tl;dr Adapting to technical change is the best strategy, but how should structural unemployment be tackled, and will there continue to be enough new jobs?
“Technical change and employment”, was published in 1979 and still bears strong resemblance to technical change and employment discussions today, albeit for rather different technical changes. At the time of writing the advent of electronics was a key driver of discussion, whereas the coming of artificial intelligence and machine learning are key drivers of today.
The book looks at the impact of new and radical technical change over time through the lens of case studies. The case studies present the context of the industry (e.g. agriculture, steel, railroad, and textile industries), then discuss the technical change, the responses of key bodies to the change and the resultant impact on employment.
The main summary of the case studies is that:
A lack of technical change can result in significant job losses.
The case being that failing to keep pace with technical change, in particular failing to keep pace with the rate that competitors are adapting technologically can result in competitors out-competing and forcing an entire company or industry to close down or shrink.
As evidenced by the textile industry case study.
Technical change can increase or maintain output with reduction in labour requirements.
The case being that the technical change converts labour requirements to capital requirements and requires less labour for an equivalent output. This can result in so-called ‘jobless growth’.
As evidenced by the agriculture and steel sector case studies.
A slow technical change can have no job losses.
The case being that the time taken to implement a new technology also allows time to train and redeploy existing workers into new roles.
As evidenced by Canadian rail road case study.
The key summary being that technical changes should be adopted where possible, as otherwise competitors will adopt to the changes.
Industries and countries which opt for short-term job protection by resisting new technology will, in the longer term, suffer greater job loss through a lack of international technical change competitiveness.
The book also discusses two key types of unemployment:
essentially short-term in nature: ‘It is associated with periodic slumps in the economy which are reflected in under-utilisation of the capital stock. Economic recovery takes place in due course, and unemployed workers are then re-absorbed.
essentially long-term in nature. Related to fundamental changes in the economy and society such as: shifting patterns of consumer demand; a growing mismatch between skills and employment, changes in production technology and techniques.
The difficulty presented is that, with technical change being the best long-term strategy for any individual company or industry, structural unemployment can result for society. For structural unemployment alternative areas of employment will need to be found.
There generally exists a growing mis-match between skills and job opportunities. The adoption of microelectronics devices is likely to increase this mis-match in the absence of comprehensive retraining schemes.
The key question then, is will the creation of new jobs keep pace with the displacement of existing jobs as technical change continues.
Historically this has been true, but looking into the future who knows?
Technical change and employment is available from Book Depository.
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