Why we should not fear for robots stealing our jobs

8

October

2021

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In my job as a business analyst, I work on the robotization of business processes. We often get the question: are you destroying human jobs by robotization? Although it is true that one of the main objectives of robotization, and digitization in general, is increased efficiency, and robots do substitute some jobs, ultimately they will lead to increased added value for both the demand side as well as the supply side of the job market.

Firstly, robots are likely to replace highly repetitive and logic-based tasks, which does lead to job loss in the lower end of the market (2). For one, this is beneficial to the employer (demand side of the labor market), because of the gained efficiencies and elimination of human error. Secondly, this may be beneficial to employees: as a result of their repetitive tasks being replaced, they are likely to focus on more value-adding tasks, requiring interpretation instead of repetitive logic-based operations, which is likely to improve employee satisfaction. However, of course there will be some jobs that become obsolete as a result of robotization.

Although this downside of robotization is certainly existent, both the history and future predictions tell us that automation also creates job opportunities. These predictions show this will completely offset the job loss as a result of robotization, even resulting in more newly available jobs (2). Besides the positive offset to the quantity of jobs, job value (both monetary – salary, and job satisfaction level) will also increase as a result of this. Because low-level jobs disappear and are replaced by roles with increased expectations and complexity, entry-level job seekers will be more likely to be wanted for those jobs that would have been out of reach in a world without automation. Examples of jobs with increasing demand are data analysts, for which the demand has increased by 650% in the period between 2013 and 2017 (3), marketing specialists, system engineers, and – of course – process automation specialists (2).

To conclude, robotization does not only lead to gains in efficiency and non-monetary benefits such as increased employee satisfaction, but it also creates new jobs. These new jobs are higher valued than the originally substituted jobs, thus robotization does not only provide benefits to the welfare in general (the society) and the employers but also creates long-term value to job-seekers.

References

(1) Brown, T. (2016) Will robots actually take your job? (retrieved from https://www.raconteur.net/will-robots-actually-take-your-job/) (image source)

(1) World Economic Forum (2020) Future of Jobs Report 2020 (retrieved from https://www.weforum.org/reports/the-future-of-jobs-report-2020/)

(2) LinkedIn (2017) Here Are the 20 Fastest-Growing Jobs in the US (retrieved from https://www.linkedin.com/business/talent/blog/talent-strategy/fastest-growing-jobs-in-the-us)

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BlackRock’s grip as IT front-runner on the financial market

6

October

2021

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When thinking about BlackRock, only few people think of the company as an vendor of IT services. However, since the start of the 2000s, Blackrock has been selling their risk and portfolio analysis and tracking tool Aladdin to other fund managers, including some of their largest competitors such as Vanguard and State Street (3). Since 2013 the amount of assets handled on BlackRock Aladdin (acronym of Asset, Liability, Debt and Derivative Investment Network) has increased from $11 trillion to over $21 trillion, serving more than 900 clients (2,3).

In the early days of Aladdin, BlackRock was very decisive to gain insights in through their risk capability tools and to understand their assets, portfolios and industry benchmarks. As other firms noticed BlackRock’s steady performance, Aladdin started to get sold to other firms (4). Nowadays, Aladdin is steadily expanding as the most used tool in the asset management industry, resulting in a strange market position, where Aladdin is not only competitor but also the most crucial vendor to their competitors.

This leaves us with the question: why is this part of BlackRock’s strategy and why don’t they focus on their core activity: investing itself. Although I did not ask Larry Fink, the answer is probably enclosed in the lucrativeness of the contracts with the customers, the early joiner benefits of BlackRock and the nature of the system – a system developed for and within the largest and most successful asset management firm, is probably difficult to beat by an outsider.

The market position of BlackRock has been analyzed by advisors of Biden, according to the FT (1). Like in other industries such as the mobile provider market, there are concerns that having all crucial IT infrastructure in hands of the market leader may be risky and lead to conflicts of interest. As a result, the government should decide: is it risky if all IT infrastructure within a market, is owned and sold by the market leader? And is this risk limited to financial markets only, or can this risk arise in other markets as well?

References

(1) https://www.ft.com/content/524a1fef-7bcd-4c2a-8e91-a2e7124c13e3

(2) https://fortune.com/2014/07/07/blackrock-larry-fink/

(3) https://www.businessinsider.com/what-to-know-about-blackrock-larry-fink-biden-cabinet-facts-2020-12?international=true&r=US&IR=T

(4) https://www.clara-durodie.com/post/aladdin-and-the-genius-that-is-larry-fink

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