Published in The Welsh Agenda, Winter 17 (issue 59), by the Institute of Welsh Affairs
Much has been made of Wales’ distinctiveness, from its unique geographical features to its historic language and culture. This distinctiveness applies equally to Wales’ economic, employment and skill needs. The risks of automation and the oft-mentioned ‘rise of the machines’ have been frequent features in newspapers, articles and think pieces over the past few years, and Wales’ response to the challenges that automation brings will need to be distinctively Welsh too.
The definition of automation and Industry 4.0 has by now been well-articulated: a future where machines, devices and people work alongside each other, with machines and devices carrying out tasks autonomously, making decisions and communicating with each other. These fast-coming technological leaps have consequences for Wales’ workforce. Recent analysis by PricewaterhouseCoopers found that up to 30% of UK jobs could potentially be at high risk of automation by the early 2030s. The same analysis found that, based on the risk of job automation and the proportion of the workforce, the most vulnerable areas are retail trade, manufacturing, and administrative support services.
These sectors are important parts of the Welsh economy, accounting for over half a million jobs in Wales. The proportion of employees in these areas in Wales tends to be higher than the UK as a whole. The risks posed by automation reach far across sectors and job-type. Work by IPPR predicts that by 2025 up to 30% of corporate audits, a traditionally ‘white collar’ profession, could be performed by artificial intelligence. And where jobs themselves aren’t automated, automation will fundamentally change what many jobs look like and involve.
Understanding the scope and impact these technological developments will have on the Welsh workplace is made even harder by the difficulty in predicting the exact nature of jobs in the near future. Recent work by Microsoft had leading technologists consider the jobs of the future, predicting job titles such as ‘Virtual Habitat Designer’ and ‘Biohacker’.
These kinds of jobs may or may not come to pass and the Welsh workforce has shown that it can adapt to a changing world. However, we must still confront what these predicted and foreseeable changes mean for Wales and how we are to respond to them. Analysis by PricewaterhouseCoopers found that for those educated to GCSE-level or below, the estimated potential risks of automation are as high as 46%. This falls to only around 12% for those with undergraduate degrees or higher. These findings come against a backdrop of already increasing demand for higher level skills with the CBI’s Education and Skills Survey 2016 finding that more than three quarters of businesses in the UK expected to have more job openings for people with higher level skills over the coming year. The 2015 UKCES Employer Skills Survey found that the increase in the number of skills shortage vacancies in Wales outstripped the overall growth in vacancies.
Through this lens, the challenge facing Wales, and specifically education providers in Wales, becomes clearer. Demand for higher-level skills is increasing, and jobs at graduate level or higher are the least at risk to automation. To meet the increasing demand, and to enable the Welsh workforce to develop future skills whilst benefitting from automation, Wales must be able respond flexibly and quickly in providing people with the skills they need.
The challenges to doing this are multifaceted. Firstly, how do we identify skills needs and prepare Wales for the future? One important part of this is the interaction between businesses, people, and universities. By facilitating and expanding spaces and opportunities for businesses and universities to collaborate, we can also create a greater flow of information between the two. This will not only highlight what existing skills needs are, but research and innovation by universities and businesses will give shape to the jobs of the future, and the skills that will be needed to fill them.
Wales is well-placed for this. Established areas of expertise in Wales such as smart and clean energy, advanced materials, cyber security, and compound semiconductors are widely seen as core sectors for the future of both the UK and global economy. And beyond these areas, research by universities in Wales is diverse and ambitious, the recent Research Excellence Framework exercise found Wales to have the highest percentage in the UK of research whose impact is considered to be ‘world leading’ with almost half of it considered to be having a transformational effect on society and the economy.
The strength of research in Wales helps us understand what changes are coming, but this is only a part of the picture. We must also make sure that the ways in which we offer higher level skills can reach those that need them, and that provision is responsive to both the needs of businesses and individuals. Wales has an aging population with increases in life expectancy set to continue and the number of people over 65 set to increase by 25% over the next 20 years.
With this in mind, as well as providing education and training to young people just entering the labour market, it will become increasingly important to ensure that those already in the workforce are given the opportunity to upskill and retrain as the economy and the workplace enters a period of predicted rapid change. For this, we may need to explore and expand different ways of delivery, including ways to deliver degrees in the workplace. With the right structures, universities delivering degrees in the workplace could offer a choice to those who want to work full-time while studying, or whose circumstances may preclude them from committing to a full-time degree.
And what do we mean when we say skills? There are many components to someone’s ‘skills’. There are the cognitive skills such as literacy, numeracy and problem-solving, social and behavioural skills that enable us to collaborate, to work in teams and form partnerships, and there are technical skills which are often occupation specific. In the coming decades, many people in Wales will need to update and relearn technical skills as occupations and technology change. A strong foundation in cognitive and social skills will help give people the flexibility and adaptability needed to do so.
The workplace is changing, undergoing what Germany originally called a fourth industrial revolution. For Wales there are risks, but also opportunities. Universities have an important role: in their communities working alongside colleges, as education providers, and working with businesses. This role means they are well-placed to not only identify the new jobs taking shape now and in the future, but also how best to develop, in collaboration with other education providers and employers, the skills these jobs will require.
Professor Julie Lydon OBE, Chair of Universities Wales