This document discusses the challenges of technological disruption and how it will require more than institutional reform alone. It notes that the next wave of technologies may be highly disruptive to the workforce. Additionally, many firms are already failing to adopt even basic technologies, and this could worsen with further disruption. The lingering effects of the financial crisis have increased economic anxiety, particularly for young people. While good market frameworks are necessary, the experience of the last 20 years shows they are not sufficient to drive private investment and address the challenges of technological disruption.

1. Reflections on Firms, Workers and Disruptive
Technologies
Dr Dan Mawson

2. Dealing with the next wave of technological disruption requires
more than thinking about institutions and incentives
• Evidence suggests that the next wave of technologies will be more disruptive to the
labour force – requiring greater emphasis on lifelong learning and reskilling
• Our institutions are designed for a different set of challenges, and in many cases
these roles in society are deeply culturally entrenched
– For a high skilled worker in the UK, using a Job Centre perceived as a sign of failure
• Shifting peoples’ perceptions of these institutions likely to be a harder task than
reforming them or building new ones from scratch
– Do we need to think harder about the ‘Intangible Capital’ of market institutions…

3. It should also be seen in the context of the large number of firms
who are already failing to keep pace with basic technologies
The UK has a longstanding debate about why poor
performing firms survive
• A lot of the debate centres on weaknesses in
management practices in small firms
• But increasingly attention is also turning to
low rates of technology adoption
– e.g. why are many firms not using basic
software tools to speed up their accounting?
• Paradox? Consumer technologies like
smartphones are everywhere…
Distribution of management scores by employment
size bands (Great Britain, 2016)

4. We also need to think about how peoples’ behaviours may have
been altered by the lingering effects of the financial crisis
Pessimism about young people’s prospects is common
across advanced economies
In the UK, this anxiety primarily relates to young
peoples’ economic prosperity
Source: Resolution Foundation (2018) A New Generational Contract: The final report of the Intergenerational Commission

5. Looking back on 20 years of UK productivity policy, the main
lesson is that good market frameworks are not enough
• The UK recently did an internal review of our performance on the ‘Five Drivers of
Productivity’, the productivity model we used in the late 1990s early 2000s
– No systematic impact from the financial crisis – some drivers have tended to worsen
(e.g. enterprise), but in others performance has improved (e.g. innovation)
– The UK has generally maintained or improved its performance on framework
conditions and educational outcomes
– However private spending on productive assets has generally declined, or still ranks
poorly relative to our peers
• Our faith in the ability of improved skills plus better framework conditions to
leverage more private investment has not been borne out
– Implies they are necessary, but not sufficient

6. Summing up
• Managing the latest wave of technological disruption will require more than just
institutional reform, it needs cultural shifts as well
• Many firms already do not use relatively basic technologies; as the latest wave of
disruptive technologies starts to accelerate, will they fall further behind?
• We also need to think about how this disruption is going to play out in the post
financial crisis Age of Anxiety
• Good (horizontal) market frameworks are necessary but not sufficient