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Watch and prepare to adopt new technologies - Productivity Commission

Thursday 12th September 2019

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New Zealand should monitor the impact of new technologies on labour markets internationally while looking for ways to improve our capacity to take them up and adapt to any changes that result, the Productivity Commission says.

While some forecasters are predicting deep jobs losses in some sectors from the take up of artificial intelligence and other forms of automation, the commission says the rate of uptake of technology internationally appears to be slowing rather than accelerating.

And while new technologies can have impacts on particular professions or industries, “there is little evidence that new or previous technologies are strongly labour-replacing in aggregate,” the commission says in the first of four reports on evolving technologies and their potential impact on New Zealand.

“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,” says Judy Kavanagh, who is leading the commission’s inquiry into technology and productivity.

“Rates of job destruction have actually declined in New Zealand since 2000. And recent rates of job creation are at a similar level to rates in the early 2000s.”

The government in February tasked the commission with assessing the impact of potentially disruptive new technologies on the work force, labour markets, productivity and well-being. It also sought advice on the best ways to manage those risks, while optimising the potential benefits that would also flow from the technology.

Today’s report looks at New Zealand’s use of technology and its relationship with technology. The next three reports will cover: employment, labour markets and incomes; education and skills; and ways to prepare the country for the future. The commission will lodge its final report in March.

The commission says the nature of work will change during the next 10-15 years, but the rate of that change is unlikely to be unprecedented.

The prospect of dramatic improvements in the ability of artificial intelligence to drive large-scale displacement should not be discounted and the government should be monitoring international developments to identify any divergence from current trends.

While the local labour-market impacts are likely to lag, and be more muted than those overseas, “that comes with a warning that faster adoption of technology overseas could see New Zealand fall behind, with consequences for jobs and incomes.”

Kavanagh says technology adoption supports higher productivity growth and higher incomes and provides resources to pay for the things New Zealanders value.

She says the main problem facing New Zealand isn’t too much technology, but not enough.

The commission said its preliminary observations are that maximising mobility, resilience and employment opportunities will allow faster and smoother adjustment to change.

The education and training system can be improved to better enable existing and future workers adapt to technological change and it warned that trying to regulate for specific technology can quickly become obsolete and delay or prevent its adoption.

Protecting declining industries or artificially inflating new ones can delay, magnify or create future adjustment costs.

“Turning away from technological change or attempting to tightly control its entry and diffusion offers at best temporary relief. Previous attempts to insulate New Zealand from economic and technological change were not successful and created large and painful adjustment costs,” the commission says in its 92-page report.

“By failing to pick up and spread the world’s best technologies, New Zealand has lost opportunities to gain higher living standards. The path to greater well-being lies with more technology adoption and diffusion.”

Submissions on today's report and the next three close on Jan. 20.

(BusinessDesk)

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