The one job sector that's booming

The fastest growing sector isn't tech, it's the black economy...

The other day, I met an old friend I’d not seen for years. Decades in fact.

He’s a talented graphic designer. Naturally we talked about how his career had played out. It turned out that he’d drifted from job to job, but due to health problems had never managed to hold a job down for any great length of time.

To survive he’d taken any casual work he could find. Much of this work was paid for in cash; part of the booming black or ‘underground’ economy.

With so few jobs paying an adequate wage to meet the cost of living, millions of educated and skilled people now exist in an underground economy. In the US alone, this has ballooned to over $2 trillion annually.

Most people struggle to imagine a billion dollars, let alone a trillion. Two trillion dollars is $2,000,000,000,000. To put this in perspective, according to the IMF, the total GDP of the UK is ‘only’ $2.3 trillion…

That's maybe 10 million jobs in the US since the start of the recession

America's underground economy is not new, but since the Great Recession hit, analysts estimate it has more than doubled in size, driven by unemployed or underemployed people desperate to just survive. What other sectors can match that sort of growth?

I estimate this is equivalent to at least 5 million new jobs created in the US since 2008. This is fag packet maths I know, but let's say that of this estimated $1tr growth, each person earned on average $20,000 a year (this is probably much higher than the real figure, so I'm being cautious). That equates to 5 million jobs. If the actual average was $10,000, then we're talking about 10 million jobs...

As a benchmark, one of the fastest growing employment sectors, computer systems design, provides around 1.5m jobs in the US. The BLS forecasts this will be 2.1m  jobs by 2020.

So the underground economy is huge. And it’s not just criminal businesses like drugs, cyber-crime or prostitution. Research shows that a great deal of the black economy exists in completely legal industries such as bars, clubs and restaurants. It’s simply non-criminal work that isn't declared to the government by the employer and/or the employee.

Just as many people have been hard hit by the recession, so too have many businesses. It’s a huge temptation for business owners who in better times would probably run their businesses completely legally. Faced with a stark choice between closing down or slipping into the underground economy, many businesses have chosen the latter. Ironically therefore, whilst a decision to operate in the black economy takes tax out of the treasury, it also saves governments money on welfare payments to people who at least maintain some earned income.

Suddenly, the archetypal figures of the underground economy - the drug dealers and Mafia godfathers, now have a lot more company. Their new 'co-workers' are no longer just other criminals in the conventional sense of the word.

So most of these new participants in the underground economy today are ordinary citizens not evil greedy low-lives. They’re doing anything they can to survive and increasingly, this means taking jobs that pay "under the table" because they simply have no choice.

"It's typical that during recessions people work on the side while collecting unemployment benefits," Bernard Baumohl, chief global economist at the Economic Outlook Group, told The New Yorker.

He went on to say: "...the severity of the recession and the profound weakness of this recovery may mean that a lot more people have entered the underground economy, and have had to stay there longer."

Who works in the underground economy?

Some of the folks who've become trapped in the underground economy have been there for years, such as construction workers, illegal aliens and housekeepers. But it's a mistake to think these are all poorly educated immigrant workers.

The huge job losses caused by the recession have forced more people to switch from well-paid professional jobs to low paid service jobs.

But the biggest contributor to the underground economy in the past few years has been employers increasing their use of freelancers or "independent contractors" - even many who actually work full-time.

The weak U.S. economy has already given businesses plenty of incentives to cut costs by paying workers under the table. But the arrival of Obamacare gave them even more. The rules that demand that employers with 50 or more employees provide health insurance for full-time staff while allowing them to avoid offering plans to part-timers naturally encourages employers to offer more part-time work and less full time work.

"This type of regulation could put more people out of work and into an underground economy," Peter McHenry, an assistant professor of economics, told CNBC.

The underground economy hurts everyone

The rapidly growing amount of unreported wages in the U.S. is costing the nation billions in lost tax revenue. The Internal Revenue Service estimates that the losses from unreported wages have grown from about $385 billion in 2006 to about $500 billion currently.

That means the people who play by the rules are getting a raw deal.

"Those working and not paying the taxes put the burden on those who pay the tax," said David Fiorenza, an economics professor at Villanova University. "Taxes could be lower if the government were able to capture the underground economy instead of raising taxes on those currently paying the various income and payroll taxes."

But even those getting paid under the table don't get an easy ride. They forfeit contributions to Social Security, which will reduce benefits in their retirement years. They also get no healthcare, paid vacation or other benefits.

And they certainly end up with lower pay than those in the rest of the workforce. Government regulations about minimum wages hold no sway at all in the black economy. Ironically this is the most free market sector of all…which means pay is constantly being forced lower.

What the growth of the black economy really means

Whilst very little hard data is available about the underground economy, I am convinced that the majority of people within it are there not because they want to be, but because they have no real alternative.

And its explosive growth means that if you want to work, more and more of the work that is available is within the black economy. It’s Hobson’s choice…no work or work that is officially illegal. It’s not a symptom of an increasingly dishonest population, it’s a symptom of economic policy failure.

Both the IRS in the US and the Inland Revenue in the UK have announced numerous new initiatives to clamp down on the black economy. More investigations; harsher punishments. And yet the non-payment of tax by businesses like Amazon and Google continue more or less unchallenged.

It’s unjust and it targets those who are least able to defend themselves.

Government presents these moves as being a drive for a more equitable society. For everyone to pay their fair share. This is disingenuous. If we had economic success, we’d still have tax evasion, but only by those who had the freedom of choice. Unlike global corporations, most citizens who avoid tax today have few choices left.

I don’t condone tax evasion by anyone. I just think that government needs to remember that it exists to serve its citizens not the other way round. Government is happy to punish people for not declaring income in just the same way as if they robbed a bank. And yet it is failed government economic management that has created the situation that forces most people into these desperate choices.

If forced to choose between your family having nothing to eat or paying your tax bill, what would you do?

Who will take ownership of the jobs crisis?

By Neil Patrick

My recent posts have talked about the impact of technology on jobs. But this is far from the only threat to employment and a jobs recovery in the west. Off-shoring is a major progenitor of the jobs crisis. And the biggest problem with off-shoring is that no-one thinks it's a problem....except those who suffer its consequences and can do nothing about it.

The jobs crisis is real. The World Bank certainly thinks so as you can see here.

The problem is that no-one wants to take ownership of it. Just like the old saying, “Success has many fathers, but failure is an orphan”.

Empires have a habit of crumbling...

Governments have had an easy ride until now. Provide some tax-breaks and incentives to business here, some support for the unemployed there. Survive some rough and tumble with trade union negotiations without too much alienation of the electorate.

None of these things are comparable to the systemic collapse of jobs we now have to deal with in Europe and North America.

Thus, nothing that has gone before has equipped anyone in government with the skills and tools required to solve this problem.

And worse, big business can no longer be relied upon to act as a committed ally in the struggle. Globalization and off-shoring mean that the win-wins that were previously available for governments who acted benignly towards big business have disappeared. Permanently.

And this is why governments must rethink their relationships with big business.

Businesses drive to make the most profit they possibly can. Provided they stay within the law, no holds are barred. That’s the very nature of capitalism and a free market economy.

Big businesses think and act globally. But governments and citizens naturally enough think nationally and locally.

It is this mismatch in scale and geography which is at the heart of the problem.

