Belfast Telegraph

Why we need to prepare ourselves for the robots

Analysis

By John Simpson

A new industrial revolution is underway, a challenge to all developed countries, but particularly the UK. By logical extension, the challenge also applies to the economies on this island: the Republic of Ireland and Northern Ireland.

The new revolution stems from the potential being demonstrated by industrial and commercial leaders for major changes in automation and artificial intelligence.

The CBI, commending a 'leapfrog' industrial strategy across the UK, has repeated the claim that the forthcoming changes could displace 35% of all existing jobs.

The potential changes in employment are a threat to the Northern Ireland economy as much as (if not more than) any other region. There are new competitive markets to be won and new higher value jobs to be created for the places that take the lead in the new industrial leapfrog. For the areas that adopt a wait and see strategy, the potential gains could instead see serious tragedies.

The starting point for Northern Ireland in 2017 is concerning. From 2008, the year when the financial crash hit these islands, to 2017, the economic recovery has been sluggish in the UK, but particularly so in NI. The official comparators show poor results. The UK economy has recovered the output lost from 2008 to 2011 and by mid-2017 has grown by over 12%. In the same period, using the statistics compiled by the Department for the Economy, output in different areas has been as follows:

• UK: 12% higher

• Northern Ireland: 7% lower

• Scotland: 6% higher

• Republic of Ireland: 48% higher

NI has not recovered to the level of output experienced in 2008, even though employment is higher. The implications for competitiveness, productivity and the value of personal earnings do not need emphasis.

The strength and weaknesses of the UK economy are a sharp reminder of the policy challenges for all. The temptation is to assume that there has been a short-term or temporary blip and that with conventional economic management through national budgetary policies, or official monetary policy, progress will be resumed.

There seem to be at least two reasons to qualify that assumption. First, the UK, in common with other western developed economies, is experiencing an unexpected slowdown in productivity. Over an extended period, output per employee would normally have increased by 1.5% to 2% each year. Recently the outcome, year on year, has fallen to almost zero.

Second, cautiously, for the UK there is a concern that the Brexit process, and the lack of certainty on the outcome, means investments that might enhance the economy are being either deterred or delayed, building economic damage.

For NI the implications are even more noticeable. The sensible starting point for policy development in the UK and in NI is to accept the international evidence that we are indeed in the early stages of a fourth industrial revolution. From that starting point there is one stark negative conclusion: to ignore this evidence would be a serious mistake. Heads buried in the sand will not mean the storm will not take place.

In commending a 'leapfrog' industrial strategy for the new technology age, the CBI suggests the creation of an independent industrial strategy board to measure, advise and build confidence that the strategy will be effective. The CBI adds that to ensure that no region is left behind, the Board should have a regional commissioner to oversee delivery, "regardless of local political structures".

Critically, NI should now opt-in and play a lead role: to hang-back could do serious damage.

Belfast Telegraph

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