetic speculation about the impact robotics is about to have – and although some of it may be exaggerated, there is little question that a huge change is under way.

But for the British, at least – and, in fairness, the Norwegians, the Singaporeans, and a few others as well – there is a glimmer of good news. The robots may be coming, but not for us.

A study by the McKinsey Global Institute looked at the number of jobs at threat from automation country by country. It found that there were likely to be huge differences. Nations such as Japan, Germany and Mexico were most as risk, while Britain and the United States, among others, would see far less impact.

You don’t especially want a robot managing your investment fund, or editing a book or designing 
a new skscraper

There is an important point, in that, for policy-makers and investors, the countries where robotics has the biggest impact may see some short-term gains. But over the medium term, it will be the countries where the humans are still doing the majority of the work that will prosper.

There can be no debate that robotics, incorporating artificial intelligence, is the most significant new technology since the introduction of the personal computer in the Seventies. From fully automated factories to driverless cars, from drone delivery systems to shops without sales assistants, we are starting to see swathes of the economy replacing carbon-based staff with silicon-based ones. And that may have only just begun. Over the next decade, white-collar professions, such as law, medicine, teaching and accountancy, may start to be turned upside down. We are not quite at the stage where something that looks like R2-D2 does your conveyancing or completes your tax return. But it may not be far away.

And yet not all countries will be impacted in the same way. In the Harvard Business Review, the McKinsey researchers ranked countries by the number of jobs – defined as hours of work activity – at risk from automation. The result? There are some significant variations from one nation to another. In Europe, the Czech Republic and Turkey were near the top, along with Italy, Poland, Germany and Spain, with close on 50pc of jobs under threat. But Norway and the UK were the two lowest-ranking countries, with 42pc at risk.

Similar variations can be seen globally. In Japan, 55pc of jobs could potentially be replaced by machines. Kuwait and Singapore were the least impacted in Asia. In North America, Mexico came out as most at risk, at more than 50pc, while the United States scored significantly lower, on 45pc (and not just because Donald Trump might insist all those Mexican robots are programmed to stay on their own side of the Rio Grande).

The explanation for that is pretty simple. Some kinds of work are far more vulnerable to automation than others. The more routine and mechanical a task is, the easier it is for it to be taken over by a robot, and that explains the very high scores for Japan for example (and also, within Europe, for Germany, which is on 47pc), because they do a lot of manufacturing. Other factors make a difference as well. For example, if wages are higher, there will be more incentive for companies to ramp up their investment in robots. And where ageing workforces mean there is likely to be a shortage of skilled people, the pace of adoption should be a lot quicker. Again, that helps explain the high score for a country like Japan.

It also helps explain why the UK is one of the countries least at threat. We have lots of workers and wages are often not that high. Those factors will slightly stall the march of the robots. But, more importantly, the British economy is relatively concentrated in high-end, personalised services. You don’t especially want a robot managing your investment fund, or editing a book, or designing a new skscraper or getting involved in any of the other financial, creative or design industries the UK specialises in. Even when we do manufacture stuff, it is often with an element of heritage that makes it distinctive. A single malt whisky – to take our largest net export industry – doesn’t have quite the same ring to it if crafted by Jock McAndroid.

Robotics may well be a disruptive technology. But it will not impact all countries equally

Over the medium term, that may turn into an unexpected strength.

As industries get automated, there are plenty of short-term gains. There will be huge increases in productivity, and big profits to be made by companies that get in early. In the first waves, nations such as Japan, or Germany, will benefit the most.

That won’t last long, however. Very soon, the competitive advantages will start to disappear. The reason you buy a German car or a Japanese television is because you trust the quality of the workmanship. Once they are all built by robots, the work might as well be done anywhere. Over time, the real gains will be in the countries where the humans are still doing most of the work. While wages will be pushed down in industries where robots are replacing workers, the extra wealth that is created is likely to end up in the pockets of the people who are doing the stuff the machines can’t do.

Robotics may well be a disruptive technology. But it will not impact all countries equally. And those where fewest jobs are destroyed are likely to do best – which, fortunately for the UK, seems to include us. There are plenty of things that are worrying about the British economy. But the prospect of robots taking over all our jobs isn’t one of them.

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