Offshoring is a genie let out of the bottle

About 35 years ago, western firms started sending low skilled manufacturing work abroad on an ever increasing scale. By the late 1980s this was well established. And it grew. And grew. This mass-migration of jobs was overwhelmingly in one direction: away from rich countries to places where workers with adequate skills were much cheaper.

Shanghai - plenty of jobs here

Whether openly stated or not, lower labour costs were almost always the biggest driver. At first. For many firms, their survival was at stake, since new competitors were undercutting them on price. This usually involved closing plants in America and Europe and moving production to new factories in China, Mexico, Taiwan, Thailand, or Eastern Europe.

The most commonly cited benefits of off-shoring were fourfold:

  • For workers in low-cost countries it would provide jobs and rapidly rising standards of living.
  • Rich-world workers would be able to leave the dreary work to someone else.
  • For consumers, they’d be able to buy goods at much lower prices than if production was onshore.
  • For companies, lower labour costs would bring higher profits.

The trouble is that whilst these are all good things in small doses, what happens when the scale of the activity becomes so great that the migration of jobs elsewhere exceeds the ability of the domestic economy to create new ones at home?

Who cares that they can buy a new TV cheaper than ever before, if they cannot even afford to buy food or fuel?

The jobs are never coming back – even Steve Jobs thought so…

Off-shoring from West to East is now a major creator of job losses in rich countries. And not just for the less skilled, it’s now devastating the middle classes too.

US jobs reduction mirrors off-shoring

When Barack Obama joined Silicon Valley’s captains of tech for dinner in California in February 2011, each guest was asked to come with a question for the president.

As Steve Jobs of Apple spoke, Obama interrupted him with a question: “What would it take to make iPhones in the United States?”

Not so very long before, Apple had boasted that all its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold the previous year had been manufactured overseas.

"Why can’t that work come home?" Obama asked.

Jobs’ reply was unambiguous. “Those jobs aren't coming back,” he said.

Jobs' answer revealed the attitude at Apple and most global businesses. It isn’t just that labour is cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories , their flexibility and industrial skills have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most consumer products.

Government thinks big business is its friend…not anymore

Apple is one of the best-known, most admired and most imitated companies on earth. In 2011, it earned over $400,000 in profit per employee, more than Goldman Sachs, Exxon Mobil or Google.

However, what vexes Obama, economists and policy makers is that Apple and many of its high-technology peers are not nearly as committed to creating American jobs as the previous generations of US industrial giants were.

In its early days, Apple didn't look much beyond its own backyard for manufacturing solutions. A few years after Apple began building the Macintosh in 1983, Jobs bragged that it was “a machine that is made in America.”

But by 2004, Apple had largely turned its back on the US and moved to off-shore manufacturing. Central to that decision was Timothy D. Cook, who replaced Jobs as chief executive in August, 2011, six weeks before Jobs’s death. Most other American electronics companies had already gone abroad, and Apple, which at the time was struggling, felt it had to seize any advantage it could find.

In part, Asian manufacturing was attractive because the semiskilled workers there were cheaper. But that wasn’t the main thing that attracted Apple.

For technology companies, the cost of labor is minimal compared with the expense of buying parts and managing supply chains that bring together components and services from hundreds of sources and suppliers. And as automation and AI inexorably increase, so the labour part of the equation becomes even less of a factor.

For Cook, the focus on Asia came down to two things. Factories in Asia can scale up and down faster and Asian supply chains have now surpassed what’s possible in the U.S. The result is that much of America’s manufacturing capacity has become largely obsolete. American manufacturing relative to Asia is now not unlike the Soviet Union was relative to the west in the Cold War era.

How many Apple’s are needed to make one General Motors? 10 actually…

Apple employs 43,000 people in the United States and 20,000 overseas, a small fraction of the over 400,000 American workers at General Motors in the 1950s, or the hundreds of thousands at General Electric in the 1980s.

“Apple’s an example of why it’s so hard to create middle-class jobs in the U.S. now,” said Jared Bernstein, formerly an economic adviser to the White House.

“If it’s the pinnacle of capitalism, we should be worried.”

This used to be US car factory - today, it's a shopping mall

Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s on-site dormitories. Each employee was given a biscuit and a cup of tea and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

Similar stories could be told about almost any electronics company — outsourcing has become common in hundreds of industries, including accounting, legal services, banking, auto manufacturing and pharmaceuticals.

So who wants to own this problem?

Apple’s decisions reveal why the success of some prominent companies has not translated into large numbers of domestic jobs. “Companies once felt an obligation to support American workers, even when it wasn’t the best financial choice,” said Betsey Stevenson, formerly the chief economist at the Labor Department. “That’s disappeared. Profits and efficiency have trumped generosity.”

Companies and other economists think that notion is naïve. Though Americans are among the most educated workers in the world, they say the government has stopped training enough people in the mid-level skills that factories need. Clearly education alone is not enough to solve the problem.

To thrive, companies argue they need to move work where it can generate enough profits to keep paying for innovation. Doing otherwise risks losing even more American jobs over time, as evidenced by the legions of once-proud domestic manufacturers, including GM and others that have shrunk as more nimble competitors have emerged.

“We sell iPhones in over a hundred countries,” a current Apple executive said. “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.”

So business says it's not their problem and government doesn't know how to solve it. And just like two squabbling children, neither will accept any responsibility. Let alone ownership.

And that’s the crux…business will keep on doing what business does, chasing profits. And government will keep on doing what government does…

This may be the biggest problem facing North America and Europe today, but no-one wants to own it.

Some information in this post was taken from this article in the New York Times: LINK

Who employs older workers?

There are always plenty of opinions floating around about which types of business employ younger people and whether or not this is fair or even sensible. I have expressed my own views on this often enough on this and other blogs.

Today though I opted for a different tack. I thought I’d run some numbers and see what they revealed.

This was by no means an exhaustive study, but I was amazed by what I found.

I expected there to be few discernible patterns and yet I found quite the opposite. This quick dip into the numbers showed conclusively that there is a huge variation across business sectors when it comes to the age of their staff.

My method was simple enough. I just took the average age of employee as recorded in the Sunday Times top 50 best UK companies to work for as reported for 2014.

To calculate a simple benchmark, assuming a normal distribution curve based on an age range of 18 years to 65 years old, the mean age of employees should be 41 years. Higher than this means the workforce is older; and vice versa.

Now of course this assumes also that the available workers for each age group are the same, which of course, they are not. The baby boomers for example created a significant swelling of their age group as a proportion of the total population. So my purely mathematical average cannot be taken as wholly accurate – just a rough approximation.

Meet the new boss...

I simply wanted to discover which, if any sectors had demonstrably older workers and which ones had younger workers.

Since the average age of employee is not a significant factor in the Sunday times’ ranking, we can take this as a more or less randomised sample of the age profiles of people working in UK businesses today.

Moreover, every one of these firms has been assessed to be well liked by their employees, so they also represent some of our best employers.

So based on this data, here is the average age of employee at the top 50’s best UK firms to work for which I have re-ranked by oldest average age of employee to youngest (the original list rank is also shown in the first column):

N.b. I am not suggesting that my re-ranking makes any of these companies more or less ageist. There are plenty of perfectly valid and legitimate reasons why a company might have an older or younger age profile within its workforce.

What I was interested in was to see if there were any patterns when I re-ranked the list - and there certainly are.

The two firms ranking first and second are both from the same sector – contract catering.

