This article was published by The McAlvany Intelligence Advisor on Friday, November 10, 2017:
The short answer is: they will find other work. They will also find that other work to be more rewarding, higher paying, more satisfying, and providing greater benefits to others than they did while working for the bank. That’s how the free market operates, when it is allowed to.
It’s not that those DB employees didn’t have fair warning. In September, DB’s CEO, John Cryan, hired in 2015 to turn the bank around, told them:
We have to find new ways of employing people and maybe people need to find new ways of spending their time. The truthful answer is we won’t need as many people. In our banks we have people behaving like robots doing mechanical things. Tomorrow we’re going to have robots behaving like people. (Emphasis added)
On Wednesday he announced not only that the pink slips were coming, but how many: “We employ 97,000 people. Most big peers [our competition] have more like half that number.”
He went further: who would be getting the axe? Anyone involved in banking processes, working in cubicles, managing customers’ accounts, tracking investors’ positions, filing financial reports – in other words, any job that a human is currently doing that can be done more efficiently by a robot:
There we’ve got the most to gain. We’re too manual, which can make you error-prone and it makes you inefficient. There’s a lot of machine learning and mechanization that we can do….
[Accountants, for example] spend a lot of their time basically being an abacus.
Once the world’s largest bank, DB is now the 16th largest, having been hammered not only with stricter banking regulations but with penalties for bad behavior and high legacy pension costs. Brought on in 2015, Cryan created a five-year plan, Strategy 2020. He had hoped that by now the bank would have returned to significant profitability, defined as 10 percent return on equity. In the third quarter it was just four percent. He’s already fired 4,000 people, with another 5,000 holding their collective breath. By the time he’s done, the bank will employ half the 97,000 people it currently has on its payroll.
Most people ask: where are 50,000 people going to find work? Oh, no! This is awful! Anti-capitalists will use the layoffs to attack the capitalist system that allows such misery.
Let’s dissolve those concerns right now. First, not all those operating abacuses in their cubicles will be let go immediately. They know their jobs are vulnerable. They’ve read the Oxford professors’ report issued back in 2013: “The Future of Employment: How Susceptible are Jobs to Computerization?” They’ve read their conclusions:
According to our estimates around 47 percent of total US employment is in the high-risk category. We refer to these as jobs at risk – i.e. jobs we expect could be automated relatively soon, perhaps over the next decade or two.
Surely those on the bubble know that technology has speeded up the timetable, with robots being programmed to do more and more of humans’ work, without the pension benefits required. They’ve seen the YouTube video of how Mercedes builds its cars using robots (see Sources below for the link). If they are at all perceptive, they are already making plans.
They’re likely to be given buyouts – not enough to retire on but enough to provide seed corn for their next position. They’ve already spent time online doing job searches, using websites like ZipRecruiter, Indeed, SimplyHired, GlassDoor, Monster, CareerBuilder, and others.
And what are they finding? Macroeconomically they are finding a global economy that is growing by three percent annually, with estimates that that growth will continue into the foreseeable future. On a micro basis they are finding the best growth in unexpected corners: undersea exploration, entertainment, video streaming, writing, leading expeditions, giving classes at the local library where they’re allowed to sell their books and services. There are those who will be invited to stay at DB, which will need computer software engineers to develop the software for the robots that just took their jobs. There will be new management positions opening to give direction to the new developers.
Those who aren’t offered positions will discover opportunities in health care, assisted living complexes, writing, and performing. They will discover opportunities in space and undersea exploration, teaching snorkeling, doing underwater research for various non-profits. In other words, people exiting DB will find a whole new world of opportunity that they never dreamed of or would have discovered had they been kept in their cubicles with their abacuses.
They will, looking back, learn that the pink slip they are shortly about to receive will become a ticket to ride.
THE FUTURE OF EMPLOYMENT: HOW SUSCEPTIBLE ARE JOBS TO COMPUTERIZATION? By Oxford Professors Carl Benedikt Frey and Michael A. Osborne, September 17, 2013