Productivity Commission examines impact of technology on work

'Difficult to predict in advance the aggregate impact of a specific technology on work and labour,' draft report concludes

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The productivity Commission has published a draft report, New Zealand, technology and productivity: Technological change and the future of work, that concludes it is very difficult to predict the impact of any technology on work.

The draft report is the first in a series of four the Commission will release in coming weeks as part of its inquiry into Technological Change, Disruption and the Future of Work, initiated by minister of finance Grant Robinson on 25 February.

Its conclusion would seem to suggest the commission will have difficulty answering the questions that the terms of reference said should guide the enquiry: “What are the current and likely future impacts of technological change and disruption on the future of work, the workforce, labour markets, productivity and wellbeing?”

“How can the Government better position New Zealand and New Zealanders to take advantage of innovation and technological change in terms of productivity, labour-market participation and the nature of work?”

The draft report says: “Technology can have many distinct effects on the labour market, and more than one effect can occur. Technology can replace human labour, augment human labour, increase the demand for labour by reducing the cost of goods and services, create new markets and jobs, and improve matching between workers and employers. Because of this complexity, it can be difficult to predict in advance the aggregate impact of a specific technology on work and labour.”

However, in the draft report the commission says it has not found much support in the available data for claims that widespread disruption is coming soon.  It says the problem facing New Zealand is too little technology, rather than two much.

Inquiry director Judy Kavanagh said rates of job destruction had declined in New Zealand since 2000, and recent rates of job creation were at a similar level to rates in the early 2000s.

“If the rate of technological  change was accelerating, you’d expect to see evidence in the official statistics, such as faster productivity growth, more business start-ups, and more jobs being created and destroyed. But what we see in New Zealand and across the developed world is the opposite,” Kavanagh said.

The draft report concludes faster adoption of technology increases the economy’s ability to adjust to change without disruption.

It calls for policy changes that support and encourage faster adoption, and address objections to change, by:

- reducing policy uncertainty for firms and for workers;

- better supporting workers and others adversely affected by technology adoption;

- better preparing New Zealanders for potential changes to the nature of work and the skills required; and

- supporting the efficient allocation of capital and other resources to productive enterprises and away from less-productive ones.

The commission is calling for submissions on the draft report and will issue three further draft reports: Employment, labour markets and income will be released in October, Education and skills in November and Preparing New Zealand for the future in December. A final report will be presented to the Government in March 2020.

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