Loading summary
Transcript56 lines
- [00:04]
Ben Walter
Every small business owner has that one moment that could have broken them. But remarkably, it didn't. Hi, I'm Ben Walter, CEO of Chase for Business. And on season three of the Unshakeables, my co host Kathleen Griffith and I are bringing you more incredible stories of overcoming the impossible. We're really proud to share that the Unshakeables is nominated for Best branded podcast at the 2026 iHeart Podcast Awards. Listen to the Unshakeables wherever you get your podcasts and lear more@chase.com podcast JP Morgan Chase bank and a member FDIC Copyright 20 and 26 JP Morgan Chase Co.
- [00:40]
IBM Narrator
The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across hr, IT and procurement processes, we've reduced costs by millions, slashed repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business.
- [01:09]
Red Lion Hotels Narrator
IBM from coast to coast. Unlock adventure at Red Lion Hotels by Sonesta. Where restful, sleep, friendly service and trusted local knowledge are part of every stay. Red lion makes it easy to feel welcomed, comfortable and connected wherever the road takes you. Whether you're traveling for business or pleasure, you can spend less and make more of every trip. When you sign up for Sonesta Travel Pass, you'll get their best rates instantly. Go to sonesta.com to book your stay and unlock the best rates with Sonesta Travel Pass. Here today, Rome tomorrow. Join now@sinesta.com Terms and conditions apply.
- [01:46]
Francine Lacqua
Bloomberg Audio Studios Podcasts, Radio news. Welcome to in the City. Each week we unpack a story that's crucial to the world's financial capitals. I'm Francine Lacqua.
- [02:07]
Allegra Stratton
And I'm Allegra Stratton. So, Fran, it's been going on for years, but it feels like it's reached something of an apogee, this debate about artificial intelligence and its, of course, ability to deliver big productivity gains, particularly here in the uk, but also the problems with it.
- [02:23]
Francine Lacqua
Yeah, And Allegra, we've seen, we've even seen the government actually double down on this commitment to AI. Recently, the PM focused a cabinet meeting on how it could potentially be used to improve government services brought to living standards.
- [02:35]
Allegra Stratton
Right. And so for all of us, it is unclear how technology, this technology is going to reshape the economy. But we've got a report on Bloomberg that businesses are already changing the way they hire. A new study from McKinsey looked at how UK companies are reducing hiring for jobs and that they think will be impacted by AI. Postings for jobs were actually already down a crazy 38% in industries that will be affected by AI. So in our conversation today, we're going to get into what role AI will play is playing in solving the UK's productivity puzzle. Yes. But also more immediately how it is already changing the UK's job landscape.
- [03:17]
Francine Lacqua
Now joining us is James Kanagasoriam. James is Chief Research Officer at the AI enabled research firm Focal Data and has been instrumental in implementing data driven decision making processes across various sectors including finance and tech. So James, thank you so much for being on the show.
- [03:35]
James Kanagasoriam
Welcome to the City of London. The City of the City.
- [03:37]
Allegra Stratton
The City of London.
- [03:39]
Francine Lacqua
The next station is Bank. Please mind the gap between the train and the platform.
- [03:45]
James Kanagasoriam
The financial heart of the country.
- [03:52]
Allegra Stratton
The City.
- [03:52]
James Kanagasoriam
The City.
- [03:54]
Allegra Stratton
Welcome to in the City. Stand clear of the doors please. We are seeing a debate in America, particularly between big, big tech titans in different points of view, about whether AI will demolish the white collar employment cohort. We've had Ford CEOs say two weeks ago could be as many as 50% of jobs lost for white collar workers from automation. We've got the anthropic CEO saying he thinks 25, an increase of 20, unemployment. You know, these guys are kind of bidding to outbid each other with their apocalyptic rhetoric, but clearly there is, there is a problem. And then on the other hand, you've got the boss of Nvidia saying, guys, we're going to create more jobs through AI. Tell us where you stand.
