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FLEXIBLE AUTOIJIATION: TWO APPROACHES TO THE ASSESSMENT OF EMPLOYMENT IMPACTS
W.E. Goldberq April 1983 CP-83- 19
C o Z Z a b o r a t i v e P a p e r s report work which has not been performed solely at the International Institute for Applied Systems Analysis and which has received only
limited review. Views or opinions expressed herein do not necessarily represent those of the Institute, its National Member Organizations, or other organi- zations supporting the work.
INTERNATIONAL INSTITUTE FOR APPLIED SYSTEMS ANALYSIS A-2361 Laxenburg, Austria
PREFACE
T h i s p a p e r on f l e x i b l e a u t o m a t i o n w r i t t e n by D r . G o l d b e r g was p r e s e n t e d t o a IIASA workshop which was h e l d i n J u n e 1 9 8 2 i n
B e r l i n (GDR) and o r g a n i z e d by t h e Management a n d T e c h n o l o g y Area i n c o o p e r a t i o n w i t h t h e Academy o f S c i e m e s o f t h e GDR.
T h i s p a p e r i s p a r t i c u l a r l y i n t e r e s t i n g i n s e v e r a l r e s p e c t s . F i r s t l y , i t a d d r e s s e s t h e p r o b l e m which c o r r e s p o n d s t o t h e
I n s t i t u t e ' s i n t e r e s t . The main i s s u e a d d r e s s e d i s t h e i m p a c t a s s e s s m e n t o f f l e x i b l e a u t o m a t i o n i n employment. Two methodolog- i c a l a p p r o a c h e s a r e p r e s e n t e d i n t h i s p a p e r .
S e c o n d l y , D r . G o l d b e r g s e l e c t e d t h e s e r v i c e s e c t o r i n
g e n e r a l a n d b a n k i n g i n p a r t i c u l a r a s a c a s e s t u d y . A s f l e x i b l e a u t o m a t i o n i s more common i n i n d u s t r y , e s p e c i a l l y i n m a n u f a c t u r - i n g , t h a n i n t h e s e r v i c e s , h i s p a p e r f u l f i l l s a c e r t a i n p i o n e e r - i n g m i s s i o n .
T h i r d l y , t h e m e s s a g e o f t h i s p a p e r c a n b e i n t e r p r e t e d a s t h e s t u d y o f s e l e c t e d s o c i a l a n d s o c i e t a l e f f e c t s o f modern i n f o r m a - t i o n t e c h n o l o g y .
D r . G o l d b e r g ' s p a p e r p r o v e s t h a t t h e i m p a c t a n a l y s i s o f modern t e c h n o l o g y d e s e r v e s a n i n t e r d i s c i p l i n a r y a p p r o a c h .
T i b o r Vasko Chairman
Management and T e c h n o l o g y A r e a
FLEXIBLE AUTOMATION : TWO A?PROACIIES TO THE ASSESSMENT OF EI4PLOYlIIENT IMPACTS W.H. Goldberg
A i m s , Overview, C o n c l u s i o n s
A p p l i c a t i o n s o f f l e x i b l e a u t o m a t i o n (FA) a t l a r g e have s o f a r a l m o s t e x c l u s i v e l y been c o n f i n e d t o t h e m a t e r i a l s conver- s i o n and p r o d u c t i o n s e c t o r of i n d u s t r y . The p o t e n t i a l f o r t h e a p p l i c a t i o n o f FA i n t h e r e a l m of a d m i n i s t r a t i v e and c l e r i c a l work and t h u s i n t h e s o - c a l l e d s e r v i c e s e c t o r s of t h e economy i n g e n e r a l a r e a t l e a s t a s i m p o r t a n t a n d , t h u s , d e s e r v e p r o p e r r e c o g n i t i o n a n d t r e a t m e n t . T h i s c h a p t e r d o e s n o t aim a t a com- p r e h e n q i v e o v e r v i e w o v e r a p p l i c a t i o n s and t h e p o t e n t i a l of F A t o t h e s o - c a l l e d t h i r d s e c t o r and i t s f u n c t i o n s . I t r a t h e r draws a t t e n t i o n t o some r e c e n t g e n e r a l s t u d i e s o f t h e f i e l d and t h e n goes i n t o some d e t a i l i n t o t h e a p p l i c a t i o n o f f l e x i b l e automa- t i o n i n t h e b a n k i n g s e c t o r . For t h a t p u r p o s e , two s t u d i e s of q u i t e d i f f e r e n t t h r u s t and aim, b u t b o t h c o n c e r n e d w i t h t h e b a n k i n g s e c t o r , a r e b e i n g p r e s e n t e d a n d , t o some e x t e n t , compared. ::
