Professional Documents
Culture Documents
Contacts
David Sproul
Senior Partner and Chief Executive, Deloitte LLP
+44 (0)20 7303 6641
dsproul@deloitte.co.uk
Angus Knowles-Cutler
London Senior Partner, Deloitte LLP
+44 (0)20 7007 2946
aknowlescutler@deloitte.co.uk
Chris Gentle
Partner and Head of Deloitte Insight, Deloitte LLP
+44 (0)20 7303 0201
cgentle@deloitte.co.uk
UKFutures
Contents
Foreword
Introduction
Executive summary
The onward march of computers and robots
Londons growing work force
Adapting London for future needs
Work and place
Infrastructure and housing
Retail
Conclusion
Methodology
Endnotes
3
4
5
6
12
16
21
25
27
28
29
30
London Futures Agiletown: the relentless march of technology and Londons response | 3
Foreword
The future of London is critical to Deloitte, our clients and our
people. We opened our first office in the world in the city in 1845.
Today it is still our largest client-serving location, accounting for
seven per cent of our worldwide revenues. That is why we
have undertaken two complementary studies that look at the
major impact technological advances are having on London.
We hope that the findings presented in this report provide a useful
contribution to the debate on the future of our city. We also take
a look at what the future might hold for London in a number of
key areas: education and skills; work and place; transport and
infrastructure; and retail.
Major advances in technology create a number of challenges
for London, but also present a range of opportunities. Unless
the changes that are coming in the next two decades are fully
understood and anticipated by businesses, policy makers and
educators, there will be a risk of avoidable unemployment and
under-employment of Londoners. A widening gap between
haves and have nots is also a risk as lower skill jobs continue to
disappear. London continues to be the worlds leading magnet for
talented people, but the skill sets that are needed are changing.
Deloitte has called for the appointment of a city-level Chief Talent
Officer to coordinate a strategic response. We believe that our
recent research, described in this report, confirms this need.
Looking forward, agility seems to be the key: an agile workforce
with the skills to adapt to fast-changing job requirements; flexible
use of working space to accommodate rapidly-evolving work
practices; and a city infrastructure that uses technology to support
increasing numbers of people at home, work or play.
London has a very long history of harnessing technology to its
advantage and there is every reason to believe it will do the same
again. The technology might be different, but the citys success
will as ever require a flexible response within a clear framework
forchange.
This report focuses on the capital, but in the coming months
we shall also be giving our view of the implications of automation
and computerisation for a number of the UKs other great cities.
Angus Knowles-Cutler
London Senior Partner
4 | London Futures Agiletown: the relentless march of technology and Londons response
Introduction
Throughout history, advances in technology have transformed
commercial activity and the jobs that people do, never more so
than today with the accelerating pace of change in digitisation and
robotics. The continuing impact of technology on jobs needs a
response from policy makers, businesses and educators.
Although the replacement of people by machines is well
understood, the scale and scope of changes yet to come may not
be. We have studied the risks to jobs in the UK from automation
and have attempted to measure the scale of the problem. We
have welcomed the opportunity to work with Deloitte on this
importantresearch.
We have found that within the UK, a lower proportion of jobs are
at risk in London than in the rest of the UK, but even here the risks
are significant and substantial changes are inevitable. Of particular
concern is our assessment that London jobs paying less than
30,000 a year are over eight times more likely to disappear than
jobs paying over 100,000. The speed of transformation is not so
easy to predict, but we believe that the employment landscape will
be very different in ten to twenty years from what it is today.
London Futures Agiletown: the relentless march of technology and Londons response | 5
Executive summary
Since the industrial revolution, advances in
technology have seen machines taking the
place of humans. The emergence of digital
technology has accelerated this process:
exponential growth in computing power,
combined with a dramatic reduction in
cost, has seen technology substituting for
labour in ways previously unimaginable. This
Deloitte study, using cutting-edge academic
techniques and drawing on insights from
leading businesses, examines the challenges
facing London and the UK over the next
two decades. This analysis will help to
ensure we continue to build a strong and
sustainable economy in the future.