- [04:40]
James Kanagasoriam
I would stand more in the former camp, which is that I can see the immediate upsides and I can see the fact that different countries might benefit from it differently. And I think the UK is potentially not that badly positioned given its kind of human capital stocks, the fact it has lots of businesses that are pretty adjacent to AI or are in AI itself. But the reality is that if you strip away all the rhetoric, firms that hire white collar graduates are hiring fewer of those people. And they're doing so in a degree that you would typically associate with a mass recession. So again, the numbers that you've talked about, whether it's 25%, 50%, those types of numbers in terms of cohorts of people rolling on, is what you'd associate with a mass financial crash. But the idea that that's a kind of permanent shift is pretty, pretty, yeah, pretty structural.
- [05:31]
Allegra Stratton
Sorry to interrupt you, James McKinsey, showed there was a 38% reduction in what they called AI exposed jobs.
- [05:38]
James Kanagasoriam
Yeah, exactly. And it depends on who's getting augmented and who's getting exposed. You know, I'm in one of those jobs in terms of market research, but lucky enough to work at a firm that is actually an AI market research firm. So I'm one of the, I work with a few small band of cohort of people who are getting augmented, who are hopefully at the forefront of this rollout of this technology. But there are much wider societal impacts. Like what does it mean to literally have a milk ground that is a third to half the size of what it is before? What does that mean for the tax base? What does that mean for the university education sector? And the number of people graduating with degrees who expect to go into white collar jobs? Like a lot of politics and social issues are basically downstream of the gap between people's expectations and then what is delivered in terms of society, jobs and pay. And the third thing is, obviously what's really interesting about this is that this is clearly differentially affecting a group of people that you would not necessarily associate with being left behind. Right. We're talking about graduates who would have expected to basically earn good to great salaries over the course of their careers, who are probably living in cities who could expect some kind of graduate premium. Then they're suddenly walking into a job market where none of these things exist. But they've already crystallized a lot of the downsides. So they already have, for example, debt from university, they have already moved to cities that have high house prices.
- [07:08]
Francine Lacqua
I speak to a lot of CEOs and I mean, these are big CEOs that should 100% understand what AI means for their workforce. And frankly, they're not. I mean, you know, you'll have coffee with them and they say, I'm looking at AI training, but I don't 100% understand how it's going to impact my organization yet. We also spoke to the Accenture CEO and she was saying they're training 500,000 staffers because the consulting work in AI is increasing by so much. So do, do we actually have a full understanding of the impact of AI in the next three, four, five years and what sectors will be most affected?
- [07:46]
James Kanagasoriam
Yeah, I think it's a really good question, like how much of the analysis is evergreen. One thing that I, when I first started this kind of geographic analysis of which jobs were more exposed to AI and therefore what were the kind of community impacts. The thing that really struck Me in a UK context was the government's own analysis of which Jobs were AI exposed is basically the opposite in 2023 to its initial analysis in 2019. In other words, the jobs, the geographies, the education levels that people thought were going to be automated are not just slightly different, but they're almost the opposite. Back in 2019, the Department of Education, I think released a paper that basically indicated that a lot of the areas that were going to be AI exposed were the same areas that suffered from deindustrialization. That is now the opposite of what the analyses are saying, which is actually the jobs that are AI exposed are far more white collar. But again, these are very broad terms. The analyses that a lot of these things are based on is around emerging technologies. Those technologies change, the mix changes, the applications change. One of the bits of feedback that I thought was very interesting to my substack around it was a financier called James Wise, who's one of the lead partners at Balderton, who invests a lot in this area. And he said, look, okay, fine, you've pointed out that white collar jobs are more vulnerable than blue collar, but look at the advances in robotics. So he, he was even potentially painted in even a more challenging picture. But I do think there's obviously going to be a one off cohort effect to people who are clearly going to benefit, right? And we're going to hear a lot from them and we're going to hit that. They're very florid about how the ships might increase things like productivity and efficiencies. But I'm taking a step back and thinking fundamentally this is a complete re engineering of the wider structure of how societies work. We're potentially losing mass seams of upper middle class citizens who very disproportionately form a massive part of the tax base, for better or for worse. And the fact that this is happening at such a high cadence and pace means that policymaking, or whether it's corporates find it quite hard to distill. For me, the most interesting thing really about all of this was I was speaking to the ex chairman of YouGov, a gentleman called Roger Parry, quite interesting guy. He's sat on many boards including companies like Uber and he was saying, look, there's a degree of parallels to the initial rollout of the Internet, which was back in the day when it first happened. These boards would often get the IT guy whose job was hardware to explain the Internet to boards and maybe were a little bit in that a phase where we're not quite sure who the experts are, what is the information that companies need to do, what are the parameters, how is that communicated to workforces?
