The London based think tank, Centre for London, recently issued a report focusing on factors likely to transform the capital’s economy over the coming years. The capital is the dynamo of growth in the UK and has seen disruption and transformation before. The report says over ‘the past 70 years, the city has been transformed from a declining imperial capital to one of a handful of “global cities” – command and control centres where the global movement of capital, goods and information is managed and organised.’
The report looks at how automation and other factors may combine to disrupt London’s economy in coming years, and at how London’s workforce will be able to adapt to change.
Today London has around 5.8 million workers, one sixth of the UK total and by early 2015 London’s population had exceeded its pre-war total of 8.6 million people and generates around £400 billion every year in economic activity.
The report goes on to say, “After rapid deindustrialisation and the decline of dock-based industries, London found a new role as a global financial capital following the deregulatory “big bang” of 1987, and as a global cultural and educational centre in the following years.”
“London has proved resilient to setbacks such as the financial crisis of the late 2000s, and has continued to grow despite the uncertainties following the EU referendum in 2016. Nonetheless, the economy has not worked for everyone, and London still has one of the highest regional unemployment rates in the UK as well as high rates of in-work poverty and child poverty – reflecting the impact of London’s cost of living even upon those in employment.”
“Against this backdrop, our report examines some of the factors likely to transform London’s economy in coming years, focusing on automation – sometimes heralded as the catalyst for a new industrial revolution – but also on some of the other factors that may combine to intensify or mitigate automation’s effects. It looks at the potential impact on the workforce in different sectors; the opportunities that will arise from the changes; the factors that will help workers and employers to weather the storm and take advantage of these opportunities; and what government agencies and employers can do now to ensure resilience, prosperity and fairness in the decades to come.”
“London’s economy has been on a roll in recent decades, establishing the city as a leading global centre for finance and business services, cultural industries, higher education and tech. But times are changing: the growth of automation, Brexit and wage pressures are three factors with potential to shake up London’s labour market.
This report undertakes fresh analysis of data on London’s workforce, skills and specialisms in order to consider which jobs and businesses will be most affected. It also reviews the factors that will help the capital adapt to change, and considers the implications for businesses and policymakers.”
The march of automation through machine learning, mobile robotics, AI and deep learning is expected to affect more and more jobs in coming decades. New technologies are enabling the automation of ever more complex tasks and the cost of robots is falling, by around 10% a year. Recent estimates about the impact of technological change remain uncertain but suggest between 10 and 47% or current jobs in high income countries could be automated over the next 20 years.
The Centre for London think tank report points out that In London, automation combines with other disruptive factors.
“Reduced access to European labour following Brexit could pose a particular challenge in a city where 15 per cent of workers come from other European countries.”
“Pressure on wages resulting from national policy and rising costs within London may be amplified by labour shortages, creating more pressure for automation.”
“London’s workers and employers are expected to face a perfect storm of disruption… Around one-third of London’s jobs could be automated.”
“The impact is likely to be greatest for low- and medium-skilled workers in secretarial, administrative, sales and routine trade jobs. Their occupational makeup means that wholesale and retail, transportation and storage, and accommodation and food – together accounting for around one million jobs in London – are the sectors most likely to be affected. Automation in some of these sectors (such as accommodation, food and retail) may be accelerated by wage pressures and labour shortages,” the report said.
But London is also well placed to weather the storm. Businesses are already working to capture opportunities and ready themselves for change…
Caroline Artis, London Senior Partner, at EY London said in her foreword to the report;
“London is one of the world’s most attractive, dynamic and powerful cities, with an incredible mix of commerce, culture and people. With an economy generating around £400 billion every year in economic activity, it has rightly established itself as a leading global city in a league of its own.
But whilst London has proved astonishingly resilient over recent decades, as it has adapted to deindustrialisation, the transformation of financial and business services, cultural resurgence and the growth of the global city economy, we cannot ignore that the world is changing.
We are living in an era that combines unprecedented change with limitless opportunity. The nature of work is evolving fast, new generations are now dominating the workforce and we are being forced to be more innovative, more agile, more collaborative and more everything.
Adapting to these challenges requires changes to current ways of working for people, businesses and government. It recognises that many employers are already seeking to adapt to the changing paradigms of work, but the disruption of business models is hardly new.
What is considered new ground is how technological change is creating new enterprise and employment opportunities. London’s well-qualified workforce, its areas of economic specialism and its global character should enable the city to take advantage of these opportunities.
The report also considers the implications for policy and regulation, particularly in the context of a post-Brexit immigration strategy, which will be critical in helping London to attract and retain the skills necessary to capitalise on the opportunities unlocked by technological change.
This report undertakes a fresh approach to the possibilities and opportunities to arise from this decade of disruption, along with data analysis to support the evidence that will ensure London remains resilient and prosperous in the decades to come.”