Technological Unemployment Essay Sample

The Impact of Technology

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Technology – as defined by the US National Academy of Science (cited in Jones 1996, p.17) –
     is a perishable resource comprising knowledge, skills, and the means
     of using and controlling factors of production for the purpose of
     producing, delivering to users, and maintaining goods and services,
     for which there is an economic and/or social demand.
Ever since the Industrial Revolution (1780s), the impact of technology has been subject to public debate over its effect on employment – does it cause unemployment or does it underlie the huge increases in standards of living (Jones 1996, p.11)? While it is difficult to ascertain the relationship between technology and employment, all that can be said with any certainty is that technological advancement has the capacity to create revolutionary economic and social changes (Jones 1996, p.21). In order to provide a clear analysis of the impact of technology on employment, we need to take into account the consequences of technological transitions and seek to relate these to social, economic, political, and cultural factors occurring at the time.

The relationship between technology and employment is at the same time complex and volatile (Mokyr 1990, p.52). To illustrate, the term “Luddite” was coined in the early 19th Century to describe mindless machine-breaking (Jones 1996, p.21). The Luddites were skilled cloth-weavers who believed that technology would destroy their livelihood and opportunities for work (Jones 1996, p.22). They were opposed not to the knitting and lace-making machines as such, but more to the “de-skilling” involved as these machines replaced workers which, inevitably led to the destruction of craft industries during this period (Jones 1996, p.24).

Historically though, the impact of technology has been to increase productivity in specific areas and in the long-term, “release” workers thereby, creating opportunities for work expansion in other areas (Mokyr 1990, p.34). The early 19th Century was marked by a rapid increase in employment on this basis: machinery transformed many workers from craftsmen to machine minders and although numbers fell relative to output – work was replaced by employment in factories (Stewart 1996, p.13).

Nevertheless, many fears to technological advancement have been expressed similarly to that of their predecessors by the ‘Neo-Luddites’ of today (Stewart 1996, p.13). A prime advocate, author of The End of Work and US economist, Jeremy Rifkin asserts that technology is a ‘revolution’ which has taken over the world, posing a significant restructuring of the workforce and quality of life (Wyndham 1997, p.

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1). In an alarmist tone, he argues that governments worldwide are fighting a losing battle to find jobs for millions displaced by the ‘technological revolution’ and by corporate cost-cutting (Smark 1997, p.47). Says Rifkin (cited in Stewart 1996, p.13):
technology is taking more jobs than it is creating, thus leading the world to
catastrophic global unemployment......Traditional white and blue collar jobs
are being lost to technology at a frightening rate. However, technology is only
creating limited jobs for a small, elite core of scientists, computer programmers,
consultants and entrepreneurs – this elite group being the ‘knowledge sector’.

In confronting Rifkin’s prediction of a “society absent of mass formal employment”, this is possible for while technology is rapidly changing and restructuring workplaces on a global scale, there are stresses which are causing instability in the workforce (Smark 1997, p.47). Fewer people are required in many areas, greatly reducing the availability of work (Gill 1996, p.165). Consequently, when workers are displaced by new technology, there are substantial costs in retraining and educating them for other jobs (Gill 1996, p.167). One of the problems posed by rapidly changing technology then, is that people do not have the required skills to gain employment and although there may be jobs out there, the problem is not demand for labour, but the quality of labour supplied (Clark 1997, p.172). The opportunities for people being re-employed without the appropriate skills are minimal and subsequently, they fall on society for welfare, unemployment and retraining (Smark 1997, p.47). Are these the desired outcomes that flow from technological transitions with which society is confronted?

For all that, perhaps the major turnaround in the nature of work, society, communication and personal experience has been the impact of computerised technology (Jones 1996, p.96). A computer may be defined as a “tool which converts data (raw material) into information (product) by following sets of programs (instructions)” (Jones 1996, p.98). Since the late 1970s, computing has become a transforming technology central to communications, manufacturing, medicine, research, administration, education, tourism and entertainment (Jones 1996, p.99). It has been central to the economic, environmental and social well-being of citizens in nations employing this technology namely, most Western and developed Asian countries (Mattill 1993, p.77). Improvements to the standard of living, increased public and private sector productivity, the creation of new industries and improved public services, have been fostered by a culture in favour of such forms of technology (McKern 1996, p.60).

Incidentally, computer technology has generated major increases in employment downstream and reveals the most important characteristic whether it is applied to the office environment, the factory or various industrial sectors – that of labour saving and capital saving (Gill 1996, p.179). Seen as a means of enhancing efficiency of production, while reducing cost and rising capacity, it has had a profound impact on access to information which has become the central factor in the organisation of society and national economies, and promoted the growth of a global economy (Gill 1996, p.182). This has not been achieved however, without serious implications for privacy and security with controls of centralised information on personal credit, health, educational, banking and insurance records (Jones 1996, p.101). Since the development of recent innovations such as the Internet and other technology, there has been widespread concern regarding their effects on liberty, privacy, individuality and quality of communication (Jones 1996, p.105). Yet despite this, it is hard to ignore or prevent technology form altering the way in which people live and society as a whole operates (Smark 1997, p.47).

Technology thus far, has been used to promote greater economic equity, more freedom of choice, changes in the pattern of work and more notably, has been a contributing factor to the globalisation of work (McKern 1997, p.60). Globalisation is most commonly used to describe “processes of technological and economic global integration which are creating a new distribution of wealth, skills, technology and production” (ASTEC 1996, p.15). The pace and extent of globalisation, and the increasing internationalisation of culture and communications, is influenced strongly by technology, particularly transport and communications (Adler 1990, p.4). The globalisation of the employment market represents increased opportunities for businesses and governments in that the promotion of political harmony will improve global integration of markets and a growing interdependence between the policies of governments (Adler 1990, p.5). Some of the benefits such as greater access to markets and technology, are used as a pool of resources by expanding and equipping areas most affected, with more efficient means (Adler 1990, p.6). In effect, technology will assist rather than replace the workforce by allowing organisations to communicate on a global scale in ways that are more cost-effective and efficient (McKern 1997, p.60).