- [10:47]
Francine Lacqua
But James, it's not showing up in data yet, right? If what you're explaining is true, then unemployment should go up. It hasn't gone up yet. So is there going to be, is it like a small drip feed where you lose jobs, you don't really understand why the industry is changing and no one really realizes, or is it going to be like a recession where suddenly that's it, you lay off thousands, thousands of staff in a company?
- [11:13]
James Kanagasoriam
So my job, I'm not an economist, my job isn't to forecast the labor market. What I can fundamentally see though is the displacement and substitution that's happening is not offset yet by the creation of new roles. But we can see new roles, right? I see them in my own firm. People who are concentrated around customer success or people who are evolved around sales, or people that are used to basically take these technologies and deploy them. People are getting augmented. There are new roles, there is a degree of creativity. But the loss of 30 to 50% of a white collar industry, that is mass displacement, we should be thinking about this in exactly the same terms as we think about, for example, when oil runs out of a particular area, what does that look like? So the uk, that context, that would be North Sea oil, we should be talking about this is like de industrialization equivalent but on steroids.
- [12:12]
Allegra Stratton
Do you see that, James? Do you? What is, what are those? I mean, obviously it's sort of difficult to dynamically predict what new jobs spring up because of AI. But certainly that is Nvidia CEO's position, isn't it, that the jobs are going to be more and they're going to be better. But as you say, we're not yet necessarily completely take your point that you can see in your own firm. But are they as many jobs as the ones that have been displaced, do you think?
- [12:36]
James Kanagasoriam
I'm skeptical is what I would say, but jury's out. We're just at the foothills of these pretty large shifts in both the labor market and how we understand work. A lot of companies don't know how they would create the new jobs that exist. The Duolingo CEO, Right, saying we're not hiring anyone if we think they're exposed in any kind of way. I think we're still getting to the stage where we're trying to understand what are the jobs that can be expanded, what are the ones that can be augmented. It's clearly not going to be all negatives. And it's clearly not all going to be positives from this aspect, but certainly from what I can see in the most automatable industries. Take something really, really basic. Like a young investment banker would spend a lot of their time building things like discount cash flow models in Excel and pulling financials and doing research into certain sectors. These are jobs that cannot just be done with a few lines of code, but can also then be done by a lot of these technologies. And we're talking now, I was thinking about my first graduate job when I worked in the city and I was just thinking how few people would now be needed to conduct that. I mean there's a much wider conversation to be had about skills and training. So how do people become experts in an era where basically the whole of society has this big red button that they can push to basically push the buck automatically?
- [14:02]
Francine Lacqua
Get a lot pushed by us or someone?
- [14:04]
Allegra Stratton
No, no, no, but that's, I mean this is, I want, this is what question I wanted to ask you. I mean Neil Ferguson was writing a couple of weekends, the historian and economist writing a couple of weekends about setting up a university and the university is not going to allow the use of AI. So how much do you think in the years ahead, maybe not immediately, maybe he'll be an outlier for a while, but how much is some of this going to be about the kind of refuse nick mentality which is, yes, AI can do a whole lot of this, but at some point, if we think we're looking at 30, 50% unemployment, we have to choose not to do some of this.