The jobs challenge
To understand the potential impact of
computers and robots on jobs in the UK,
Deloitte has worked with Carl Benedikt
Frey and Michael A. Osborne of the Oxford
Martin School at Oxford University, to
estimate the types and numbers of jobs at
risk from automation. This analysis and the
methodology follow a similar 2013 study
of US labour markets1. We conclude that
35 per cent of todays jobs in the UK and
30 per cent in London are at high risk of
disappearing over the next two decades as
a result of technology.
Which jobs are at risk?
There are significant implications for the
number and types of jobs at risk. Jobs
most at risk from technology are in office
and administrative support; sales and
services; transportation; construction
and extraction; and manufacturing.
However, for 40 per cent of UK jobs (and
51 per cent of London jobs), the risk of
automation is low or non existent. The jobs
least at risk are in skilled management;
financial services; computers, engineering
and science; education; legal services;
community services; the arts and media;
and healthcare.
Frey and Osborne estimate that for the UK
as a whole, jobs paying less than 30,000
a year are nearly five times more likely to
be lost to automation than jobs paying
over 100,000. For London, the ratio is
more than eight times.
6 | London Futures Agiletown: the relentless march of technology and Londons response
The capabilities of
computers are expanding
beyond routine work: as
a result, tasks that were
once considered too
complex for coding will
be converted into welldefined problems capable
of digital solutions.
London Futures Agiletown: the relentless march of technology and Londons response | 7
Figure 1. Jobs at high risk and low risk from automation, London and Uk
comparison (%)
51%
43%
35%
30%
London
High Risk
London
Low Risk
or No Risk
UK
High Risk
UK
Low Risk
or No Risk
8 | London Futures Agiletown: the relentless march of technology and Londons response
Low risk
51% Employment
12
High risk
19% Employment
30% Employment
10
8
6
4
2
0
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
Probability of computerisation
Low
Management, Business, and Financial
Service
Production
0.9
1.0
High
London Futures Agiletown: the relentless march of technology and Londons response | 9
50,000
40,000
30,000
20,000
10,000
0.0
Low
0.5
Probability of computerisation
1.0
High
10 | London Futures Agiletown: the relentless march of technology and Londons response
London
Rest of the UK
Numbers lost
Numbers lost
000s
000s
4.7
65
22.0
48
9.1
65
42.2
40
14.1
58
49.1
30
Travel agents
7.3
56
20.9
44
Counter clerks
15.9
48
91.7
46
32.9
44
162.6
47
0.8
43
2.1
2.9
38
5.3
Credit controllers
1.9
33
19.2
37
30.1
32
109.4
23
119.7
43
524.5
34
New jobs
globally, 2008-13
Growth
multiple
IOS developer
12,545
142
Android developer
10,501
199
Zumba instructor
6,315
396
4,325
174
Data scientist
4,184
30
3,350
22
3,440
3,360
3,119
17
2,720
17
Source: LinkedIn Talent Blog, Top 10 Job Titles That Didnt Exist 5 Years ago, Sohan
Murthy, Jan 6 2014
London Futures Agiletown: the relentless march of technology and Londons response | 11
12 | London Futures Agiletown: the relentless march of technology and Londons response
22%
5%
73%
4%
33%
58%
London Futures Agiletown: the relentless march of technology and Londons response | 13
Automation
Nearshoring
Offshoring
1,472
1,163
Hong Kong
784
665
Chicago
New York
London
*based on major cities where reliable and comparable data is available
Source: Globaltown: Winning Londons crucial battle for talent, Deloitte LLP, 2013
630
Berlin
595
Paris
438
Milan
425
Boston
342
313
Frankfurt
14 | London Futures Agiletown: the relentless march of technology and Londons response
Consumer
business
Technology,
Business and
media and
professional
telecommunications services
Education
Culture
Life sciences
London
London
London
Los Angeles
London
London
Los Angeles
New York
Los Angeles
New York
London
New York
New York
New York
Hong Kong
New York
Chicago
Chicago
Hong Kong
Los Angeles
Toronto
Singapore
Singapore
Los Angeles
Singapore
Sydney
Paris
Boston
Boston
Hong Kong
Boston
New York
Boston
Singapore
Chicago
London Futures Agiletown: the relentless march of technology and Londons response | 15
23%
13%
Stay the
same as now
Change to a
limited degree
Change
significantly
Digital know-how
15%
Management
13%
Creativity
10%
Entrepreneurship
Problem solving
9%
Negotiation
9%
8%
Professional qualifications
Processing, support and clerical (e.g.
