As Northern Ireland seeks to recalibrate its approach to economic output following a decade of comparative underperformance and a looming recession, an opportunity exists to prepare for the future impacts and benefits of automation.
A new machine age, or the fourth industrial revolution as it is sometimes described, is imminently anticipated as both artificial intelligence (AI) and robotics exhibit growing capabilities.
Previously, automation has been highlighted for its potential to improve productivity, an area in which Northern Ireland suffers when compared to its UK counterparts. However, it has also been recognised for its potential to disrupt the current labour market, rendering some jobs obsolete and opening up growth potential in certain sectors.
The impact of the pandemic, while still to be fully realised, has brought fresh focus on the need to plan for automation and integrate it into plans for economic recovery and growth. The pandemic’s impact on the labour market will be long-standing. On one-hand economic recession will bring about a rise in unemployment across the board, mostly in relation to demand reduction. On the other, the severity of the impact will be more acute in specific sectors as measures remain in place to tackle the virus’s spread.
Research by the Ulster University Economic Policy Centre (UUEPC) estimates that when initial restrictions were introduced, a third of Northern Ireland’s jobs were vulnerable. As restrictions continue to be eased this figure will fall but with some measures, such as social distancing, set to be a part of the ‘new normal’, threats to jobs remain.
The need for re-shaped workplaces and an emphasis on up-skilling or re-skilling many of those undertaking jobs most at risk or those newly entering the labour market is recognised in order to combat the economic decline. Both are features of recommendations recently delivered to the Department for the Economy as it looks to deliver a new long-term Skills Strategy for Northern Ireland.
Interestingly, the reshaping of workplaces through new skills and tasks is a major feature of the impact of automation. Although measured in an economic context that did not include Covid-19 as an economic factor, the UUEPC estimates that up to 100,000 additional jobs could be created in Northern Ireland due to automation, with a Gross Value Added (GVA) uplift of between £44 billion to £52 billion.
The extent to which these estimates will hold true, given the changing economic and political climates, remains to be seen. For instance, the report estimates that health and social care professional services may experience the largest net employment gains in Northern Ireland by 2030. Undoubtedly there is a greater political awareness about the need to invest in the transformation of Northern Ireland’s failing health and social care system, which makes an upturn in employment through automation viable, however, not calculated is the toll of the pandemic on the sector and the impact of new immigration measures on workers from the EU set to come in to force in 2021.
Automation and technology are recognised as having the potential to correct gender imbalances amidst Northern Ireland’s economic sectors and facilitate an ageing workforce. Additionally, remote and flexible working are means to address regional inequality and reduce Northern Ireland’s high levels of economic inactivity. The pandemic has facilitated far greater levels of remote and flexible working than could have been envisaged in such a short time frame and the advantages of this should now be factored into a future economic road map.
Critical to the integration of automation into economic recovery and growth will be the policy context and the levels of investment needed to drive this. For Northern Ireland, this means not only utilising the education system to equip new entrants to the labour market to meet the changing demand but also re-skilling existing employees who have seen their job role disappear or change.
Research indicates that while there will likely be a high demand for skills in the likes of data analytics, advanced ICT and coding, requirements will also exist for an uplift in ‘soft skills’ in order to capitalise on automation potential, such as problem solving, communication and management.
To this end, it is recommended that Northern Ireland initiates a cultural change to facilitate lifelong learning, which will help better equip Northern Ireland’s labour market to capitalised on the opportunities of automation.
How automation has shaped other economies: country profiles
Context: Germany, historically a manufacturing-based economy, leads the way in European automation progress. Tailored policies introduced as early as 2006 have seen their robotic and automation industry grow by 10 per cent between 2010 to 2017, most notably I40 which aims to create smart factories by achieving digitalised manufacturing over the next 10 to 15 years. Investment: Germany’s various automation strategies focus heavily on research and development and have recognised the value of wider collaboration amongst industries, policy makers and development. Germany also recognised that skills will need to be adapted to meet the future of work and so a dual system for vocational training was developed in 2005. One in five companies in Germany are now involved in the dual vocational training scheme. I40 has particular aims to increase collaboration amongst industries, policy makers and academics focus heavily on research and development.
Supports: While supports exist to allow businesses to share ideas and best practices to develop projects in the technological sector, limitations have been recognised in that organisations still face high investments costs, data security concerns, the need to adapt management styles and a limited supply of skilled workers. Uncertainty remains around the development of industrial standards, which has led to a slow uptake of investments in new systems.
Lessons for Northern Ireland: Research and development is core to develop automation, however, this must be met with financial support and expertise if new technology is to be successfully implemented. Standardisation for new technologies in Northern Ireland could help avoid the limiting factors in Germany and provide industry confidence to invest in new technology.
Context: The UK is currently ranked Number 8 overall in the Automation Readiness Index and in 2017 published the UK Industrial Strategy in preparation for an AI revolution. The Strategy covers more than 200 policies across government but has been met with some criticism because of the scale of funding pledges and overlaps of initiatives. Investment: The 2017 Strategy saw an outline of ambitions to raise the 1.7 per cent of GDP spent on research and development to 2.4 per cent by 2027 and 3 per cent long-term. The Industrial Strategy Challenge Fund and a National Retraining Scheme were major features of efforts to prepare the labour market for automation including up-skilling of workers, high-level apprenticeship schemes and work within schools to improve computer science teaching.
Supports: Supports for SMEs come in the form of the Business Basics Programme and similar sub programmes which encourage SMEs to test and adopt new technologies. A Scale Up Taskforce and a Scale Up Champion were appointed by government to help understand the difficulties businesses face in scaling up and to provide help to overcome these. Alongside this, a new Industrial Strategy Council was appointed to help oversee the Industrial Strategy.
Lessons for Northern Ireland: The wide-ranging scope of the UK’s strategy is an indicator of the extent to which automation will impact and sends a strong message to industry about the future direction. The levels of collaboration have been highlighted as strong foundations for ensuring the long-term policy can withstand political change. Work in the UK to understand the challenges to businesses of technology disruption can serve as guidance to Northern Ireland.
Context: Upon independence in 1991, Estonia based its economic ambitions on digitalisation and ICT, which has seen it become one of the most digitalised countries in the world. Around 99 per cent of all government services are completed through Estonia. Work on digital has better equipped Estonia to be prepared for automation, with the country currently ranked sixth in the Automation Readiness Index. Investment: Although not directly referencing automation, the Estonian R&D and Innovation Strategy 2014–2020, including targets of 3 per cent of GDP to be invested in research and development and a 9 per cent share of employment in high and medium-high technology sectors, has aims to increase the knowledge economy, which helps to continue the development and leadership of new technology. ICT has been given great prominence in the Estonian education system with 84 per cent of schools providing computer science classes. Additionally, the Estonian Lifelong Learning Strategy 2020 aims to encourage lifelong learning for adults aged 25–64, the Estonian government has a target in place to have a 20 per cent participation rate in education and training by 2020, compared to the EU average of 10.9 per cent.
Supports: A low wage labour market in Estonia has meant a much smaller appetite from businesses for automation investment but funding has been made available for companies to test new technology. The small market in Estonia means that company’s seeking to grow are looking outwardly and hoping to export high-technology and service goods. There are also schemes to attract skilled immigrants to ensure fresh innovation in the market.
Lessons for Northern Ireland: Citizen support and trust for digital processes is built on strong data security. When asking industry to switch to new procedure and technologies, Northern Ireland must consider the importance of strong data security.
Country profiles taken from information within the UUEPC’s’ Intelligent futures: Working with automation & digitisation to deliver sustainable employment and growth’ report published in December 2019.