Three of my list’s top 10 are from the pharmaceutical/medical sectors.

On the other hand, four of the five firms at the youngest end of this list were from two sectors – recruitment and financial services.

This list reveals other facts too. First the range of average ages 45 at oldest to 21 at youngest, reveals a huge range of age profiles across the sample firms – clearly if you are only in your early forties, you are already well past the average age of the majority of sectors’ employees.

Second, taking the approximate average age we’d expect to see – c.41 years - only 6 firms (12% of the list) had an average age that was older than this.

To sum it up, if you are over 40 and looking for work, contract catering looks like your best bet unless you have experience from the pharmaceutical sector…

Stephen Hawking on the threats of artificial intelligence

It was an odd co-incidence that yesterday I posted a piece sub-titled “Is your job at risk of being taken by a machine? A few hours later Professor Stephen Hawking was featured on the main BBC evening news with an even more gloomy prediction that artificial intelligence could be the greatest threat to the very existence of mankind.

Hawking, one of Britain's pre-eminent scientists, went much, much further than I was brave enough to do. He said that efforts to create thinking machines pose a threat to our very existence. He told the BBC: "The development of full artificial intelligence could spell the end of the human race."

Hawking is a theoretical physicist, who has the motor neurone disease amyotrophic lateral sclerosis (ALS) and is currently using a new AI assisted speech system. His warning came in response to a question about an upgrade of the technology he uses which was developed by Intel.

Machine learning experts at the British company Swiftkey were also involved in its creation. Their technology, already employed as a smartphone keyboard app, learns how he thinks and suggests the words he might want to use next. ("God help us" seems like it might be useful).

Hawking believes the basic forms of artificial intelligence developed so far have proved very useful, but he fears the consequences of creating something that can match or surpass humans.

"It would take off on its own, and re-design itself at an ever increasing rate," he said.

Professor Stephen Hawking

Ever mindful of its commitment to balanced reporting, the BBC was quick to find an expert commentator with an opposing view. Rollo Carpenter, creator of Cleverbot added to the debate saying,  "I believe we will remain in charge of the technology for a decently long time and the potential of it to solve many of the world problems will be realised." 

Cleverbot is software that is designed to chat like a human would. Its  software learns from its past conversations. In tests, it fooled a high proportion of people into believing they were talking to a real person.

Carpenter asserted that we are still a long way from having the computing power or the algorithms needed to achieve full artificial intelligence. But even he believes it will come in the next few decades.

"We cannot quite know what will happen if a machine exceeds our own intelligence, so we can't know if we'll be infinitely helped by it, or ignored by it and sidelined, or conceivably destroyed by it," he said.

I need to be braver in my position I think. And my opinion inclines more to Hawking for the simple reason that he has absolutely no vested interest in allaying concerns about the threats of technology.

I don't fear being physically killed by an out of control robot. I do fear that our whole economic system and the jobs within it will be killed if we don't do something.

I don't need to contemplate the distant future. Even today's 'basic' AI and technology is destroying jobs right now every day. Hawkings and Rollo are both contemplating the future decades ahead.

But that’s academic. The distant future isn’t the issue. Today is.

The top 30 jobs most at risk from technology

By Neil Patrick

Is your job at risk of being taken by a machine?

As technology continues to take jobs from people, so I’ve accelerated my research to try and figure out what this means for the future of work and what we can do about it.

I spend a lot of time talking to diverse experts who have insight on this subject and digging out relatively obscure research. This is far away from mainstream media which is high on attention grabbing headlines, but low on valuable insights.

So I was pleased today to discover a research paper by Oxford University academics Carl Benedikt Frey and Michael A. Osborne published in September 2013. Their research examines how susceptible jobs are to computerisation.

Their paper is titled: The Future of Employment: How Susceptible are Jobs to Computerisation?

You can read the whole document here.

Frey and Osborne developed a model which examined the current and anticipated capabilities of technology and then compared the tasks involved in carrying out over 700 different jobs. This enabled them to then rank each job by its vulnerability to being reduced or eliminated by technology in the future.

Of course, robots and IT systems are still unable to match the depth and breadth of human perception. While basic pattern recognition is reasonably mature, enabled by the development of sophisticated algorithms, sensors and lasers, significant challenges remain for more complex perceptive tasks.

So some jobs are at high risk. Others are currently relatively immune.

Computers are not so good for example at identifying objects and their properties in a cluttered field of view - hence the very nature of those annoying Captchas... Similarly, tasks that involve a complex and unstructured work environment make jobs less susceptible to computerisation.

The least at risk jobs therefore include:

Recreational Therapists
Supervisors of Mechanics, Installers, and Repairers,
Mental Health and Substance Abuse Social Workers
Occupational Therapists
Orthotists and Prosthetists
Healthcare Social Workers
Oral and Maxillofacial Surgeons
First-Line Supervisors of Fire Fighting and Prevention Workers
Dietitians and Nutritionists
Sales Engineers
Physicians and Surgeons
First-Line Supervisors of Police and Detectives
Elementary School Teachers

But even these jobs are indirectly at risk. Whilst the whole of a job may be currently impossible for a machine to replicate, parts of that job may well be perfectly capable of being replaced or aided by technology.

This fact in turn means that fewer people are needed to deliver the same amount of work.

And business has a habit of quickly finding ways round current technological limitations. If a human task cannot be replicated exactly by a machine, then why not just adapt the task so it can be?

So the limitations of perception by machines can sometimes be sidestepped by clever task design. For example, Kiva Systems, acquired by in 2012, solved the problem of warehouse navigation for its robots by simply placing bar-code stickers on the floor, informing them of their precise location. Problem solved! And fewer humans needed…

Anyway, the title of this post promised the top 30 most at risk jobs as identified by the research.

And here they are (and I sincerely hope your job is not on the list).

672. Legal Secretaries
673. Radio Operators
674. Driver/Sales Workers
675. Claims Adjusters, Examiners, and Investigators
676. Parts Salespersons
677. Credit Analysts
678. Milling and Planing Machine Setters, Operators, and Tenders, Metal
and Plastic
679. Shipping, Receiving, and Traffic Clerks
680. Procurement Clerks
681. Packaging and Filling Machine Operators and Tenders
682. Etchers and Engravers
683. Tellers
684. Umpires, Referees, and Other Sports Officials
685. Insurance Appraisers, Auto Damage
686. Loan Officers
687. Order Clerks
688. Brokerage Clerks
689. Insurance Claims and Policy Processing Clerks
690. Timing Device Assemblers and Adjusters
691. Data Entry Keyers
692. Library Technicians
693. New Accounts Clerks
694. Photographic Process Workers and Processing Machine Operators
695. Tax Preparers
696. Cargo and Freight Agents
697. Watch Repairers
698. Insurance Underwriters
699. Mathematical Technicians
700. Sewers, Hand
701. Title Examiners, Abstractors, and Searchers
702. Telemarketers

The Stephen Covey insights you’ve not heard a million times before

By Neil Patrick

Today I've been revisiting the work of the late great Stephen Covey and his best-selling work “The Seven Habits of Highly Effective People.” The book has topped the best seller lists selling more than 25 million copies worldwide since its first publication in 1989.

Most of us have at least an awareness of this book and its ideas.

But it’s so old! Covey proposed that his teachings were universal and unchanging. But 1989 was a different world and the question I had was, is this still relevant today?

