The greater use of technology, namely artificial intelligence automation, is revolutionising business. But widespread adoption is also creating a pipeline of problems for the human workforce.
Last year, global consultancy giant McKinsey revealed in a benchmark report that more than a fifth of the global labour force are at risk of losing their jobs due to automation. That’s the equivalent of 800 million workers worldwide. After looking at 46 nations and more than 800 job types, it found that while robots will “increase productivity and improve our lives,” unless workers, businesses, and governments recognise this risk, then there will be millions of displaced staff.
However, financial firms have been a bit more optimistic on the impact of white collar jobs on Wall Street and other business hubs. Even the boss of a 227-year old investment firm Charles Stanley (CAY.L), which has $30.8bn (£23.8bn) of assets under management, believes that the industry and workers within it, will be able to weather that transition.
“We will seek to automate where we see things as being more efficient and if job roles disappear, one has to deal with the immediate impact with compassion for the people involved,” Paul Abberley, CEO of Charles Stanley told Yahoo Finance UK.
“But you wouldn’t step back on making those technological improvements. In that regard, it’s quite handy being at a firm that’s been around for 200 years— there are dozens of tasks that had been done over that time that aren’t being done anymore and we are probably going to employ more people than we did before. I expect that we are going to be employing more people doing more high-value added work albeit with some regrettable friction in the transition,” he added.
The World Economic Forum has been warning about the technological impact on the labour market for years, and in 2016, a study called “The Future of Jobs” said that 7.1 million jobs could be lost through redundancy, automation, or disintermediation by 2020. But it did say, however, that jobs will be created at the same time, an estimated 2.1 million mainly in more specialised areas such as computing, math, architecture, and engineering, which would offset some of those losses. Charles Stanley’s CEO believes that’s why City workers are likely to be better weathered in that technological revolution.
“At the risk of sounding elitist, one thing I’ve always felt in the 30 odd years I’ve worked in the City, you only get smart people working in the Square Mile. Whatever function you look at, workers in the City seem to be hardworking and smart and very much retrainable,” said Abberley.
Charles Stanley underwent a restructure in terms of operations over the last four years and Abberley says tech has been a big part of that. He said that tech spending will continue to increase and have a greater return on investment for the business and clients.
Abberley said that after reviewing internal financial models in 2014 when he first took up the role as CEO, there were areas that could have been improved, such as organisational structure as well as operational efficiency.
The change seems to be paying off. In June this year, Charles Stanley’s full year results for the 12 months to the end of March, showed profit before tax to £10.9m and earnings per share up 40% to 17.2p. But there are still changes that need to be made.
“In terms of what still needs to be done, there still needs to be work done on operational efficiency. We have to make sure that the behind-the-scenes stuff that the clients don’t see runs like clockwork and as efficiently as possible to keep those costs under control.
“In terms of technology, the tech developments over time are reducing the unit costs of doing something, meaning particular tasks are a lot cheaper than it used to be. But at the same time, technology is also awakening people to a broader range of better service. So while unit costs is falling, more stuff is being done, so you end up spending more on technology because you’re delivering a lot more.
“So our spend on technology is up, is a paradox. It breeds productivity but you spend more on computers than you used to because there is more you can do and more you can provide, so there’s that constant pattern in the background.
A McKinsey report released recently looked at how AI is being adopted and absorbed across companies and sectors and the impact it has on developing as well as advanced economies. It said that AI could deliver an additional $13tn, boosting global GDP by about 1.2% a year, by 2030.