data entry, call handling, filing)
6%
Social perceptiveness
5%
Persuasiveness
5%
4%
16 | London Futures Agiletown: the relentless march of technology and Londons response
60%
Outer London
45%
London in total
53%
Paris
41%
Berlin
37%
New York
32%
Los Angeles
31%
Singapore
26%
Tokyo
20%
London Futures Agiletown: the relentless march of technology and Londons response | 17
24%
19%
11%
1%
No impact
at all
Very limited
impact on
the business
Limited
impact
Significant
impact
Very
significant
impact
18 | London Futures Agiletown: the relentless march of technology and Londons response
Figure 15. Impact of technology on London businesses in the next ten years:
predictability and effect
56%
45%
31%
33%
23%
7%
4%
1%
N/A
0%
Very
Fairly
Mixed (some
Fairly
Very
predictable/ positive/some unpredictable/ unpredictable/
predictable/
Fairly negative Very negative
negative)
Very positive Fairly positive
Predictability
Positive/negative effect
80%
60%
40%
20%
0%
0.0
Low
0.5
Probability of computerisation
1.0
High
London Futures Agiletown: the relentless march of technology and Londons response | 19
Employers
have a role
to play in
supporting
initiatives to
encourage
education
and training
among
the underprivileged.
20 | London Futures Agiletown: the relentless march of technology and Londons response
Education: conclusion
London needs to educate an agile work
force, with transferable skills that will
enable them to switch jobs, perhaps
regularly and as circumstances require,
throughout their working lives. The starting
point for creating this work force is the
education system.
Figure 17. Education in London: the building blocks and the challenges
The building blocks in place
The challenges
London universities attract more foreign students To develop suitable post-graduate programmes, including higher degree courses,
than any other city in the world
with inter-disciplinary content. To provide lifelong opportunities for improving
and adapting skills
Major improvements in London school
performance have pushed the capital to the top
of the UK GCSE league table
London Futures Agiletown: the relentless march of technology and Londons response | 21
Working practices
Changes in working practices are already
happening. More employees have
opportunities for flexible working hours;
and there is more variation in where
they work thanks to information and
communications technology, and the
sharing of files and software in the cloud.
Individuals are able to contribute effectively
to their employers business whilst also
achieving a better work-life balance.
People in skilled or creative jobs are
increasingly acknowledged as needing
different working environments within
which to operate, ranging from team
spaces to collaborate to quiet spaces to
focus. Equal access to data, information
and communication tools everywhere, have
broken the traditional ties with fixed single
work locations.
19%
Being based in
London already
18%
The workplace
environment you offer
18%
Ability to learn
new skills
18%
Proximity to friends
and family
11%
Attractions of living
and working in London
8%
The competition or
challenge of working
in London
8%
22 | London Futures Agiletown: the relentless march of technology and Londons response
36%
7%
Reduce footprint
Increase footprint
London Futures Agiletown: the relentless march of technology and Londons response | 23
37%
63%
Yes
No
24 | London Futures Agiletown: the relentless march of technology and Londons response
Services
Government
Energy
Water
Local economy
Figure 22. The work place in London: the building blocks and the challenges
The building blocks in place
The challenges
London Futures Agiletown: the relentless march of technology and Londons response | 25
The challenges
26 | London Futures Agiletown: the relentless march of technology and Londons response
Housing
A word of warning has to be added about
housing. As London seeks to attract more
highly-skilled people, there is a serious risk
that the lack of affordable accommodation
may persuade many London workers to
leave to work somewhere else, outside
London, in a reverse brain drain.
Research published by London First with
Turner and Townsend in 2014 indicates
that a housing crisis in London is becoming
a threat to jobs and growth in the city.18
It found that 56 per cent of London
workers have difficulty paying their
rent or mortgage and for 49 per cent,
this could be a reason for moving out.
Among 2539year-olds, the percentage
figures were even higher. Employers share
the same concerns: three-quarters of
businesses in the survey warn that the lack
of new homes and rising house costs in the
capital are a significant risk to the capitals
economic growth. A significant proportion
(38 per cent) expressed concerns that
housing was already affecting recruitment
and retention.