Stephen R Covey
Source:By Abras2010 (FMI Show_Palestrante_Stephen Covey)

It turns out that Covey had already answered this question. Much less well known than the Seven Habits book is its sequel, Covey's 2004 book; "The 8th Habit: From Effectiveness to Greatness".

In this book, Covey recognised that mere effectiveness would not suffice in what he called "The Knowledge Worker Age". He said that, "The challenges and complexity we face today are of a different order of magnitude." The 8th habit essentially urged: "Find your voice and inspire others to find theirs…"

This slideshare from Sompong Yusoontorn summarises the book very well:

In the Seven Habits book, Covey described the opposing ideologies of the scarcity mentality and the abundance mentality. An outlook which views the world as one of scarcity, stimulates primitive urges of possession and control.

The more scarce we view something to be, the stronger the urge to try to control and possess it becomes.

And one thing there is a scarcity of is jobs.

The scarcity mentality is the default setting for how most people view the world. Our whole society is built on it. Competition for scarce resources is the very nature of the capitalist system. Acquisition and ownership are the goal and we are encouraged to view those who own the most to be the most successful. The whole system encourages a win-lose outlook which is the antithesis of a collaborative society.

And the collaborative society is the future. Whilst on the one hand technology may be the biggest destroyer of work yet experienced by mankind, it is paradoxically also the greatest ever enabler of opportunities.

The Abundance Mentality flows out of a deep inner sense of personal worth and security. It is the paradigm that there is plenty out there and enough to spare for everybody. It results in sharing of prestige, of recognition, of profits, of decision making. It opens possibilities, options, alternatives and creativity.

The Abundance Mentality takes personal joy, satisfaction and fulfillment and turns it outward, appreciating the uniqueness, the inner direction, the qualities of others. It recognizes the unlimited possibilities for positive interactive growth and development, creating new Third Alternatives.

Success does not mean victory over other people. It means success in effective interaction that brings mutually beneficial results to everyone involved. ...Public Victory is an outgrowth of the Abundance Mentality paradigm.

Regardless of the growth or demise of capitalism, those who engage in collaborative solutions to problems will have the brightest futures.

Those who retreat into possessiveness, isolationism and protectiveness, will sooner or later become marginalized and irrelevant.

To quote Covey : “The Scarcity Mentality is the zero-sum paradigm of life”.

Is artificial intelligence the greatest threat to human existence?

By Neil Patrick

Here’s a clip from the Rubin Report in which Elon Musk states “AI is like summoning the demon”.

Interesting coming from someone who more than most people is at the forefront of understanding and developing high tech future businesses.

Does he know something we don’t?

The ensuing discussion in the clip seems to miss the point. Rubin’s mates have been watching too many dystopian movies and playing too many computer games in which robots go on killing sprees I suspect.

I wonder if the real reason Elon Musk is so cautionary about AI isn’t because we’re at risk of being slaughtered by evil robots, but because he can see that technological development is now outstripping the abilities of our current political, economic and social systems to keep up.

And that this situation means we have 21st century technology but 20th century political, education, economic, social and legal systems.

The outcome of this two speed society is that jobs will disappear faster than ever…and no jobs equals no money. And in our world, no money is effectively extinction…?

Is this what he’s really hinting at?

Is it ageist that you may be turned down for a mortgage because you are over 40?

By Neil Patrick

Daily Mail 25 Nov 2014: “Over 40? Then you CAN'T have a mortgage: Banks are now rejecting borrowers who would still be paying off loan in retirement”.

This headline caught my eye today. And as is often the case with the Daily Mail, it’s a thinly disguised attempt at sensationalism. Nonetheless, I think it is very significant news, but not because of the implied injustices it alleges.

The essence of the "story" is that new research found that people aged over 40 seeking a standard 25-year mortgage are finding their options restricted because (assuming their mortgage runs its full term - which they rarely do) they will be borrowing beyond the “normal” retirement age of 65.

The new Mortgage Market Review (MMR) rules, which came into force in April, mean that lenders have to spend more time considering whether home buyers can afford the mortgages they are applying for. - not a bad thing at all in my view.

The report released yesterday by the Intermediary Mortgage Lenders Association (IMLA) stated that "interpretations" of the MMR have convinced many banks that lending into retirement now carries extra risk if borrowers go on to find that their retirement income is less than expected.

Mortgage lenders have typically applied an upper age limit of 65 for decades now. So this point isn't really anything new.

I think the real story here isn’t about mortgages and whether or not we get accepted or rejected for one when we apply. The simple facts are that lending is and always has been priced according to lenders’ rules around risk assessment. Basically, the higher the perceived risk, the higher the cost of the loan.

But if one lender rejects your application, there will almost always be others that will accept it, albeit at a higher price and/or on different terms.

Banks and lenders get a hard time from the media. Often, it is justified. Sometimes it’s not. In this case, they are damned if they do and damned if they don’t. If they were not making stricter assessments, they’d be criticised for encouraging over-indebtedness. By applying tougher rules, they are criticised for making mortgages less easily available to some people.

So as far as the new assessment rules are concerned, it’s really not a story.

No, the real story is far behind the headlines.

What is significant I think is what this news reveals about how banks currently view the financial prospects for people aged over 40 in the UK.

Looked at in this way, this news is a bombshell.

Forget the MMR rules, this news tells us that as far as the banks are concerned, the income prospects of people over 40 are very weak. Make no mistake, if a bank is happy that you can afford to repay a mortgage or other loan, they’ll be happy to lend you the money (and of course take the interest too).

So the MMR gripes are a smokescreen. And this isn’t a new form of age discrimination.

But it is a very troubling indication, that those whose business it is to understand the outlook for our incomes have decided that despite rising house prices, the outlook for most peoples' incomes remain very fragile indeed.

Have you got the key skills for the information age?

I’ve  been writing a great deal recently about the destruction of jobs by what is variously called, the third industrial revolution, knowledge economy or new machine age. This situation creates a whole new set of challenges for everyone who wants to earn a living in these tough times.

Most of us know it is happening. What's thin on the ground is information about what we can do about it.

We need new solutions and we need to take personal ownership of our own countermeasures.

This isn’t just my opinion. Multiple and diverse organisations are reporting the same thing:

Manpower states that despite the recession, 31% of employers struggle to find qualified workers because of “a talent mismatch between workers’ qualifications and the specific skill sets and combinations of skills employers want.”

The American Management Corporation says that employers want workers who can think critically, solve problems creatively, innovate, collaborate, and communicate.

The National Association of Manufacturers reports, “Today’s skill shortages are extremely broad and deep, cutting across industry sectors and impacting more than 80% of companies surveyed. This human capital performance gap threatens our nation’s ability to compete . . . [and] is emerging as our nation’s most critical business issue."

The National Academies claim that “The danger exists that Americans may not know enough about science, technology, or mathematics to contribute significantly to, or fully benefit from, the knowledge-based economy that is already taking shape around us.”

The New York Times reports that low-skilled workers are being laid off and "turned away at the factory door and increasingly joining the swelling ranks of the long-term unemployed . . .” This issue results from a disparity between the skills that workers have and those that employers need.

So what can we do about it?

If the last time you sat in a classroom was at university or an employer’s course, the chances are high that your learning skills have significantly reduced. Of course we all acquire job specific skills at work, but what we don’t generally continue to develop in our jobs are the learning skills that are now critical for 21st century career survival.