- [14:34]
James Kanagasoriam
So there's a lot of different things baked into that question, Sorry. The first is what does it know? It's brilliant, I love it. There's like what. The first is what does it do to people's kind of learning frameworks? Mit I think have recently released a paper on what the consequences are for using LLMs and different aspects of AI. Basically it leads to quite a drastic reduction in basically your computation. In other words, we're basically leasing out bits of our brains for technology to basically execute. I think we'll start to see AI free labels like we do with food, with organic and that. You might start to see kind of things like two tier pricing systems where what people are really trying to parse. Because when you pay for something you've obviously got cost based pricing, but then it's how does someone value that? And it's the idea, let's say you've got a consultancy that comes in and does A project for you and you know that it's all kind of been done with human minds versus ones that's been augmented. Will people start to think about that pricing differently? I don't know. Will people be happy to pay the same half million pounds for a consulting project if they know that it's basically been conducted by one human and ten bots and one copilot? Maybe we don't know. This is really at the kind of frontier of kind of human psychology and economics. But I do think you'll start to see the refuse nix, as you put it, Allegra, both in terms of political parties.
- [16:01]
Allegra Stratton
Am I giving away too much of my.
- [16:03]
James Kanagasoriam
What I. Yeah, I'm actually more, I'm more optimistic than my, perhaps my column indicated. I was giving the bear case about how it's going to change our politics as opposed to kind of a labor market thesis, which is that all the people who've done quite well basically out of a globalized financial system, expanded higher education and slightly medium to large immigration levels, there's a group of people who've done pretty well. They all live in certain parts of the UK and the US and other English speaking countries. Those appear to be the same geographies that are most AI exposed, which produces a very interesting politics of people who've previously done very well starting to feel
- [16:46]
Allegra Stratton
much more threatened, left behind, as we say.
- [16:49]
Francine Lacqua
I mean, that feels like the Trump vote already, doesn't it?
- [16:53]
James Kanagasoriam
Well, for me one of the really interesting things of politics over the last 25 years has been this decoupling of people's income, household income and basically their levels of education. Because back in say for example, the early 90s, really up until about 2010, they kind of walked in lockstep. If you went to an area that had lots of people who'd gone to university, it was probably richer and there were some differences. But I think what we've seen basically since higher education has been expanded out to be 50% in a lot of countries, but actually the promise then of that delivering higher incomes has declined. And also the growth of secure blue collar employment has meant this really odd decoupling of the two. And I think Thomas Piketty was really the guy who is the economist who is most famous for his work on inequality. But he pointed out actually the future that we may see is of secure blue collar workers, which he called the merchant right, making a march on society versus what he called the Brahmin left, which is the person who's got three degrees but no mortgage and very, very low salary. And I think we haven't quite thought through what the consequences of that because the politics in those two groups are drastically different to classically left and classically right.
- [18:13]
Allegra Stratton
One question on just kind of the politics of the left and right that we have right now. You've worked in politics yourself, James, and listeners don't know, but when I first came across you, as we say, you were the guy who coined the term the Red Wall, didn't you? It was really brilliant analysis and it has come to live and live and then get smashed down as well as a political entity. But how do you think this government, do you think this government, the labor government, is understanding the scale of what we've been talking about? And then the country that I've been reading about recently, Sweden, they brought in a furlough type scheme to help people skill up while in work in order to deal with these sort of existential threats. But we can't really necessarily afford that right now.
- [19:01]
James Kanagasoriam
Yeah, very interesting couple of points. So the first is the whole political system, whether it's the UK or us, is currently dealing with what you could only describe as an omni crisis of the arrival of AI, geopolitical instability, financial market instability. Particularly think about the UK and the potential for a debt crisis. There is not necessarily the bandwidth or the expertise within government to basically parse and understand these technologies and then work out what should we do? Because they're basically trying to survive day to day. Governments, as you well know, Allegra lives pole by pole and this one has lost 20 points in less than a year and a half. So are they going to be doing the long term thinking about what the labor market is going to be looking like when effectively they've lost the most amount of vote share for a majority elected government in living memory? Unlikely. Do they have the MPS? Do they have the MPS to understand? There are good MPs that sit on the government benches who really understand this. You see them. You know, I think there's the labor growth group, I think a lot of MPs there who are very interested in the sector. I think MPs like Jake Richards, Kanishka Narayan, who really understand some of these kind of technologies, who are kind of thinking about what the long term kind of consequences are. But let's, you know, will the UK have the appetite for another furlough scheme? Depends. I think a lot of the issues that we have now is that the UK is quite vulnerable in terms of its, its debt pile, its deficit, the problems it has with its labor market, the number of people who are out of work. I think the idea that there's going to be another labor market collapse that's going to require unilateral government support might wear thin on voters. Very, very interested to see where the markets would absorb it. Like the idea that we still paying
- [20:49]
Allegra Stratton
for the last one.