These views are consistent with a
December 2013 Deloitte and London
First report, which found that almost four
out of five of 150 businesses in a survey
said the cost of living in London and the
south-east is a barrier to hiring a suitably
skilled workforce. Despite this, 86 per cent
said they were absolutely committed to
remaining in the capital and only one per
cent said they were quite likely to leave
by2020.19
London Futures Agiletown: the relentless march of technology and Londons response | 27
Retail
Changing shopping habits
London is a large and important centre
for retail business. It has iconic shopping
streets and department stores, and a large
customer population, by no means all of
them local, and many of them affluent and
willing to spend money.
Retailers have so far struggled to keep pace
with the connected consumer. About 40 per
cent of internet sales are click and collect
transactions, and although it represents
only a small proportion of total retail sales,
this method of consumer purchasing is
increasing by about 30-40 per cent a year,
at a time when total retail sales are rising by
less than three per cent.20 Click and collect
relies upon ubiquity. It has to be as easy for
consumers to collect as to click. Collection
points need to be convenient. We have seen
the growth of services such as Collect+ and
Doddle and we are seeing retailers adapt by
providing click and collect points as railway
and underground stations. There must
be collection points where the growing
numbers of consumers can pick up their
purchases: already we are seeing retailers
adapt by providing these at some railway
and underground stations.
Consumer habits have also been changing
in the grocery sector, with a rapid expansion
in the number of convenience stores.
Increasingly, consumers are choosing to buy
their groceries in smaller quantities and more
frequently, and from a local store, rather than
buying in bulk from a large supermarket. The
retailers have responded by opening more
small stores, but have not yet addressed the
implications for their distribution networks.
The current arrangements are for bulk
shipments of goods to retailers large regional
distribution centres, from which they are
delivered to stores in the network.
Deliveries in large trucks may be appropriate
for large supermarkets, but not for small
convenience stores in busy urban centres,
where they can disrupt traffic flow. We
might therefore expect retailers to adapt
their systems in London, using smaller
delivery vans and possibly a network of local
distribution centres within the M25.
Figure 24. Retail in London: the building blocks and the challenges
The building blocks in place
The challenges
28 | London Futures Agiletown: the relentless march of technology and Londons response
Conclusion
To develop and maintain the talent pool
that London needs, forward planning
and successful policy implementation are
essential. The consequences of policy
failure would be of significant damage
not just to London, but for the wider UK
economy.
This report has identified issues that may
be of interest to business leaders and policy
makers as they develop strategies for the
future. Deloitte has already presented an
agenda for action, with suggestions about
the measures that London should be taking
to retain its pre-eminence as a global city,
and to meet the challenges of the changing
work place.
Deloitte agenda for action:
appoint a Chief Talent Officer for London
anticipate growing pressures on the
citysinfrastructure
strengthen the links between employers
and the education sector, to keep
London at the forefront of higher
education
develop teaching in schools so that
students are better-equipped to offer
skills that employers want from their
employees
keep London an attractive place for
talented people to work.
London Futures Agiletown: the relentless march of technology and Londons response | 29
Methodology
The Oxford study: Research by Frey and Osborne
Frey and Osborne identified three bottlenecks to automation of jobs: the skills of
perception and manipulation; creativity; and social intelligence. For their US study they
took detailed survey data from the 2010 version of the O*NET database, an online
service developed by the US Department of Labor. They systematically identified features
corresponding to the degree of each of the skills required to perform 702 occupations.
(The O*NET defines the key skills required to perform an occupation as a standardised and
measurable set of variables on a scale of 0to 100.)
In order to measure the risk to each occupation from automation, 70occupations were
hand-labelled, assigning a value 1 if automatable and 0if not. For these subjective
assignments, Osborne and Fey drew on a workshop held at the Oxford University
Engineering Sciences Department, examining the automatability of a wide range of job
tasks. They used a Gaussian process classifier to predict the probability of automation for
each occupation. This approach enabled them to identify irregularities in their handlabelling process so that they could correct for potential subjective errors.
For their UK research they made an assumption that occupations in the UK demand the
same set of skills as corresponding occupations in theUS. Totranslate the 702 O*NETSOC
occupations into corresponding occupations in the UK, they used the International
Standard Classification of Occupations (ISCO08), as advised by the ONS, and then
crosswalked these to their corresponding 369 UK SOC 2010 codes. As there are fewer
ISCO-08 codes than O*NET codes, some US occupations were merged for the purpose
of the UK study. For each merged occupational group, the probabilities of automation
were calculated as weighted averages of the probabilities of automation for each O*NET
occupation within the group.