If we accept that the pace of change in the world is accelerating, then it is logical to conclude that our ability to adapt to change must also be increasingly critical. And the key enabling mechanism for coping with change is learning.

What are the key learning skills for the 21st century workplace?

21st century skills are a set of abilities that everyone needs to develop in order to succeed in the information age. The Partnership for 21st Century Skills has identified three key learning skill areas.

I call them the three Cs of thinking; critical thinking, creative thinking and collaborative thinking:

Critical Thinking

Critical thinking is the ability to think clearly and rationally. It includes the ability to engage in reflective and independent thinking. Someone with critical thinking skills is able to do the following :
  • understand the logical connections between ideas 
  • identify, construct and evaluate arguments 
  • detect inconsistencies and common mistakes in reasoning 
  • solve problems systematically 
  • identify the relevance and importance of ideas 
  • reflect on the justification of one’s own beliefs and values 

After we leave education and start to exist in the world of our jobs, our critical thinking skills may easily become rusty. Other factors start to influence and direct our thought processes. The competitive environments we often experience encourage competitive reactions – the exact opposite of one of the other Cs – collaboration.

So good critical thinking skills not only break the force field of groupthink, they also encourage collaboration.

Creative Thinking

This is the process by which individuals come up with new ideas or new approaches to business. New ideas could result in new products, procedures or policies. They could also result in a new process that cuts costs or improves quality - for example, a bagless vacuum cleaner.

Fresh ideas give businesses a competitive advantage and help make their goods or services stand out in the market place.

We can make use of several different thinking techniques to improve our creativity:
  • Lateral thinking or thinking outside the box. An example of this would be breaking down the steps taken to serve coffee in a café and asking 'why' at each step to see if a better process can be created. 
  • Deliberate creativity uses thinking techniques to spark off new ideas. For example, putting on different thinking hats to tackle problems from different angles. 'White-hat' thinking looks at facts and 'black-hat' thinking looks at drawbacks. 
  • Blue-sky thinking involves a group of people looking at an opportunity with fresh eyes. As many ideas as possible are generated in an ideas generation session where no ideas are rejected as silly. 

Collaborative thinking

There are generally accepted to be seven rules for all collaboration:

Look for common ground: find shared values, consider shared personal experiences, pay attention to and give feedback, be yourself and expect the same of others, be willing to accept differences in perception and opinions

Learn about others: consider their perspectives and needs, appeal to the highest motives, let others express themselves freely

Critique results, not people: do not waste time on personal hostility, make other people feel good, avoid criticism and put downs

Give and get respect: show respect for others' opinions, be considerate and friendly, put yourself in the other person's shoes, be responsive to emotions, speak with confidence but remain tactful

Proceed slowly: present one idea at a time, check for understanding and acceptance of each idea before moving on to the next. Speak in an organized and logical sequence.

Be explicit and clear: share your ideas and feelings, pay attention to nonverbal communication, speak clearly and make eye contact, select words that have meaning for your listeners

Remember the five "Cs" of communication: clarity, completeness, conciseness, concreteness, and correctness

It's not a co-incidence that the social web or internet 2.0 also functions with these principles at its core.

New Skills for New Jobs

These skills have always been important for personal development, but they are now absolutely critical in our information-based economy. When most workers held jobs in industry, the key skills were knowing a trade, following directions, getting along with others, working hard, and being professional - efficient, prompt, honest, and fair.

To hold information-age jobs though, people also need to think deeply about issues, solve problems creatively, work in teams, communicate clearly in many media, learn ever-changing technologies, and deal with a flood of information. The rapid changes in our world require us to be flexible, to take the initiative and lead when necessary, and to produce something new and useful.

But these thinking skills aren’t just relevant to our careers and jobs. They play a part in making the world a better and more just place for all of us. I think there’s a good argument that the absence of these thought processes within the management of the banking world was the biggest single factor in the financial collapse of 2008. If we ever needed an example of the terrible consequences of endemic groupthink, we need look no further.

So next time you are considering what skills you could acquire to enhance your career prospects, think outside the box and think about what you can do to improve your thinking skills. Not just for yourself but the world as well.

It's now official - The Global Jobs Crisis is real

By Neil Patrick

When I set up this blog, I was convinced that the subtitle – Global Jobs Crisis was appropriate and justified.

But many of my friends online and offline commented that they thought I was being rather apocalyptic. Even sensationalist. After all it does rather fit with the sort of conspiracy theory stuff which abounds in the online media world.

But I stuck with it nonetheless. Not because I wanted to be alarmist or a doom-monger. On the contrary. I wanted to raise awareness of the problem and try to find solutions that would work for people at a personal level.

It was simply the most appropriate tagline I could come up with which described the unfolding situation as I saw it. And with every week that passes I see more evidence that it remains the right subtitle.

So today I was interested to see that two years after I started this blog, none other than the World Bank has issued a report which describes the global jobs crisis in forensic detail.

I’d forgive anyone for not noticing it. It went more or less unremarked upon by the mainstream media. It’s titled in typical government speak and somewhat benignly: “G20 labour markets: outlook, key challenges and policy responses”.

The World Bank, Washington
By Shiny Things [CC-BY-2.0 (] via Wikimedia

Behind the dull bureaucratic title is the starkest confirmation I've yet seen which describes in depressing detail, the true nature of the problem.

The world is facing a global jobs crisis that is killing the chances of reigniting economic growth. Worse there is no magic bullet to solve the problem.

The Study was released at a Group of 20 (G-20) Labor and Employment Ministerial Meeting in Australia in September 2014. The Bank says an extra 600 million jobs need to be created worldwide by 2030 just to cope with the expanding population.

"There's little doubt there is a global jobs crisis," says the World Bank's senior director for jobs, Nigel Twose.

"As this report makes clear, there is a shortage of jobs — and quality jobs.

"And equally disturbingly, we're also seeing wage and income inequality widening within many G-20 countries, although progress has been made in a few emerging economies, like Brazil and South Africa."

He said that overall emerging market economies had done better than advanced G-20 countries in job creation, driven primarily by countries such as China and Brazil, but the outlook was bleak.

"Current projections are dim. Challenging times loom large," said Twose.

Who says something really matters

Local mainstream media is so heavily influenced by national government spin that we cannot take anything that is said at face value. And I do my best to expose the most blatant deceptions about jobs and employment news that I come across.

Which is why this report has to be taken seriously. The World Bank isn’t beyond the influence of key stakeholders with their own agendas. Many have argued that the World Bank which has had an American as its President ever since its creation in 1946, promotes a US based world view.

And I have concerns that the World Bank still clings to a largely discredited view on monetary systems.

But critically, the World Bank isn’t controlled by politicians. And that’s the most important thing in my view. No-one at the World Bank is trying to win votes from citizens. They gain no benefit by telling people that things are better than they really are.

100 million unemployed

The report, compiled with the OECD and International Labor Organization, said more than 100 million people were unemployed in G-20 economies and 447 million were considered "working poor," living on less than US$2 a day.

It said despite a modest economic recovery in 2013-14, global growth was expected to remain below trend with downside risks in the foreseeable future, while weak labor markets were constraining consumption and investment.

The persistent slow growth will continue to dampen employment prospects, it said, and warned that real wages had stagnated across many advanced G-20 nations and even fallen in some.