T h e ' s t u d y f o c u s e s on m e t h o d o l o g i c a l a p p r o a c h e s t o t h e a s s e s s m e n t o f c o n s e q u e n c e s of t h e i n t r o d u c t i o n of f l e x i b l e a u t o m a t i o n i n t o s e r v i c e t a s k s ( a s i l l u s t r a t e d by examples from t h e b a n k i n g s e c t o r ) r a t h e r t h a n l i s t i n g t e c h n o l o g i c a l a p p r o a c h e s and s o l u t i o n s . t o t h e f i e l d . The r e a s o n f o r t h i s c h o i c e i s t h a t t e c h n o l o g y by n e c e s s i t y i s d i f f e r e n t i n c h a r a c t e r and import- a n c e when i t comes t o a n a l y z i n g v a r i o u s s e c t o r s and s u b s e c t o r s w i t h i n t h e f i e l d of i n t e r e s t . Technology a l s o i s c h a n g i n g q u i t e r a p i d l y and w i l l change s t i l l f a s t e r once t h e s e r v i c e s e c t o r
:: P e r m i s s i o n t o q u o t e from HedberglMehlmann (1 9 8 2 ) h a s been k i n d l y g r a n t e d by t h e a u t h o r s a s w e l l a s 5y t h e p u b l i s h e r , A r b e t s l i v s c e n t r u m , Stockholm.
Seccmes a central focus of interest for the introduction of flexible automation.
The two exam~les also demonstrate quite different points of view. Their points of departure and their missions differ:
one example is a rather intensive description of a subset of an econometric model to the assessment of employment and econ- omic consequences of the introduction of microprocessors not only into an industry, but also into a national economy. The other one aims at the assessment of employment and social as well as societal consequences of further automation in banking.
It aims also at conclusions towards the development of strat- egies to cope with technological change in the banking industry.
Prologue
When attempting to define flexible automation operation- ally, as no exact definition exists, one may say that it aims at the solutionrof tasks implying degrees of variability which by traditional means would have requested the presence of human operators. The presence/participation of human operators is reduced by automata to a greater or lesser extent. The vari- ability is achieved either by automatic or semi-automatic setting of paraneters/variables, which may be activated by objects in treatment/process (e.g.. their characteristics or by signals attached to them), by programs (which may be triggered by operators or by cues attached to objects under treatment) or by users. Combinations of those are not only possible but also quite common.
The definition of flexible automation in the service-sec- tor is not identical with "information technologies", nor does it mean micro-electronization. It may, however, comprise both, to greater or lesser degrees.
Flexible automation, by this definition, is by no means confined/restricted to physical ~roduction processes but may very well comprise "services" of various kinds.
This chapter aims to exemplify applications of flexible automation to the service sector and, by means of examples, to explore some of the consequences of FA when applied to services.
A total coverage of "the" service sector is not possible within the given frame of space (and resources)
.
Thus, tke methodo- logical approach to the examples chosen will be emphasizedrather than.the examples as such. The aim is to demonstrate how in principle one could go about to assess the potentials as well as the consequences of various types of FA to other seg- ments of the service sector or to administrative tasks/func-
tions in general in industry, in the public sector or in similar fields.
Motives to Automate
A few remarks should be made about the motives for and general attitude towards automation.
The m o t i v e s t o i n t r o d u c e a u t o m a t i o n a r e m a n i f o l d a n d ob- v i o u s l y n o t u n i f o r m i n d i f f e r e n t s e c t o r s a n d i n d u s t r i e s . I n a r e c e n t s t u d y o f m o t i v e s t o a u t o m a t e ( f u r t h e r ) ( S c h o l z 1 9 8 2 a ) i n a s a m p l e o f 2 , 6 0 0 i n d u s t r i a l e n t e r p r i s e s i n t h e F e d e r a l R e p u b l i c o f Germany, t h e f o l l o w i n g s i x ( o u t o f 1 4 ) m o t i v e s a r e m e n t i o n e d m o s t f r e q u e n t l y ( r a n k o r d e r s , :: = e q u a l r a n k ) .