Deloitte survey of London-based organisations
Deloitte conducted a survey among senior representatives of 100 organisations between
September 2014 and October 2014. The organisations that responded were made up in
part of exclusively based London organisations and in part by organisations that have their
premises and operations outside of London (60 per cent and 40 per cent respectively).
The industries represented include financial services; government and public bodies;
manufacturing and construction and technology, media and communications. The size
of organisations was based around the number of people they employ in Greater London
(10-100 employees (33 per cent), 101-200 employees (40 per cent) and more than 250
employees (27 per cent). All responses gathered were anonymous.
Respondents were individuals in senior roles within their organisation.
30 | London Futures Agiletown: the relentless march of technology and Londons response
Endnotes
1. The Future of Employment: How Susceptible are Jobs to Computerisation?, Carl Benedikt Frey and Michael A. Osborne. See also:
http://www.oxfordmartin.ox.ac.uk/publications/view/1314
2. Technology shocks and urban evolutions: Did the computer revolution shift the fortunes of U.S. cities?,
Thor Berger and Carl Benedikt Frey.
See also:http://www.oxfordmartin.ox.ac.uk/downloads/academic/Technology%20Shocks%20and%20Urban%20Evolutions.pdf
3 London: Enabling a World Leading Digital Hub, Deloitte and London First.
See also:http://londonfirst.co.uk/wp-content/uploads/2013/09/London-Enabling-a-world-leading-digital-hub1.pdf
4. Full Report - Graduates in the UK Labour Market 2013, ONS, 19 November 2013.
See also http://www.ons.gov.uk/ons/dcp171776_337841.pdf
5. Education at a glance 2014,OECD Indicators. See also: http://www.oecd.org/edu/Education-at-a-Glance-2014.pdf
6. Higher education in England 2014: Analysis of latest shifts and trends,
See also : http://heer.qaa.ac.uk/SearchForSummaries/Summaries/Pages/HEER000444.aspx
7. Education and Skills in your area London Region, Department of Education,
See also www.education.gov.uk/inyourarea/results/gor_H_las_3.shtml
8. Ibid
9. Learning to grow: What employers need from education and skills, CBI.
See also: http://www.cbi.org.uk/media/1051530/cbi__edi_education___skills_survey_2011.pdf;
10. Science and Technology Committee - Second Report
Higher Education in Science, Technology, Engineering and Mathematics (STEM) subjects
See also: http://www.publications.parliament.uk/pa/ld201213/ldselect/ldsctech/37/3702.htm
11. National Science Board Science and Engineering Indicators 2014
See also: http://www.nsf.gov/statistics/seind14/
12. Universities UK (2014), The impact of Universities on the UK Economy
See also:http://www.universitiesuk.ac.uk/highereducation/Documents/2014/TheImpactOfUniversitiesOnTheUkEconomy.pdf
13. QS world university rankings 2014: top 200
See also: http://www.theguardian.com/higher-education-network/ng-interactive/2014/sep/16/-sp-qs-world-universityrankings-2014
14. Ibid
15. The Deloitte Talent in Banking Survey, 2013
See also: http://www.deloitte.com/assets/Dcom-UnitedKingdom/Local%20Assets/Documents/Industries/Financial%20Services/
uk-fs-uk-in-focus-v2.pdf
16. Human Capital Trends Report, Deloitte, 2013: See also: http://www2.deloitte.com/global/en/pages/human-capital/articles/globalhuman-capital-trends-2013.html
17. The London Business Footprint: Mapping changes in the office market, Deloitte LLP, 2014
18 Moving Out: How Londons housing shortage is threatening the capitals competitiveness
See also: http://www.turnerandtownsend.com/moving-out/Moving_Out_SqK6H.pdf.file
19. London Boardroom Barometer December 2013 by London First and Deloitte. See also http://londonfirst.co.uk/wp-content/
uploads/2013/12/London-Boardroom-Barometer-presentation1.pdf
20. Click and Collect, UK, September 2014, Mintel
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