Will robots take over your job in Sweden?

Economics analyst Mårten Blix outlines how to make sure jobs are not lost when digitalization grows in tech-savvy Sweden and robots take over skilled labour.

Will robots take over your job in Sweden?
Will jobs be lost to robots in tech-savvy Sweden? Photo: AP Photo/Vincent Yu

Jobs disappear and robots take over. Or everything remains as usual. These are two completely different scenarios for the future of the labour market. They cannot both be correct.

There is fairly broad consensus among economists that technology has so far been positive for work, but the question is what happens in the future. During the industrial revolution machines destroyed jobs. Among artisans, several crafts were replaced by machines and less skilled workers. But throughout the 20th century, technology and jobs have mostly reinforced each other and have led to need for better skills, higher wages and productivity.

Despite comprehensive automation and restructuring of the whole economy, work has not disappeared. However, there has been significant job polarization in many OECD countries in recent decades, resulting in a shrinking middle class.

In Sweden, this trend has so far taken place mostly through an increase of highly-paid jobs and strong real wage growth over the past 20 years. This is in contrast to the United States, where large groups have not received any increase in real wages over long periods of time. It is likely that the trend of job polarization will continue.

Is there a risk that large groups in Sweden will experience weak wage growth and that robots will take over? This will likely depend on how the challenges are managed – by politicians and by the labour market partners. In the long run, technological developments will lead to greater prosperity, but the path could be tumultuous if unwise decisions, or no decisions at all, are made.

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People understandably treat the claims that robots are taking over with some scepticism, since many may not see any direct evidence of this in their own workplace. But the idea of a robot sitting at a desk (with a coffee cup) is misleading, when much automation is in fact about software in the cloud, physically located in some anonymous server hall. It is worth bearing in mind that today's smart phones have replaced a variety of devices and services you previously had to pay for: GPS navigation, music players, scanners, voice recorders and so on. The applications available via cloud services for managing huge amounts of data are well developed and could easily be used to replace human labour. Most people will probably be surprised at how much actually already has and easily could be automated.

Automation of simple services continues, but what is new is a wave of automation also for skilled work. It covers everything from simple services, legal services to administrative services. Research has identified the potential to automate jobs where tasks are repeated in a predicable manner and can therefore be programmed. Think about what tasks you encounter every day that are more or less predictable. They are increasingly often going to be automated.

Some real-life examples:

– Restaurants and hotels almost without staff; a machine cooking several hundred hamburgers per hour.

– Software can replace great numbers of junior lawyers, can grade essays in school and automatically generate text so well that it is difficult to see that it was not written by a human.

How should Sweden stop jobs being lost to robots? Photo: AP Photo/Peter Dejong

The limit of what can be automated can these days not even be drawn at the tasks that require creative or cognitive ability, such as composing music or researching empirical relationships.

The main driving force behind the ongoing trend for automation is the aspiration to create something better and more efficient. In Sweden and several other OECD countries this aspiration is reinforced by the fact that we are entering a period when many people are exiting the labour market for reasons of old age, while fewer young people are entering. Combined with skills mismatch in the labour market, this provides a strong incentive for automation. It is not a coincidence that Japan, with the oldest population in the world, may have taken the most steps in automation in the sector devoted to care of the elderly.

But even if technology allows an increasing degree of automation, other factors can sometimes be more significant. A considerable part of school education, for example, could be automated, but social norms and values can be more important. In some countries in Asia there are driverless trains, but so far no autonomous passenger flights. In healthcare, the demographic trend is probably a more important a factor than automation. A small country such as Sweden, with its own language and own institutional framework, also does not enjoy the same kind of benefits of economies of scale when it comes to automation.

What then is the sum of the various driving forces? Will 50 percent of today's professions disappear? This figure was presented in a report by Oxford researchers Frey and Osborne. The short answer is that this picture is incomplete and does not take into account that new jobs are being created all the time. Some existing jobs increase and new jobs that we cannot even imagine today are created. The question should instead be if the new jobs are being created at the pace needed.

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There is a real risk that we are facing a period of increased tensions in the labour market, particularly as wage bargaining for large parts of the economy is under way at a time with low confidence in the Riksbank's (Sweden's Central Bank) inflation target. The biggest income inequality is created by long-term unemployment, a risk that increases in times of rapid change. To ensure positive development while taking advantage of new technology and reducing its downsides, the following should be done:

1. Reduce the cost of labour by cutting taxes on (human) work. Sweden's high tax on labour unnecessarily increases the already strong incentive for automation. Tax deductions for household services should increase in scope rather than being slimmed down.

2. Facilitate the so called sharing economy by reducing uncertainty in how regulation is applied. Allow competition in the first instance by reducing unnecessary barriers rather than forcing digital companies into old regulation unsuited to a digital world.

3. Improve the opportunities for lifelong learning and make it easier for people to accumulate new knowledge. Without new knowledge the risk of being overtaken by technology increases, resulting in a risk for poorer prospects in the labour market.

4. Reduce the difference in social security systems between employees and self-employed.

These measures are good for the economy irrespective of how strong digitalization turns out to be. There will be new jobs when the robots take over our old ones – provided that politicians do not construct unnecessary obstacles.

This is a translated version of a debate article which originally appeared in the Dagens Nyheter newspaper.