. T a b l e 1 : M o t i v e s t o I n t r o d u c e A u t o m a t i o n i n I n d u s t r y
Producers of Producers of Producers of Food
raw materials mchinery consumer Producers
and semi- goods
finished p d -
Increasing productim
f l a i b i l i t y 5::
Cuttinc3 c o s t
of materials 2
C u t t i n g energy
consuxription 1
Cutting cost
of personnel 5::
Cutting waste 4. 9 5 5::
Inproving
~arlung
conditions 5::
T h e c l o s e r t o t h e c u s t o m e r t h e p r o d u c t i o n i s , t h e more waqes seem t o m a t t e r . F l e x i b i l i t y , t h r o u q h ~ u t t i m e , s a v i n s s o f
e n e r g y a n d , i n t h e r a w m a t e r i a l s s e c t o r , s a v i n g s o f m a t e r i a l m a t t e r . A l s o t h e i n c r e a s i n g i m p o r t a n c e o f t h e w o r k i n g e n v i r o n - m e n t i s r e m a r k a b l e .
C e r t a i n l y , t h e p i c t u r e may s h i f t n o t o n l y f r o m i n d u s t r y t o i n d u s t r y , b u t a l s o f r o m e n t e r p r i s e t o e n t e r p r i s e a n d b e t w e e n c o u n t r i e s . (And, o f c o u r s e , i t w i l l a l s o d e p e n d o n t h e method^
o f i n q u i r y employed. )
-
D i f f e r e n c e s i n a t t i t u d e s i n d i f f e r e n t c u l t u r a l s e t t i n g s h a v e b e e n d e m o n s t r a t e d many t i m e s . R e c e n t l y OECD ( 1 9 8 1 ) c a t e g o - r i z e d d i f f e r e n c e s i n a t t i t u d e s t o w a r d s t h e i n t r o d u c t i o n o f a u t o - m a t i o n b a s e d o n m i c r o e l e c t r o n i c s i n t h e f o l l o w i n g way:
a ) J a p a n p u r s u e s a t e c h n o l o g y - o r i e n t e d , g l o b a l l y a i m i n g d e v e l o p m e n t s t r a t e g y , i n w h i c h t e c h n o l o g i c a l p r o g r e s s i s a c e n t r a l a i m , w h i c h i s n o t p u t i n t o q u e s t i o n ;
b ) The t r a d i t i o n a l l y p o s i t i v e a t t i t u d e s - t o w a r d s t e c h n o l o - g i c a l p r o g r e s s i n t h e U n i t e d S t a t e s see i n m i c r o e l e c t r o n i c s no
new d i n e n s i o n . I t s p o s i t i v e e f f e c t s on tecIlilology and t h e econ- ony a r e t a k e n f o r g r a n t e d ;
c ) I n some X e s t e r n European c o u n t r i e s ( i n , p a r t i c u l a r i n t h e F e d e r a l R e p u b l i c o f Germany b u t a l s o i n F r a n c e ) t h e a t t i t u d e i s s p l i t : on t h e o n e hand, m i c r o e l e c t r o n i c s a r e needed t o keep t h e c o u n t r i e s i n t h e f o r e f r o n t of t e c h n o l o g i c a l l e a d e r s h i p . On t h e o t h e r h a n d , q u e s t i o n s a r e b e i n g r a i s e d a s t o t h e need. o f r e g u l a t i o n o f some t e c h n o l o g i c a l developments b a s e d on micro- e l e c t r o n i c s ;
d ) I n N o r t h e r n European c o u n t r i e s , t h e g e n e r a l a t t i t u d e h a s t u r n e d t o w a r d s pessimism a n d s u s p i c i o n t o w a r d s t h e outcomes o f new d e v e l o p m e n t s , i n c l u d i n g m i c r o e l e c t r o n i c - b a s e d t e c h n o l o g y . I n S c a n d i n a v i a a n d i n G r e a t B r i t a i n c l a i m s have been r a i s e d t o c o n t r o l t h e i n t r o d u c t i o n o f new t e c h n o l o g y i n g e n e r a l and o f m i c r o e l e c t r o n i c s i n p a r t i c u l a r , e.g. by r e g u l a t i o n , t a x a t i o n o r even p r o h i b i t i o n . The main r e a s o n i s t h e . f e a r t h a t f u r t h e r
w o r k p l a c e s may b e l o s t d u e t o a u t o m a t i o n a n d t h a t new t e c h n o l o g y , t h u s , s h o u l d b e r e s t r i c t e d t o c e r t a i n u s e s o n l y , where no new unemployment may emerge.