- [20:50]
Francine Lacqua
But they are, James, our white collar workers. I mean, do they tend to vote conservative or labor? Because one of the best analyses that I've ever seen was actually the fact that you start maybe a little bit idealist at 18, 19, 20 years old and then you buy a house and you turn a little bit more to the right. And actually if you can't afford to buy a house anymore, then it completely changes the politics and it changes the politics of this country. Can you see the same with actually AI? What's the analysis?
- [21:17]
James Kanagasoriam
Yeah, so in terms of white collar work, how people split politically is very much down to a couple of axes. So I'll just run through them. So the first is basically where is your wealth from? So in general, if the white collar work is a function of business that is very government adjacent or is actually government, those voters, irrespective of their age, tend to tilt to the left. So that might be, for example, working for a ngo, it might be working for a quango or kind of government body, or it might be working for a company who, the majority of whose contracts are basically at the pleasure of federal government spending and where the work is much more downstream of kind of pure play private sector that tends to tilt much more to the right. Then you've got age where that's a clear effect as you just described. Then of course, if we're just talking about white collar work, talk about industry. So industries have hugely different political tilts. In the US we know this from donation data where you can basically track who's donated to which party in aggregate by industry. Certain industries tilt much more strongly to the right. They tend to be more in kind of computing, parts of finance, particularly those more to do with kind of asset management, real estate. And then there are other sectors that tilt very strongly to the left, whether that would be the education sector, the health sector. Again, the other thing to think about is unionization. You think of people who belong to unions as all blue collar. They're not millions of private sector union members. That's another very, very strong tilt. So I think the answer is it's quite complicated. But the effect of AI, I think is to rob countries of a classic kind of managerial cohort of people that's sufficiently Large and I wonder where they're all going to go. Because I think what we're seeing with a lot of these kind of what you call scalable companies is there aren't that many people who work in them versus their size. And I'm not sure we thought about what that looks like in terms of white collar wealth.
- [23:25]
Allegra Stratton
Okay, let's take a turn for the more optimistic. You said halfway through this conversation that actually your piece was bearish, but give us the bull case in two sentences. Why is it going to be okay? James?
- [23:44]
James Kanagasoriam
So the thing I'm very bullish on is that we are going to see a reappraisal of the qualities of creativity and intellectual plasticity and dynamism. Why? Because actually if you look at the analysis, if you're wondering where does this AI exposure analysis all come from? It's very boring because I should go through the methodology. But basically you can break down human skills into 52 components. A typologist called, yeah, yes, this is a lot. A guy called Fleischer broke down basically human skills and capabilities into 52 dimensions. And then basically most of the AI exposure analysis is basically taking those 52 skills and asking across each one, what is the degree to which that skill is exposed to a certain type of technology. Now for me, what was very interesting when I did the initial analysis, so it's basically a matrix, is the skills, the human skills that are least exposed are creativity and kind of problem solving and kind of domain switching. In other words, that kind of intellectual dynamism and being able to kind of context switch. And for me that's really interesting because it kind of reminds us what's very human and what we most value in people. And I'm very interested to see whether education systems start to kind of re engineer around that. Like how much of the processes and education exams we have to really examine pure intellectual creativity, quite sceptical.
- [25:19]
Francine Lacqua
It puts introverts at a natural disadvantage.
