15 years ago, it almost seemed technological change had peaked after the inflated dotcom bubble on the stock markets erupted. Fast forward to 2018 and we are talking about the ‘Internet of Things’ which will see fridges telling us what to buy at the grocery store (or even ordering the shopping themselves). Devices such as digital video recorders or webcams can even become objects through which hackers can disturb the functioning of online channels such as Netflix and Facebook, platforms which have utterly transformed communication and broadcasting in recent years.

A transport without workers: Uber’s endgame

As the world changes at an ever-faster pace, analysing the social consequences of technological change is essential. 15 years ago smartphones – the basic requirement for platforms such as Uber to exist in their current forms – were still a curiosity in most of the world. 15 years from now, it is quite possible that an important part of Uber’s current business model – independent drivers – will become obsolete.

Such a scenario is widely considered as Uber’s ultimate goal and explains its light-touch attitude towards regulation in different markets. In such a scenario, taxi drivers are only an intermediary phase between traditional taxi services and a fully automated business where the company offers both the platform and the car, controlling the car-hailing service in its entirety. As described in a CNBC article from 2017: “Among Uber’s biggest expenses is the cost of attracting drivers, who have a high turnover rate. And Uber’s ability to expand into suburban and rural markets, and areas with low vehicle ownership, and continue to offer a ride within three minutes, largely hinges on the availability of a network of self-driving vehicles.”

Uber is already testing autonomous technology in the United States. It shifted its pilot project from San Francisco to the neighbouring state of Arizona after a regulatory standoff with the California Department of Motor Vehicles (DMV). Uber had refused to apply for the necessary permit to test autonomous vehicles on public roads, arguing that it did not apply for a situation in which a human person was in the vehicle supervising the automated driving, and so the DMV went ahead and revoked the registration of 16 Uber self-driving cars.

Instead, having received a warm welcome from Arizona’s Republican governor, Doug Dacey, the tech company decided to move its tests there. It returned to San Francisco (applying for the permit it earlier considered unnecessary) soon after a March 2017 incident in the town of Tempe, Arizona, when a human driver failed to give way to the Uber car, resulting in a crash. Although police eventually cleared the Uber SUV, the accident led to a temporary grounding of the operations in the state. The media reported that the company decided to use more technologically advanced models in the next phase of the tests. In March 2018, tragedy struck when, despite the presence of a human in the vehicle, an Uber test vehicle hit and killed a pedestrian, again in Tempe, Arizona.

Tests are on hold for the moment but the incident does not mean that the automation of driving will be postponed for long. Experts differ in the precise timing of the finalisation of the process or the exact level of automation. Some argue that it will be rolled out in full on major roads, while on smaller routes drivers may still be necessary. However, most agree it will have an enormous influence on jobs and the regulation of transport systems.

The most obvious example of automation’s impact on the job market is that of truck drivers. Currently the biggest sector in terms of job creation in most US states where Uber is also testing autonomous driving technology, some forecasts estimate that 1.7 million American workers could be put out of work by the end of the next decade. If – and it is a future companies such as Uber are betting on – the difficulties with automated driving in an urban environment can be overcome, taxi drivers too will have little chance of competing with self-driving cars.

For all kinds of automated driving, many regulatory issues will need to be addressed, including the swift harmonisation of laws between different countries to avoid problems when such vehicles cross borders. This challenge will most likely require intervention at the European level. Regulatory solutions will also need to cover responsibility for traffic accidents, important for insurance purposes, as well as guaranteeing sufficient protection against cyberattacks on autonomous car software, which could allow vehicles to be hijacked with potentially lethal consequences.

The long reach of automation

Changes to the transport sector are just a small part of the possible changes automation and digitalisation will bring to the world of work. Such changes include the mass laying off of manufacturing workers as robots take over their tasks. Potential ‘dark factories’ would allow firms to save money on wages and electricity, as robots do not require light or heating to perform their tasks. Plans for autonomous cargo ships are being explored by major freight companies and could be put to sea in a short to medium timeframe too.

This wider trend has been described as the ‘third/fourth industrial revolution’. While the first industrial revolution was powered by steam and coal from the late-18th century, and the second by electricity produced from coal and oil 100 years later, the third is usually seen as starting in the 1970s with the emergence of computing. The budding fourth industrial revolution will be driven by the networked internet of things, and powered by renewables. But although the term ‘fourth industrial revolution’ or ‘Industry 4.0’ has gained much traction, some argue that we have not yet seen sufficient technological changes to distinguish it from the third one. This perspective would argue that technologies such as the internet and renewable energy are features of both, albeit in less advanced forms. As with the previous industrial revolutions, technology will once more change working patterns, as well as our production and consumption habits.

The growing interconnectedness of machines, a development spanning from their autonomous communication with each other to the growing role of data, has been heralded as the key trend shaping the global economy by, among others, chair of the World Economic Forum Klaus Schwab.[1]

What will all this mean for Europe? The European think tank Bruegel has calculated the possible influence of job automation on European workplaces and how many workers will be affected. Although a significant percentage of workers in every EU country will be affected, a visible link can be seen between how innovative an economy is (or, alternatively, how dependent on competitive labour costs it is) and the risk of potential labour market disruption.