The OECD s t u d y d o e s n o t c o v e r s o c i a l i s t c o u n t r i e s and t h u s g i v e s no s t a t e m e n t a b o u t them. One may, however, s p e c u l a t e t h a t t h e a t t i t u d e t o w a r d s m i c r o e l e c t r o n i c s t h e r e i s p o s i t i v e a t l a r g e : m i c r o e l e c t r o n i c - b a s e d t e c h n o l o g y i s s e e n a s a means t o improve t h e t e c h n o l o g i c a l s t a n d a r d , t o push p r o d u c t i v i t y , t o r e d u c e manpower b o t t l e - n e c k s t a n d t o improve working c o n d i t i o n s
i n c e r t a i n i n d u s t r i e s .
The a t t i t u d e s c o n c e r n i n g t e c h n o l o g y a r e i m p o r t a n t i n s o f a r 2s t h e y on t h e o n e hand i n f l u e n c e t h e g o a l s g o v e r n i n g t e c h n o l - ogy t o b e c o n s i d e r e d a s f a c t o r s e n h a n c i n g / c o n s t r a i n i n g t h e i n t r o - d u c t i o n o f new t e c h n o l o g y . T h i s p o i n t w i l l be t a k e n up below
when d i s c u s s i n g t h e d i f f e r e n c e s between t h e t e c h n o l o g i c a l l y p o s s i b l e and t h e s o c i a l l y f e a s i b l e o b j e c t i v e s , o f ( f u r t h e r ) a u t o - mation.
S t u d i e s o f Automation and I t s Consequences
S t u d i e s i n t o f u t u r e a u t o m a t i o n and i t s c o n s e q u e n c e s may be r o u g h l y ( a n d somewhat s u p e r f i c i a l l y ) d i c h o t o m i z e d i n t o " f i c - t i o n t y p e " a s s e s s m e n t s o f what may be p o s s i b l e from t h e p o i n t of view o f t e c h n o l o g i c a l development, and s t u d i e s o f employment
( o c c a s i o n a l l y a l s o o f s o c i a l o r s o c i e t a l ) c o n s e q u e n c e s of a u t o - mation. The l a t t e r t y ? e o f s t u d i e s by n e c e s s i t y must imply some 2 e l i b e r a t i o n s i n t o t h e r e a l m o f t h e f o r m e r t y p e : c e r t a i n assump- t i o n s a b o u t t h e t e c h n o l o g i c a l development a r e n e c e s s a r y i n o r d e r t o make p o s s i b l e e s t i m a t i o n s and c a l c u l a t i o n s o f q u a l i t a t i v e and q u a n t i t a t i v e employment consequences. T h i s s t u d y a t t e m p t s t o e s t i m a t e employment consequences i n a mid-term p e r s p e c t i v e and, t h u s , w i l l e s s e n t i a l l y have t o c o n t e m p l a t e a b o u t t h e d i f - f u s i o n w i t h i n a f o r e s e e a b l e t i m e o f a l r e a d y a v a i l a b l e t e c h - nology.
The a b u n z a n c e of studies and r e p o r t s on t e c h n o l o g i c a l de- velcprnent and t h e i r employment c o n s e q u e n c e s d u e t o m i c r o e l e c - t r o n i c s o r c o m p u t e r t e c h n o l o g y ( i t i s o b v i o u s l y v e r y d i f f i c u l t t o draw a d i v i d i n g l i n e between t h e two, a s t h e y a r e q u i t e f r e - q u e n t l y i n t e r d e p e n d e n t ) , have i n d u c e d b o t h a u t h o r s a n d a u t o r -
i t i e s t o c o m p i l e p u b l i s h e d r e s u l t s a s w e l l a s t o o r g a n i z e h e a r i n g s a n d c o n f e r e n c e s , i n o r d e r t o n o t o n l y summarize t h e many and o f t e n d i v e r g i n g , o r e v e n c o n t r a d i c t o r y c o n c l u s i o n s , b u t a l s o t o s c r u t i n i z e m e t h o d o l o g i e s employed a n d t o draw con- c l u s i o n s a s t o what p o l i c i e s , measures e t c . may b e t a k e n t o e n h a n c e , s u p p o r t , a m p l i f y , c o n t r o l t h e d e v e l o p m e n t i n g e n e r a l o r i n c e r t a i n r e s p e c t s l )
.