Overall, it can be said that the impact of technology on employment cannot be understood in isolation: it is a reflection of an era’s social and economic factors that are occurring. As illustrated, technology neither causes employment nor unemployment but rather, has implications on the availability and location on specific types of jobs and the impact it has on employment, varies depending on the state of economic growth (Gill 1996, p.179). We have seen that since the Industrial Revolution, technology has been responsible for improvements such as: overall economic growth, opportunities for work expansion, significant restructuring of the workforce, increased productivity, enhanced living standards and the globalisation of work. Conversely, we have also seen the adverse effects technology has brought with it that has increased levels of unemployment in some employment categories, resorted the ‘unskilled’ to welfare and exploited the privacy and liberty of society. While the future of employment under technological progress is hard to forecast, those predominantly in control of powerful technology have a responsibility to consider the social consequences of future technological implementations (Jones 1996, p.236). Finally, the technology and unemployment debate without doubt will continue at various times in years to come and like the Luddites, the Neo-Luddites of today are sure to fail in their crusade to stop technology from altering the way people live and moreover, prevent new technology from restructuring the workforce.

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B i b l i o g r a p h y

Adler, N. J. (1990). Globalisation and Human Resource Management: Strategic International Human Resource Development. Speech Notes. Boston, Massachusetts: Harvard.

ASTEC. (1996). Developing long-term strategies for science and technology in Australia. Canberra, ACT: Government printing services.

Clark, D. (1997). Student Economics Briefs 1998. AFR Books. Sydney: John Fairfax & Sons.

Gill, C. (1996). Work, Unemployment and the New Technology. Cambridge, London: Oxford.

Jones, B. (1996). Sleepers Wake! Technology and the future of work. 4th edn. Melbourne: Oxford.

Mattill, J. (1993). “Too High on High Tech?” Technology Review. Vol. 186. no. 5. July. p. 77. Cambridge, Massachusetts: William J. Hecht.

McKern, B. (1997). ‘Science and Technology need respect.” Business Review. 10 March 1997. p. 60. Broadway, NSW: John Fairfax & Sons. [CD-ROM] Database viewed: Newspapers/File: Business Review 1997.

Mokyr, J. (1990). The Lever of Riches: technological creativity and economic progress. London: Oxford.

Smark, P. (1997). “No room for optimism in our brave new society.” The Sydney Morning Herald. 18 January 1997. p. 47. Broadway, NSW: John Fairfax & Sons.

Stewart, C. (1996). “Would the last hand out of the factory please turn off the lights?” The Australian. 27 June 1996. p.13. Canberra, ACT: Nationwide News.

Wyndham, S. (1997). “Hazard warning in transit to republic.” The Sydney Morning Herald. 14 August 1997. p. 1. Broadway, NSW: John Fairfax & Sons.

Technological unemployment occurs when developments in technology and working practices cause some workers to lose their jobs.

Technological unemployment is considered to be part of a wider concept known as structural unemployment.

Example of technological unemployment

When labour-saving machines are introduced into the productive process, a firm can get rid of workers and produce the same amount of goods than before. Therefore some workers can lose their job.

Overall Impact on Unemployment

Technological change doesn’t have to increase overall unemployment, even though some types of workers may temporarily lose their jobs.

For example, in 1800, the majority of British workers were employed in agriculture. Labour-saving technology meant that food could be produced with fewer workers and so some agricultural labourers lost their jobs as farms used more machines.

However, as jobs were lost in agriculture, new jobs were created in producing machines.

Similarly, advances in computers and robots meant that firms could produce manufactured goods with fewer workers. The increased productivity in manufactured goods meant that the relative cost fell, giving more opportunities for people to work in the service sector.

Why does technological change not cause unemployment?

Let us suppose, technological change means we can produce food with fewer workers. Therefore, it is cheaper to produce food and the price of food should fall.

This means that people can spend a smaller percentage of their income on buying food. Therefore, people have more money to spend on other goods and services.

This increased demand for manufactured goods causes higher demand, and therefore there will be a higher demand for workers.

Technological innovation merely changes the types of jobs that occur in the economy. If labour productivity increases, we can enjoy a greater range of goods and services.

In 1920, there were 1.2 million coal miners in the UK. Technological change was a factor in the number employed fall to less than 5,000 in 2012. (decline of UK Coal)

Why Technological change can increase unemployment

If labour markets are flexible, then technological change will not cause unemployment. However, if there are labour market inflexibilities, then it can cause unemployment – at least, for a certain time period.

For example, due to technological change, coal miners may lose their jobs. However, due to occupational and geographical immobilities, they may be unable to take new jobs in the service sector. (e.g. a miner may not have skills to work in computers; he may find it hard to relocate).

In this case, technological change can cause a temporary increase in unemployment – which will last until the coal miners develop greater skills and ability to move.

Evidence of technological unemployment in the US?

Since 2000, productivity growth has become detached from employment growth. During the early 2000s employment grew at a slower rate than productivity. Since the end of the great depression, employment growth has picked up (though in a flexible labour market – many new jobs are low paid). But, this might indicate the gains in productivity from automation are leading to lower job growth (though there could be other factors too)

In this period from 2000, there was a sharp jump in corporate profits, which suggests companies are gaining higher profit from increased productivity.

Labour share of GDP

This shows that labour (salaries, wages) are taking a smaller share of GDP since 1990. This also doesn’t reflect the rise in wage inequality and growth in salaries of top 1%



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