A day after my last blog, on skills shortages and Brexit, the Migration Advisory Committee published its analysis on migrant workers and the future.
The report, commissioned by the Government ahead of Brexit, suggested there should be no special status for EU migrant workers and extending access (called Tier 2 visas) for higher-skilled workers from non-EU countries should be extended to all countries.
It also said it was “not convinced there needs to be a work route for low-skilled workers” from the EU” with the possible exception of seasonal agricultural workers.
Not surprisingly employers and businesses gave the report a mixed reception, generally negative from those who depended heavily on low-skilled migrants for production line, hospitality and farm-related work.
But given that the world is at the start of what is being called IR 4.0, or the fourth Industrial Revolution, is this an example of politicians’ and businesses’ thinking being out of date and, along with trade wars, fighting the wrong battles?
This is the thesis of Paul Donovan global chief economist at UBS Wealth Management who argues that global trade has now hit its peak and, in the future, thanks to IR 4.0 everything, from supply chains to transportation will become much shorter, with locations of production much closer to their customers.
The reason is that with the advent of robotics, AI and automation much of the production of goods could be carried out locally and affordably without the need for the constant worry about sourcing enough low-skilled workers to carry out what are essentially tasks that could easily be automated.
This would reverse the offshoring trend of the past 20 years or so that was driven by the pursuit of lower labour costs. Indeed, the onshoring of manufacturing in US has been gathering pace due to automation, exchange rates, higher transport costs and lower energy costs.
The construction industry is an interesting example, where there have been shortages of skilled tradespeople for some years and it is currently using EU workers to fill the gaps.
In the last few days research published by Altus Group with 400 UK property developers postulated that we could soon see “armies of robot bricklayers” making up for the skill shortage. Already there are trials taking place on some building sites. Drones, meanwhile, are being used for surveying, inspections and progress monitoring.
Of course, there would be a period of disruption during the transition and the World Economic Forum (WEF) has already predicted around 75 million jobs being displaced globally by robots by 2022, and not only in the most obvious sectors. However, WEF also predicts that a technological revolution could create around 133 million new jobs. This prediction has also been backed up by PwC.
Professor Klaus Schwab, WEF Founder and Executive Chairman, in his book The Fourth Industrial Revolution, calls this a time of great promise and potential peril. In his book he says: “decision makers are too often caught in traditional, linear (and non-disruptive) thinking or too absorbed by immediate concerns to think strategically about the forces of disruption and innovation shaping our future.”
This suggests that business leaders will have to begin questioning everything, from their strategies and business models, to making the right investments in equipment, training and disruptive R&D.
Arguably this revolution in thinking applies equally forcefully to governments.