Mårten Blix, PhD in Economics, is a guest researcher at the Swedish Research Institute of Industrial Economics. He is a former secretary in the Commission on the Future of Sweden. He is working on a report on the effects of digitalization on the economy.

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Gothenburg: is the dream of a new city turning into a nightmare? 

Sweden’s second city is the site of Scandinavia’s largest urban development project. But there is rising concern that the costs outweigh the benefits, says David Crouch

Gothenburg: is the dream of a new city turning into a nightmare? 

Last week, residents in the area of Fågelsången (birdsong), a quiet street at the very heart of Sweden’s second city, woke up to read the following news: “Explosions at Fågelsången: On August 8, week 32, we start blasting around Fågelsången and are expected to be done by week 40. When blasting, for safety reasons, no one is allowed to go out, open their windows or be within the blasting area. We will work weekdays 7am to 5pm.” 

Blasting deep holes in the granite – along with sprawling roadworks – has been the reality for central Gothenburgers for the past four years, as a vast rail tunnel is being dug to link the current terminus with other parts of the city and enable smoother connections with other routes. The aim is to triple rail passenger numbers and eliminate traffic jams on the main road through the city, at a cost of 20 billion crowns (€1.9 billion).

This railway, known as Västlänken (the West Link), is not the only big construction project in the city centre. It is just the largest element in a gigantic scheme to revive the docks area along the river, which was destroyed by a global shipping crisis in the 1970s. The great rusting cranes opposite the opera house and the disused Eriksberg gantry are an important aspect of Gothenburg’s skyline and self-image. The areas on the north bank were also home to many recent immigrants and a byword for poverty. The city’s mayor famously, and shamefully, referred to it as “the Gaza strip”.

So in 2012 the city launched an ambitious plan. Christened Älvstaden, the RiverCity, municipal investment aimed to build an attractive, modern waterfront while creating tens of thousands of homes and jobs. It is by far the Nordic region’s biggest urban regeneration project. A YouTube video commissioned by the city authorities a few years later neatly sums up both the breathtaking scope of this vision and the exciting / brutal (choose your own adjective here) nature of the transformation it would bring: 

The RiverCity revolved around two flagship projects: a new bridge over the river, the Hisingsbron (Hisingen Bridge), combined with major new office developments right in the centre; and Karlatornet, Sweden’s tallest skyscraper, which would literally tower over Gothenburg like a beacon of modernity in a city that traditionally has had strict rules against high-rise buildings. 

Add to all this a proposed high-speed rail link with Stockholm, and you have a recipe for quite spectacular urban upheaval involving billions of tons of steel and concrete. Visit Gothenburg today and much of the city seems to have been turned into a building site. There is a forest of cranes, while smart new office blocks puncture the skyline – a genuine metamorphosis is under way.

But many Gothenburgers are either uneasy or downright unhappy. The RiverCity is a vanity project to gentrify the docklands, they say. Karlatornet’s 73 stories of luxury apartments will be a scar on the landscape and a symbol of Gothenburg’s new love affair with finance and real estate, a slap in the face for the city’s proud industrial values. Västlänken is a vit elefant, a costly project that will deliver questionable benefits, many believe.  

Opposition to Västlänken was such that a new political party, the Democrats, took 17 percent of the vote in 2018 with its headline demand to stop the project immediately. This caused a revolution in local politics, overturning decades of Social Democrat rule. 

And now the gloss on these big-ticket construction projects is starting to fade. Karlatornet was the first to run into trouble. For most of 2020 building work was at a standstill, raising the threat that this flagship of regeneration would be nothing more than an unfinished stump, after American financiers pulled out of the project. The new Hisingen Bridge is open to traffic, but its construction was fraught with setbacks and the final cost to the taxpayer is still unknown. “There has been an awareness from the start that this was a high-risk project,” one of the project’s bosses said ominously this spring.

RiverCity is more than two billion kronor over budget, and facing accusations of mismanagement that evoke Gothenburg’s old nickname of Muteborg, or Bribetown, after a proliferation of municipal companies in the 1970s led to conflicts of interest, with politicians sitting on company boards. Opponents of the scheme argue that in any case it is unlikely to solve any of the city’s fundamental problems, such as the ethnic segregation that has created immigrant ghettos in outlying suburbs.  

In May, Swedish newspaper Dagens Nyheter published leaked minutes from Västlänken management meetings in which one of the main contractors on the project said it would be delivered billions over budget and four years later than its official 2026 deadline – in other words, four more years of earth-shattering explosions, roadblocks and associated upheaval. With local elections only months away, the Democrats have taken out advertisements on billboards and in local media demanding that top politicians tell the truth about what is going on. For opponents of the scheme, this is exactly what they have warned of all along

Next June, Gothenburg will officially celebrate its 400th anniversary, postponed from 2021 because of the pandemic. Visitors will experience a city on the move, with pristine new motorways and sparkling office blocks. So for Gothenburg’s urban planners, there is light at the end of the development tunnel. In the case of Västlänken, however, they will be hoping that the light is indeed that of an oncoming train. 

David Crouch has lived in Gothenburg for nine years. He is the author of Almost Perfekt: How Sweden Works and What Can We Learn From It, a freelance journalist and lecturer in journalism at Gothenburg University.