What if Schumpeter was right about creative destruction in the digital economy?

The gale of creative destruction describes the “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one” (Joseph Schumpeter, 1942).
There has been much debate about the impact of technology on workplace innovation, skill demand and employment. For decades, technology has been transforming the nature of work, changing the demand of skills and raising productivity (Mckinsey, 2012). Shaped by the global value chain (GVC) (Brown et al., 2015), this leads to a change in the volume and quality of jobs with the creation (e.g. multi-skilling and deep-skilling), redesign (e.g. re-skilling and up-skilling), and lost (e.g. deskilling) of global jobs.
In the golden age of the American economy for two and a half decades following World War II, many new and better quality jobs were created with upgraded skills and better wages (Ford, 2015). This was to complement the introduction of electronics, information technology and automated production (Schwab, 2016) to increase organisational productivity. However, the evolutionary view of skill-biased technological change (SBTC) has been called into question by what some commentators are calling the second machine age (Brynjolfsson and McAfee, 2014) or the fourth industrial revolution (Schwab, 2016), where technological disruption, including advancements in robotics and autonomous transport, artificial intelligence and machine learning (WEF, 2016), are very different from the past.
Digital technology is disrupting at a scale, scope and complexity (Schwab, 2016) profoundly changing all aspects of our lives, the way we work, interact and learn (Accenture, 2014) at unprecedented speed (Brynjolfsson and McAfee, 2012). Some argue that capitalists use digital technology to increasingly displace labour in both routine and non-routine knowledge, physical and interactive works (McKinsey, 2012; Ford, 2015). This is to bring an ever-expanding set of opportunities to companies (Brynjolfsson and McAfee, 2012) to offer higher quality value at lower (Brown and Lauder, 2013) or even near zero marginal labour cost (Rifkin, 2014). Some further argue that capitalists are using digital technology to facilitate firm restructuring for workplace innovation (Lorenz, 2015; Toner, 2011). This is reducing the demand for high-skilled employees (Head, 2014). The World Economic Forum (2016) forecasted on job loss and gain in the next five years from 371 leading global employers with more than 13 million employees in 15 major economies. Two third (i.e. 4.7 million) of the 7.1 million jobs lost are in “Office and Administration” concentrated in routine cognitive skills due to manpower-lean technological automation. 2 million new jobs could emerged related to data analysts and specialised (STEM: Science, Technology, Engineering and Mathematical) sales representatives concentrated in non-routine cognitive, interpersonal and technical (Spitz, 2004) ELP (Entrepreneurship, Leadership and Professional) skills found in micropreneurs (UKCES, 2014) with technological adoption. Due to globalisation and digital disruption, the middle-skilled and low-skilled workers are subjecting to employment risks. The global workforce is experiencing increasing employment polarisation and inequality (Brown and Lauder, 2013; Autor 2014; Brynjolfsson and McAfee, 2012; Piketty, 2014).
To address this long-range jobs challenge (World Bank, 2013), it is equally important for individuals, especially parents, to lay path for our children by first gaining a better understanding of how digital disruption is impacting on skill demand, employment and talent management of the future leading employers, and only then on how to effectively prepare our children with the relevant future skills, industrial exposure and competitive resume to seize these quality jobs in the future of work.
Mind & Hand is an EduTech platform that partners both educational industry players and private sector business employers to offer our students programmes that keep pace with technological change and that are relevant to the industry. We hope to empower our students with the skills, confidence and perspective to navigate the global skills crisis and prepare them for a workplace of the future.

By Jonathan Lee–
Jonathan is a proud parent of two and he is a fervent advocate of future-ready education


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