"There is no magic bullet to solve this jobs crisis, in emerging markets or advanced economies," said Twose.

"We do know we need to create an extra 600 million jobs worldwide by the year 2030 just to cope with the expanding population.

"That requires not just the leadership of ministries of labor but their active collaboration with all other ministries — a whole of government approach cutting across different ministries, and of course the direct and sustained involvement of the private sector."

The Group of 20 leaders have called for each member country to develop growth strategies and employment action plans. They emphasized the need for coordinated and integrated public policies, along with resilient social protection systems, sustainable public finance and well-regulated financial systems.

"Coordinated policies in these areas are seen as the foundation for sustainable, job-creating economic growth," says the report.

So there we have it. The responsibility for solving the problem has been passed to national governments. And they are urged to adopt a cross-departmental approach to solving the problem.

Given the nature of governmental silos and the painfully slow way in which government policies are formulated and implemented, I’m not holding my breath for any big breakthroughs anytime soon.

And sadly the subtitle of this blog seems to be one thing which isn’t about to become redundant for a long while yet.

Why the US Middle Class is in danger of extinction

By Neil Patrick

Current news reports claim the US job market is slowly improving. Is this a return to better days? Sadly no. It’s a transformation for sure, but not back to anything like we all knew 10 years or so ago.

Make no mistake about it, America's middle-class jobs have been destroyed in the wake of the 2007-8 financial collapse. The growth in new jobs reported gleefully by the government have been almost entirely low-wage jobs. And there is little reason to believe this situation can be quickly or easily reversed.

What has caused this? In the next few posts, I want to look at the factors that are behind this tragic state of affairs, dig into what’s happening and what we can do about it.

I believe there is no single cause or culprit. Instead it’s a complex cocktail of seven factors which have collided to create a perfect storm for skilled American workers. In brief these are:
  • Record levels of government and personal debt 
  • The rise of technology leading to ever falling marginal costs 
  • Capital shifts away from labour and into non-human investments 
  • The globalisation of businesses 
  • Government fiscal policies 
  • Demographics and education 
  • Finite global resources 

But I am getting ahead. In this post, I am going to look at:
  • The nature of the alleged jobs “recovery” 
  • Why GDP growth isn’t making people better off
  • The transference of government debt to households.

The substitution of high paid jobs by low paid jobs is beyond doubt

A recent presentation from the Federal Reserve Bank of San Francisco describes the jobs “recovery” in stark terms. The vast majority of job losses during the recession were in middle-income occupations, and they've largely been replaced by low-wage jobs since 2010:

Mid-wage occupations, made up a staggering 60% of the job losses during the recession. But mid-wage jobs have made up just 22% of the jobs gained during the recovery.

By contrast, low-wage occupations have totally dominated the recovery. They represent 58% of the job gains since 2010. "Many middle-class workers have lost their jobs and, if they have been able to secure new employment at all, find themselves earning far lower wages post-recession," the San Francisco Fed says.

Nearly 40% of the jobs gained since the recovery began - about 1.7 million - have come from three low-wage sectors: food services, retail, and employment services.

And four low-wage occupations are now the top four types of employment in the US: retail sales, cashiers, office clerks, and food preparation and servers:

The problem is compounded by the fact that industries which employ mid-wage earners, such as construction, manufacturing, insurance, real estate and IT, have either stagnated or grown too slowly to recover their pre-recession losses.

Worse again, budget cuts to federal and state government have eliminated a vast swathe of mid- and higher-wage jobs. And a separate chunk of middle-wage jobs including carpenters, plumbers, plasterers and electricians are still waiting for the U.S. housing market to recover.

The growth of wealth inequality is a problem for all, not just the poorest

This is creating a polarised workforce in the United States. Over the past decade, both high- and low-wage jobs have been growing. But jobs in the middle continue to shrink. Mid-wage jobs suffered a major drop after 2001, largely stagnated during the 2000s, and have now declined even further in the most recent downturn.

Economists have been debating the causes of this divergence. Harvard’s Lawrence Katz and Claudia Goldin, argue that new technologies and machines are now displacing mid-wage jobs.

I believe this is a correct analysis as I talked about here. But it’s not the full story. Some others, such as Larry Mishel of the Economic Policy Institute, point to political factors, from the decline of labor unions to trade liberalization to the dwindling minimum wage. This is a factor too, but again it’s only an ingredient in the mix, not the full disastrous recipe.

But neither of these arguments discuss the lead weight which is pulling the whole economy down. And that weight is government debt. That debt puts massive upward pressure on tax, demands endless quantitative easing (devaluation of the dollar to you and me) and limits government spending – the type of spending which would create more jobs in the public sector.

It seems logical to me that there’s no single simple explanation of what’s going on. It’s multi-factorial which makes it complex to understand and remedy both at a national and individual level.

But if the trend continues, it will amplify something which is already a big problem in the United Sates: income inequality. Not to mention the destruction of the hopes and aspirations of a huge swathe of American society. And needless to say, that’s a bad thing…

GDP growth and household incomes have become separated

For the first time in US history, economic growth is no longer driving income improvements at the household level.

Traditionally, improvements in GDP have directly resulted in increased income and prosperity for citizens. In the US, this link has broken. US median household income is now at a lower level than it was in 1999. In fact even though US GDP has been on the rise since 2009, household income has been falling since 2008:

Here we see the evidence of how as technology continues to increase productivity and reduce marginal costs, so we have GDP growth but no wealth creation except for those who are in the boardrooms and/or major equity owners.

To look at it in its simplest terms, businesses can create higher returns with less human labour inputs than ever before. The first industrial revolution substituted human muscle power with mechanical devices. The second industrial revolution transformed transport and communications. And the third industrial revolution is replacing human cognitive tasks with artificial intelligence.

So until recently, technological improvements have only really affected those who sold their manual capacity to earn a living. Today’s technology is reducing the workforce needed for tasks which required the application of professional and mental skills too. But there’s another problem; if we are selling our manual labour, we need to do nothing to create our commodity. Our bodies are there to be applied to work whenever we want. Little or no training is needed.

But jobs requiring the application of skill and knowledge are different. The acquisition of these skills can take years. Sometime decades. And if no-one wants them anymore, we have a stark choice – dump them and start again or try and compete for unskilled work.

So we have an American middle class with skills that fewer and fewer people want or need to pay for. The keys to the acquisition of wealth are no longer the sale of our labour and skill. They are the ownership of income generating assets. And thanks to booming stockmarkets, owning assets has made most of the wealthy even wealthier over the last few years.

This is the reality of the polarisation of America’s workforce. Greater wealth acquisition by those at the top, those who own assets, but falling income levels for everyone else… not just the poorest, but the vast majority of Americans.

Needless to say, this is also a bad thing…

The burden of government debt is being passed to households

Despite multiple deficit-reduction deals during the past three years, the US national debt is projected to swell to 100 percent of the economy by 2038, due primarily to the enormous cost of caring for an aging society.

Whilst WW2 exceeded the current peak of government debt, the end of WW2 and the global restructuring that arose from its ashes is a very different scenario to that we face today. Post 1945 saw the US emerge as the dominant global super power. It’s huge manufacturing capacity, abundant natural resources and global markets created the wealthiest society on the planet:

But post 1980 has seen the failure of that economic model as the production of cheaper goods of equivalent or even higher quality started to materialize in low wage economies.

