Around 10% of British jobs could be lost to automation, Bank of England Gov. Mark Carney said Friday, highlighting the potential short-term costs of the so-called Fourth Industrial Revolution.
In a speech in Dublin, Mr. Carney said that widespread automation should eventually boost productivity and living standards in the global economy, but would likely mean a period of higher unemployment as more workers are replaced by robots.
Such rapid change also presents a challenge for central bankers, he said, as a period of high unemployment would likely mean weaker spending and inflation.
“If the Fourth Industrial Revolution is similar to past technological revolutions, the overall effect will eventually be labor augmenting, boosting productivity and wages, while creating new jobs to maintain or even increase overall employment,” Mr. Carney said, according to a text of his remarks released by the central bank.
“But that is in the long run. In the interim, if it is similar to previous industrial revolutions, it seems likely there will be a period of technological unemployment, dislocation and rising inequality.”
Anxiety over the emergence of robotics, artificial intelligence and other advanced technologies that promise to transform the workplace is growing in policy circles as greater swaths of the workforce appear at risk from automation.
In his speech, Mr. Carney stressed the need for new or revamped institutions to cushion the blow for workers displaced by machines. He suggested, for example, the need for a more developed system of further education later in life to equip workers with new skills.
He touched only briefly on the outlook for monetary policy in his remarks, saying that accelerating pay growth is adding to inflationary pressure.
He said annual pay growth is accelerating as dwindling unemployment makes it harder for companies to recruit staff. Annual private-sector pay growth hit 3% in the three months to July.
Domestic inflationary pressures are “at rates consistent with the 2% inflation target,” Mr. Carney said.
The governor’s remarks suggest the BOE remains broadly on track to gently raise interest rates two or more times over the next few years, provided the U.K.’s exit from the European Union in March goes smoothly.
The BOE in November said British banks are fit enough to withstand a severe economic shock, such as may occur if Britain abruptly exits the EU without an agreement over the terms of its withdrawal. The stress test it put banks through included a sharp fall in house prices and a steep rise in interest rates and inflation.
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