The divided geographies of job losses

Automation therefore may widen the divides between European economies, divides that integration and regional development instruments aimed to bridge. Northern European countries such as Sweden that enjoy both open, innovative economies and (still) robust social safety nets, face the smallest risks from automation. On the other hand, Southern and Eastern EU countries risk much more disruption. Romania is in particular danger with up to 61.3 per cent of jobs in the country under threat from automation. Besides Malta, Latvia, and Lithuania, all of the Member States that joined the EU after 2004 have risk factors over 53 per cent. Of the older EU countries, those most damaged by the global financial crisis – Greece, Italy, Spain, and Portugal – face similar or higher levels of disruption, in addition to, surprisingly, Austria.

Such a divide may be explained at least partly by the position of Central and Eastern European economies in the EU value chain. For years they have been trying to entice as much foreign investment as possible, which often meant closing down domestic industries that may have been competitors. By allowing foreign corporations to buy privatised companies to integrate them into their global production networks, the innovation potential of Central and Eastern European countries has been limited greatly.[2]

This geographically uneven impact of technology mirrors what will be experienced within countries. As Maria Skóra from think tank Das Progressives Zentrum describes: “Technological progress might have a two-fold effect on the labour market. On the one hand, there is risk that not everybody will benefit from innovations equally. Technological progress inevitably leads to polarisation of the labour market in terms of qualifications and competences, thus one may presume that those positioned relatively high in the professional hierarchy will benefit from innovations more – or will be less at risk of job losses from automation. It is clear some workplaces involving monotonous activities, less skills, and prone to automation and digitalisation will vanish.”

Political responses to technology’s challenge

Such risks may go both ways. The optimists argue that – just like during the previous industrial revolutions – we will see huge changes in the workforce, but ultimately new industries will create new occupations that will absorb the unemployed (possibly in realms requiring more strategic, analytical thinking). Their focus is therefore more on upgrading educational systems, aimed at adapting them to the changing labour market (more group work, coding lessons, etc.) and at putting more attention to lifelong learning and access to training. This – at least in part – seems to be the reasoning behind labour market reforms pursued by French President Emmanuel Macron.

The pessimists argue that this time it is different. Technology may exacerbate inequalities both between economies and within societies, creating privileged elites with access to paid employment and the rest, cut off from decent job opportunities and left to fend for themselves. In the short term, they focus more on proposals such as shortening of the working week to allow for better job sharing or shifting taxation towards robots, as proposed by the Socialist candidate in the 2017 French presidential elections, Benoît Hamon.

Most of the people inclined to believe that technology will drive inequality and unemployment (coming from diverse backgrounds, from the Basic Income Earth Network to Mark Zuckerberg and Elon Musk) proposing some form of basic income, paid to all citizens with no strings attached. It would allow all to enjoy a modest but sufficient quality of life, and support the consumption necessary for the economy not to collapse. While such an idea may seem utopian for people used to a traditional social safety net, its prospects in the last years have vastly improved with pilot projects launched or planned in Utrecht, Finland, and Ontario in Canada, among other examples.

There are also voices arguing for an environmental take on the matter. Rupert Read from the Green House think tank argues that technological fixes such as robotisation assume boundless or negotiable planetary limits. In this analysis, if we are serious about fighting climate change and changing how we produce and consume, then the robot revolution may end before it even started. A few decades spent pursuing ‘the rise of the robots’ may abruptly end as the social and economic structures underpinning any such technological development collapse due to unavoidable ecological disaster. The alternative would be to return to human-centred, low-carbon, localised work in line with more traditional green priorities for decentralised (both political and economic) power.

While seemingly abstract today, these considerations may soon shape the ways we consume, work, and exist in the world. A small tweak in a business model of a car-hailing platform may render the jobs of millions obsolete. Regulations are trying to keep up with changing technologies. A recent European Court of Justice decision determined that Uber was not just an intermediary between drivers and clients as it claimed and that it needs to comply with the local requirements regarding transport services. This decision in turn may speed up experiments with autonomous vehicles in Europe. Anticipating political and societal questions that will soon need answers, the Digital Working Group of the Greens/EFA group in the European Parliament has emphasised the need for a coordinated European response on issues ranging from hacking to the ethical implications of road accidents involving driverless cars.

Any planned regulations on Uber or other platform economy companies need to acknowledge that our fast-changing socio-economic environment represents a moving target. In Central and Eastern Europe, trends including the precarisation of work, deindustrialisation, and plans for reigniting industrial production, are both well established and yet rapidly evolving. The Polish government’s ‘Strategy for Responsible Development’ aims to escape the ‘middle-income trap’ by encouraging a more active role for government in promoting innovation in all parts of the country. It promotes regional specialisation (mainly in industrial products) as one way to create more added value across the economy.

While it can be argued that this strategy is a step forward compared to the previous laissez-faire approach to industrial policy, it is yet to be seen if it is sufficient to meet the challenge of automation. The strategy remains framed by old, mainstream economic concepts such as growth and competitiveness. The brains behind the strategy, current Polish Prime Minister Mateusz Morawiecki, seems to see the ‘sharing economy’ more like a business opportunity than the potential economic disruptor it could actually represent. For this pressing reason, public authorities need to be looking at the impact of technology on national labour markets. And, beyond investigation, potential solutions tailored for local social and economic contexts are still badly needed.

 

[1] K. Schwab, The Fourth Industrial Revolution, World Economic Forum 2016.

[2] An example of such changes has been described, for example, by Elizabeth Dunn in her book Privatizing Poland. Baby Food, Big Business and the Remaking of Labor, Cornell University Press, 2004.