Making matters worse, tax cuts for the vast majority of Americans were made permanent during last year's fiscal cliff showdown. If the tax cuts had been allowed to expire, projections showed the debt dropping to 52 percent of GDP during the next 25 years.

In effect, huge government debts are being allowed to accumulate unchecked. But sooner or later these debts will be passed to individual citizens rich and poor through the giant levers of fiscal policy.

And you guessed it; this is also a bad thing…

So these three points define the problem: 

  • Millions of jobs for skilled workers in the middle income bracket have simply vanished. 
  • Economic growth has become of value only to the asset owning classes. 
  • Government debt will continue to be passed onto citizens. 

This isn’t a problem which can be solved by the traditional tools of government. If you want to place your faith there, that’s your prerogative and I hope you are right. My take is that we all need to come up with our own personal solution. It might just be the biggest test of our lives…

I’ll be back with more on this soon.

Nine toxic behaviours that we must all keep at bay

By Neil Patrick

Many self-help books and coaches talk about the dangers of toxic people. We should distance ourselves from them they say. Better still remove them from our lives. I'm not so sure about this.

Sometimes that’s easier said than done. Just how would you go about removing a person from your life I wonder? Like your boss, or a colleague or a family member? Short of committing illegal acts, it all seems a bit tricky to me.

There's a much more realistic alternative option I think. We all have some of these toxins within ourselves. And it’s a much more practical proposition to change ourselves than attempting to change or remove those around us.

So not only should we be alert to toxic character traits in others, we should also try to purify our own system.

I am not here to preach or claim I am above criticism. I can count at least two or three traces of these toxins within myself. I don’t quite need a Betty Ford Clinic-style detox I hope, but relentless alertness to them and removing them is a sure way to purify ourselves I think.

And just as toxins in others make them destructive and debilitating to be around, toxins within ourselves don’t just erode our own strengths, they drive a wedge between ourselves and those we want to have productive and happy relationships with.

Here're my top nine poisons and how to detox from them.

1. Control

Controlling people think they know everything and the best way to do anything. They’ll never give anyone else a chance to contradict them, express a conflicting idea or influence their opinions. Learn to value and listen to the opinions of others. Don’t try to find fault in their views, but seek to find ways to improve their ideas.

2. Arrogance

Confidence and arrogance are totally different things. Confidence inspires; arrogance intimidates. Arrogant people always think they know best and feel superior to others. Remember to celebrate and show more enthusiasm for the success of others than your own.

3. Victims

Negatively charged people see themselves as perpetual victims. Victims look at their own situations and mistakes and seek to find others to blame, from their boss to their staff or their customers. Take ownership of your own life and change to adapt to the world around you. Don’t expect the world to change to suit you.

4. Envy

Those infected with jealousy don’t feel pleasure when good things happen to you. They can't appreciate it when others achieve success or move forward; they feel that if anything good is going to happen, they deserve it more than you. The success of those around you should be just as important to you as it is to them. Help others succeed as a matter of course. Sure, not everyone will reciprocate, but which is better a whole heap of goodwill, or a whole heap of indifference?

5. Lies

Liars are impossible to rely on. You can never know what to believe. You can't trust their promises or their statements. They will lie to you about others, and they will lie to others about you. Likewise we should tell the truth, always. Even if it’s bad news, sharing it now, is better than hoping it will disappear and be forgotten. It won’t.

6. Negativity

Some people are always suspicious of everything and everybody. Negativity destroys relationships, and spending time with negative people makes you feel the world is a much worse place than it actually is. My mantra is this: trust everyone and disappointment is a risk. Trust no-one and disappointment is guaranteed.

7. Possessiveness

Consumer culture relentlessly nags us to want more, achieve more and possess more. Sure, desire and ambition can be good things. But it turns toxic when people want everything for themselves and when possession, rather than doing or being, becomes the focus of their life. Aspire to success not as a way to have more for yourself, but as a way to be able to give more back to others.

8. Judgmentalism

Making a judgment and being judgmental are not the same thing at all. Judgments are objective and based on discernment, while being judgmental is just about criticism. Judgmental people are poor listeners and communicators and always too quick to jump to conclusions. Seek to understand before you seek to judge. Then consider how something can be made better.

9. Gossip

Gossips see themselves as being interesting because they share fascinating information about other people. And the more sensational this is the better. They do it because they secretly believe that their own lives are less interesting or deserve more privacy than those of others. They make little distinction between speculation and fact. We all talk about others – that’s natural. But if we bad-mouth someone, we can fully expect that those who hear this criticism will suspect that we will do the same to them.

So personally, I’m not about to remove anyone from my life. I’d much rather try and make others’ lives better by forever striving to become a better person myself. It'll keep me out of jail at least.

Any thoughts on what I should add to round this up to make a top 10?

Why politicians won’t solve the jobs crisis

By Neil Patrick

Politicians simply don’t get the nature of work in the 21st century.

Let’s just dismiss the idea they just don’t care because they’re too busy looking out for themselves. The more worrying evidence suggests that they don’t understand the nature and pace of the evolution of technology. And how this is reshaping the world of work.

Today in the UK, self-employed people represent the fastest growing sector of employment. 

These people exist completely outside the politicians’ bubble. But politicians do little or nothing to support them. After all, very few will become big enough in the politicians’ term of office to make any impact on either employment levels or the treasury’s income.

The politicians therefore have little incentive to pay attention to this change. They see the future as a world which is somehow a newer, shinier version of the old one. A world which is big, bold and full of promise. It makes them feel like they are being visionary. The architects of a better future society.

So, they get busy implementing big, “important” projects . They like big things after all. But the 21st century world is a fragmented one. And it’s getting smaller not bigger. Microchips will soon be just one atom and ultimately subatomic. (Yes. Look it up). Big corporations are being nibbled away by much smaller faster moving competitors. And devolution is showing that people want smaller more local governments, not bigger more federal ones.

But the politicians carry on making uninformed and anachronistic decisions about the things that shape every aspect of our lives and how companies and individuals function. Don’t believe me? Here are just three examples.

There’s no recovery in jobs, at least not the type of jobs government understands.

In June, the Office for National Statistics released figures which show that flexible working is at a record high in the UK. The headline figure from the ONS is that 14% of the UK workforce is now either working full time from home or use home as a base. This represents a 1.3 million increase over the six years since the onset of the recession.

Total jobs growth in the same period was around 1.8 million. In other words, over two thirds of the UK jobs created since the recession began have been self-employed or based at home.

Note to government: This is NOT the future of work...
Source: Wikipedia.  Credit: Chris Brown

The Government is claiming this as a victory for its legislation. They want us to believe their foresight has enlightened bosses in helping employees find a better work life balance.

In an interview,  Co-Chair of the LibDem Parliamentary Party Committee on Work and Pensions and a Deputy Government Whip, Jenny Willott said that: "Current workplace arrangements are old fashioned and rigid. Extending the right to request flexible working to all employees will drive a cultural shift where flexible working becomes the norm and is not just for the benefit of parents and carers."

But government legislation isn’t what’s driving this change.

Clearly, this is spin. It's not government policy but in fact the explosion of homeworking that is driving Britain’s rapidly expanding army of freelancers and micro-businesses. The recent increase in employment levels is almost entirely down to a huge surge in the numbers of people who are self-employed.

In the last quarter of 2013 alone, the number of people identified as self-employed rose by a staggering 211,000 while the number of employees fell by 60,000. There are now around 4.5 million self-employed people in the UK. 

