This blog post has been produced for the Greater Birmingham Chambers of Commerce to provide insight on the findings of the Birmingham Economic Review. The Birmingham Economic Review 2018 is produced by the University of Birmingham’s City-REDI and the Greater Birmingham Chambers of Commerce, with contributions from the West Midlands Growth Company. It is an in-depth exploration of the economy of England’s second city and is a high quality resource for organisations seeking to understand Birmingham to inform research, policy or investment decisions. This post is featured in the full report and report summary here.
Greater Birmingham is one of the UK’s major digital hubs, with more than 6,000 tech firms employing around 38,300 people. Thousands of students are here studying computer science or business at schools, colleges and some of the UK’s leading universities.
Our region has a long history of leading technological change. At the vanguard of the industrial revolution, Midlands manufacturing and natural resources helped shape the world as we know it.
In 1770, Matthew Boulton claimed that Birmingham’s superiority as a manufacturing town was largely due to the “superactivity” of its people and the “mechanical contrivances and extensive apparatus which we are possess’d of”.
Man and machine – working together – powering the country forward. That spirit of innovation continues today. Midlands’ manufacturers have long adopted technological and robotic advances to improve productivity. Artificial intelligence (AI) is the next step.
With our rich automotive heritage, it’s fitting that we are driving developments in autonomous and connected vehicles (CAV). Led by the University of Warwick’s WMG, Midlands Future Mobility brings together academics, policymakers and businesses to establish the Midlands as a world-class centre for the development and evaluation of CAV and related technologies and services.
However, our regional strength could also be our Achilles’ heel. Being an early adopter may put the region at risk of a greater share of job losses as roles for humans become roles for machines.
Generating GVA of 15% (UK Office of National Statistics, 2016), manufacturing accounts for 13.6% of Midlands employment compared with a national average of 9.8%. Services also play a large role in the regional economy, employing almost half of the working population. Other key sectors are engineering, transportation and storage, construction, energy and public administration.
Unfortunately, according to this year’s ‘UK Economic Outlook’ from PwC, many of these sectors are those most likely to see a net decrease in jobs due to AI.
Broadly positive about the impact of AI on job creation v job losses, PwC estimates that the share of existing jobs displaced by AI (c. 20%) is likely to be approximately equal to the additional jobs created.
However, it does note potential regional variation, with more jobs likely to be lost rather than created in the Midlands. By PwC’s analysis, this is due to the proportion of jobs in sectors more likely to see net job losses: manufacturing (-25%); transportation and storage (-22%); and public administration and defence (-18%) in this region.
By PwC’s own admission, these figures represent its best estimate based on models of potential economic performance and the adoption of new technologies. And, while there will be inevitable change to employment tasks and roles, AI will bring opportunities, many of which have not even been thought of.
I’m not at all pessimistic about our region and its ability and appetite to innovate and change. Everything in our history says that we are more than capable of leading technological change.
We’ve got world-beating universities. The region is home to industries already using AI and robotics (manufacturing, legal) or ripe for doing so (healthcare). We’re seeing strong leadership from Mayor Andy Street and the West Midlands Combined Authority, which is currently surveying businesses in the region to see how ready they are for AI.
In the public and third sectors, we have data-rich organisations for whom AI has to be part of the solution to meeting rising need with smaller budgets. I’m pleased that Curium is supporting Public Sector Digital Midlands, an event on 27 September for people involved in public sector digital.
Showcasing the work of digital teams in central and local government, the NHS, the police and education, the event will include Andy Street, Mayor of the West Midlands and Kevin Cunnington, Director General of the Government Digital Service, among the speakers and panellists.
In our business experience, we come across individuals and organisations who want to change but are finding it hard to do so. AI is just one of the many business challenges they face alongside managing their business-as-usual.
For them and for our region, there’s no easy solution. But, I believe that by investing and by harnessing the talent, political will and business need for better ways of working, Birmingham and the region has the potential to lead the UK through this ‘fourth’ industrial revolution.
Andy Dawson is a director and co-founder of Curium Solutions, an independent change consultancy and Greater Birmingham Chambers of Commerce Awards’ Business of the Year. Its report, ‘AI and robotics: from science fiction to business fact’, is available online.