- [25:23]
James Kanagasoriam
It depends on your definition of creativity. Someone could write something that's an incredible memo that explains the world in a different way, in a way that you'd never thought of before. But they never spoke it, they just delivered it into your inbox. Creativity can have all sorts of import. I do think on the kind of what is it the humans are going to do? It's going to be around communication, connectivity, people still sell to people, people still talk to people. And you're right, there's a bit of humanity there that's much more kind of of extravert, kind of tilted. That's going to have some value. But you know, these things come in waves. The key thing is these technologies keep on changing. The point that James Wise, I spoke about earlier in terms of robotics, that may change things up again. Let's see.
- [26:14]
Allegra Stratton
Okay. All right. Well, we got there. We got there. To upbeat. To an upbeat note. Thank you so much for joining us, James.
- [26:23]
Francine Lacqua
Thank you, James.
- [26:24]
James Kanagasoriam
Thank you both.
- [26:28]
Allegra Stratton
So we have some news, everybody. This is actually our last in the City episode.
- [26:33]
Francine Lacqua
Oh, Fran, I know. The crying emoji is in full force in the podcast studio. We've had so much fun, Allegra.
- [26:40]
Allegra Stratton
Huge fun. It's been sort of like a little Bloomberg confessional for our guests and occasionally for us. You can't see it at home, but it's a small podcast studio, but it's got surrounded by glass and we can see lots of people working outside on Bloomberg terminals. So it has a very good atmosphere in here.
- [26:56]
Francine Lacqua
Yeah. And it's also nice to work with colleagues that you respect and kind of exchange ideas with and every week trying to figure out the topic of the week and actually how we can make a little difference in explaining things that are not always easy to understand or understood by everyone.
- [27:11]
Allegra Stratton
Totally. It's made me sharper and know and hear about things that I wouldn't have done otherwise. So thank you, Fran.
- [27:18]
Francine Lacqua
No, it's been great. We're missing Dave.
- [27:20]
Allegra Stratton
Exactly. Thank you. In absentiating, Dave Merritt and all of the brilliant Bloomberg reporters who you will all be familiar with who join us so often. It's been a blast.
- [27:29]
Francine Lacqua
It has been. And thank you to our producers, but keep an eye out on the feed because we have something new. It'll be coming out soon, so more conversations with great guests and we'll tell you more soon about that.
- [27:41]
Allegra Stratton
Da, da, da.
- [27:56]
Cincinnati Insurance Narrator
If you follow markets, you know the value of long term thinking. You plan, you diversify, you prepare for volatility. But in life, even the best strategies can't prevent every bad day, a fire, a loss, a disruption that demands immediate attention. When that happens, what matters isn't just what you planned. It's who shows up. That's where Cincinnati Insurance comes in. For more than 75 years, they've helped individuals and businesses navigate life's toughest moments with care, expertise, and personal attention. Together with independent agents, Cincinnati Insurance focuses on relationships, not transactions. Their approach is grounded in experience, follow through and trust built over time. Bad days happen, and when they do, you deserve an insurance partner who understands risk, respects what you've built, and is ready to help you move forward. The Cincinnati insurance companies. Let them make your bad day better. Find an independent agent@cinfin.com from coast to coast.
- [28:58]
Red Lion Hotels Narrator
Unlock adventure at Red Lion Hotels by Sonesta, where restful sleep, friendly service and trusted local knowledge are part of every stay. Red lion makes it easy to feel welcomed, comfortable and connected wherever the road takes you. Whether you're traveling for business or pleasure, you can spend less and make more of every trip. When you sign up for Sonesta TravelPass, you'll get their best rates instantly. Go to sinesta.com to book your stay and unlock the best rates with Sonesta Travel Pass here today, roam tomorrow. Join now@sinesta.com terms and conditions apply.
- [29:31]
Okta Narrator
These days it seems like AI agents are just about everywhere you turn every field and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Okta helps you get identity right by securing your AI agents identities, giving you a single layer of control, a single standard of trust. So whether an AI agent supports a single user or your entire enterprise, with Okta you'll turn risk into opportunity. Secure every agent. Secure any agent. Okta secures AI.