This pattern is embodied in the MPC’s forecasts, with wages projected to outpace productivity in the next few years (Chart 31). Put differently, growth in unit wage costs is expected to pick up and the labour share to rise fairly sharply (Chart 32). That path is certainly plausible if cyclical factors are the key drivers of the low labour share. But there may be alternative forces at play. If substitutability between labour and capital is higher than in the past, labour’s bargaining power and share of income might be commensurably lower, as we have seen across a number of countries before and after the crisis. So how different might the MPC’s projections look if the labour share was, say, flat rather than rising over the next few years? Charts 32 and 33 show the path of wage growth and inflation that would imply. Wage growth is weaker, averaging around 3¼% rather than 4½% at the year three point. So too is consumption given weaker take-home pay, though this is largely offset by stronger company profits and higher investment, leaving aggregate output little altered. The upshot is a materially lower path for inflation than contained in November’s Inflation Report: inflation reaches around 1.6% at the two-year horizon and remains around these  12  BIS central bankers’ speeches  levels. That would put the balance of risks squarely towards a more protracted undershoot of the inflation target, even without any downdraught from external prices and demand.
Research by Carl Benedikt Frey and Michael Osborne has tried to quantify this hollowing-out, by assigning probabilities to certain classes of job being  8  BIS central bankers’ speeches  automated over the course of the next few decades. Their work was initially done for the US, but has recently been extended to the UK (Frey and Osbourne (2013), Deloitte (2015b)). Using this methodology, the Bank has recently done its own exercise for the UK. Table 3 classifies jobs three ways in the US and UK – high (greater than 66%), medium (33–66%) and low (less than 33%) probability of automation. It also shows the fraction of employment these jobs represent. Chart 27 provides a more granular breakdown of these jobs. For the UK, roughly a third of jobs by employment fall into each category, with those occupations most at risk including administrative, clerical and production tasks. Taking the probabilities of automation, and multiplying them by the numbers employed, gives a broad brush estimate of the number of jobs potentially automatable. For the UK, that would suggest up to 15 million jobs could be at risk of automation. In the US, the corresponding figure would be 80 million jobs. The BBC website contains a handy algorithm for calculating the probability of your job being robotised. For an accountant, the probability of vocational extinction is a whopping 95%. For a hairdresser, it is 33%. On these numbers, the accountant’s sun has truly set, but the relentless upwards ascent of the hairdresser is set to continue.