These people aren’t working from home as an alternative to going to work in an office for an employer. There is no office and no employer, so employment legislation is of no use or relevance to them. They are doing what they do in spite of what the government is doing with regard to flexible working, not because of it.

Technology is an enabler for small business but a nightmare for large organisations

Start-ups and small businesses reap huge rewards from the tech revolution. Digital media enables immediate and fast deployment of a whole range of powerful tools from video conferencing to online sales platforms.

But transitioning big bureaucracies from paper based systems to digital ones is very different. It’s a huge, complex and expensive task. As a result, we can be pretty confident that when a new government digital system actually goes live after running millions over budget and being delivered late, it still won’t work properly.

Recently, the think tank Policy Exchange reported that the UK public sector could save £24 billion a year by offering the UK population universal fast broadband and migrating all Government information and services to digital platforms.

One of a handful of politicians who do get tech, Nadhim Zahawi is quoted as responding to the report by saying: “The internet and technology is shaping the way everyone interacts, transacts and reacts and has been doing so for at least a decade… well, everyone, that is, except government.”

There is movement of course, but it is painfully slow because the Government knows just how complex, expensive and disaster prone these transitions actually are. And when reducing government debt is a priority, such initiatives have pretty low appeal.

But the good news for government is that if they shifted their attention to the small business sector, things are much less scary and there are lots of quick wins to be had. But this involves breaking the habit of thinking big and instead thinking small…

Like the relatively simple task of getting fast broadband available everywhere in the country. Not only would this transform Government services, universal fast broadband is simply the single most important piece of infrastructure the UK could introduce.

So if home working and digital technology is the future, why is the government looking to invest in 20th century infrastructures?

One of the most extreme examples of how governments make bad decisions around the future of work is the high speed rail network approved in 2012 connecting Manchester and Leeds with Birmingham and Birmingham with London. This is known as HS2.

This high speed rail network will enable people to save time moving across the UK. Some journey times such as Manchester to London are expected to be reduced by almost 50%. 

HS2 Railroutes
Source: Wikipedia   Credit: Cnbrb

But by 2033, when the project will allegedly complete, how many people are actually going to want or need to make such journeys at all? By then it seems a safe bet that current technology trends will likely have developed to a point where such journeys are too expensive, too slow and too prone to disruption if not on the train journey then in the travel to and from the stations?

June 2013 saw the original projected cost of HS2 rise by £10bn to £42.6bn and, less than a week later, it was revealed that the DfT had been using an outdated model to estimate the productivity increases associated with the railway, which meant the project's economic benefits were massively overstated.

Peter Mandelson, originally a major advocate of HS2 when the Labour Party was in government, declared shortly afterwards that HS2 would be an "expensive mistake" and also admitted that the inception of HS2 was "politically driven" to "paint an upbeat view of the future" following the financial crash. He further admitted that the original cost estimates were "almost entirely speculative" and that "Perhaps the most glaring gap in the analysis presented to us at the time were the alternative ways of spending £30bn."

Boris Johnson similarly warned that the costs of the scheme would be in excess of £70 billion. The Institute of Economic Affairs estimates that it will cost more than £80 billion. Incidentally, that figure is pretty much the same as the entire GDP of New Zealand…

But there are non-financial arguments too to conclude that HS2 is a really bad idea. HS2 is not designed for the world of 2033, when it will be complete. It’s designed for a world in which people travelled to meetings. A world in which businesses were big and business was managed via top down command and control hierarchies and nationally dispersed teams.

Thanks to the politician’s disconnect with the reality of 21st century work, the UK is now saddled with a hugely expensive white elephant that will almost certainly end up costing even more than the worst case projection so far of £80 billion. And deliver far fewer benefits than even the most cautious estimates.

It really is time for our leaders to ditch their big ideas and start thinking small.

Are our employers and institutions ready for the New Machine Age?

By Neil Patrick

Researching for my post on the zero marginal cost society led me to the great work of Erik Brynjolfsson and Andrew McAfee. They have painted a dazzling picture of the digital future and described the changes that people and society need to make in order to prevent being left behind. I think the potential is bright too, but today as the dog days of summer retreat, I’ve got a nagging feeling about one thing…

MIT’s Erik Brynjolfsson and Andrew McAfee have coined the term and titled their book, The Second Machine Age. It describes an almost utopian future. It’s a very uplifting vision of how technology holds the potential to fill the world with more possibilities than we can even imagine.

I featured Andrew McAfee’s great TEDx talk here a couple of weeks ago.

But can this vision be realised? Technology frees us up to achieve more than we ever could have dreamt of, but will organisations be able to keep up? After all, apart from the goods and services we consume, most of us rely on organisations for one other very important thing…our jobs.

People, organisations and societies have to keep up with the speed of technological change

The Second Machine age will require constant change, delivering at speed, innovative thinking, fast-paced learning and cross functional collaboration like never before.

So my worry isn’t with technology per se. My worry is that the pace of technological change is moving so fast that people cannot keep up. Let alone corporations and society as a whole. And if organisational thinking can’t keep up, how on earth can organisational culture?

The future’s here, ready or not

Brynjolfsson and McAfee paint an optimistic picture of the future. As the full impact of digital technologies is felt, they profess that we will realize an immense bounty in the form of dazzling personal technology, advanced infrastructure, and near-boundless access to cultural items that enrich our lives.

They admit that amidst this bounty will also be wrenching change. Professions of all kinds, from lawyers to truck drivers will be relentlessly downgraded and delisted. Companies will be forced to transform or die. But will they spot the need to transform quickly enough to respond? I think it's safe to predict that some will and some won't and will suffer the consequences. Recent economic indicators already reflect this shift; fewer people are working, and wages are falling even as productivity and profits recover.

But will organisations and employers keep up?

I don’t doubt the guarantee of technological transformation. What I doubt is the capability of organisations to transform fast enough to keep up. Let alone institutions and legal systems…

On the one hand technology is enabling things to be made and done faster and cheaper than ever before. At the same time, this speed is outpacing people’s ability to extract enough money from the system to live.

Brynjolfsson and McAfee recognise that to adapt, society must change rapidly. This includes revamping education so that it prepares people for the next economy instead of the last one, designing new collaborations that pair brute processing power with human ingenuity, and embracing policies that make sense in a radically transformed landscape.

I agree that this is needed. What I struggle with is the idea that persistent ideas and attitudes left over from 20th century top down command and control structures can possibly evolve fast enough to prevent giant chasms opening up between technology and policy and culture.

From the time I have spent teaching business in universities, I took away a lot of learnings. And one of these was that the smallest unit of time measurement used in the management of educational institutions is a year. And that's just far too slow to keep up with the world of tech.

But educational institutions are not alone in being slow to change. Commercial businesses are so focussed on day to day and week to week revenues, that the medium and long term changes they need to make are deprioritised. And this makes them vulnerable. And this will leave many people exposed to redundancies, lower incomes and longer periods without work.

Our organisations have got to embrace this new economic reality or they will die. And one way they can do this is to hire more people who understand what's going on and how to capitalise on this new economic era not be crushed by it. And this creates a whole new world of economic winners and losers.

Who will respond and who will not?  That's the most interesting and important question I think...

Andrew Keen’s interview with Erik Brynjolfsson and Andrew McAfee here may help you decide for yourself: