Will technology destroy jobs and inflation?

Shane Oliver, Head of Investment Strategy and Chief Economist.

The following note looks at whether technology will destroy jobs and inflation.

The key points are as follow:

  • Fear of machines taking human jobs is nothing new. But what is now different is the ability of machines to replicate human cognitive skills across many industries, rather than just in manual industries (like in manufacturing).
  • The adoption of new technology won’t destroy the need for human jobs and cause a mass surge in unemployment. Technology will make some jobs obsolete but it will create others in its place. But, technological changes will further distort the labour market by putting pressure on middle-skill routine jobs and incomes. Non-routine cognitive and manual jobs will grow in importance as populations age and advanced economies become more service-based.
  • Technological improvements are a long-run factor behind lower inflationary pressures. But, impacts on inflation from machine learning (the latest tech novelty) is still too early to be seen. Inflation is mainly being kept down by a slower than expected recovery to stronger GDP growth after the Global Financial Crisis.
  • The government has a role to play to monitor the social impacts of technology and to ensure that the right education and training is being provided to the population so that there is flexibility in skills retraining and labour mobility.

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