E v a l u a t i n g t h e Employment Impact o f I n f o r m a t i o n Technology on t h e Banking I n d u s t r y : A Programmatic P r o p o s a l V s . a n A p p l i e d S t u d y
The r e m a i n d e r o f t h i s c h a p t e r w i l l b e d e v o t e d t o a com- p a r i s o n o f a p r o g r a m m a t i c p r o p o s a l t o w a r d s t h e e v a l u a t i o n o f t h e employment i m p a c t o f i n f o r m a t i o n t e c h n o l o g y , which i s t a k i n g t h e b a n k i n g i n d u s t r y as a n example f o r a g e n e r a l a p p r o a c h
(Henize 1 3 8 1 ) , a n d a s t u d y i n t o t h e p o t e n t i a l c o n s e q u e n c e s upon employment i n t h e b a n k i n g s e c t o r i n Sweden d u r i n g t h e 1 9 8 0 ' s
(Hedberg a n d Mehlmann 19 82).. The Swedish s t u d y w a s u n d e r t a k e n a s one o f s e v e r a l i n d u s t r y s t u d i e s on b e h a l f o f a g o v e r n m e n t a l committee l o o k i n g i n t o t h e e f f e c t s o f c o m p u t e r i z a t i o n (Data- e f f e k t u t r e d n i n g e n ) . A s b o t h documents w e r e w r i t t e n a n d p u b l i s h e d d u r i n g 1981, t h e a u t h o r s d i d n o t know o f e a c h o t h e r s ' d e l i b - e r a t i o n s .
An E c o n o m e t r i c Approach
A r e c e n t r e v i e w o f t h e l i t e r a t u r e 2 ) t o o k a v e r y c r i t i c a l a t t i t u d e v i s d v i s t h e r a t h e r u n s a t i s f a c t o r y methodology a s w e l l a s t h e meagre outcomes o f many employment i m p a c t s t u d i e s . H e n i z e , who a l s o had c r i t i c i z e d t h e methods a p p l i e d i n a number o f s t u d i e s , w a s a s k e d t o p r o p o s e a n a p p r o p r i a t e methodology f o r a n a s s e s s m e n t o f t h e employment i m p a c t o f i n f o r m a t i o n t e c h n o l o g y i n t h e F e d e r a l R e p u b l i c o f Germany. H e n i z e , who h a s one f o o t i n i n f o r m a t i o n t e c h n o l o g y and t h e o t h e r i n e c o n o m i c s , p r o p o s e s a n e c o n o m e t r i c a p p r o a c h w i t h p r o p e r r e c o g n i t i o n o f c r o s s - i n d u s t r y and c r o s s - s e c t o r a l i m p a c t s o f i n f o r m a t i o n t e c h n o l o g y . I n o r d e r t o i l l u s t r a t e . t h e claims h e r a i s e s on a n e c o n o m e t r i c model t o b e employed, h e s e l e c t s t h e b a n k i n g i n d u s t r y as an example, f o r s e v e r a l good r e a s o n s :
1 ) M e t t e l s i e f e n (1981 ) ; Yensch e t a l . ( 1 9 8 0 ) ; ~ o t h w e l l / ~ e g v e l d (1979) ; I f o - I n s t i t u t (1980) ; Henize ( 1 981) ; S c h o l z (1982a+b) ;
Lund ( 1 9 8 1 ) ; Evans ( 1 9 7 9 ) ; Kahlbhen e t a l . ( 1 9 8 0 ) ; D e r t o u z o s / Moses ( 1 980) ; V o l l e b e r g h ( 1 981 ) ; ~ o r a / ~ i n c ( 1 979) ; B r i e f s
( 1 978) ; M e r t e n s e t a l . ( 1 981 ) ; Rada ( 1 980) ; F r i e d r i c h s / S c h a f f ( 1 9 8 2 ) ; OECD ( 1 9 8 1 ) ; Schmidt ( 1 9 8 0 ) ; OECD (197.9);
Mertens e t a l . ( 1 9 8 2 ) .
2 ) Der B u n d e s m i n i s t e r f u r Forschung und Technologic, e d . ( 1 9 8 0 ) .
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The finance sector is a key sector in the economy.The banking industry thus is an important industry to study.
-
It is heavily: impacted upon by recent advances in com- puter and communications technology.-
Whereas output, efficiency and productivity measures are quite well defined for goods producing industries, such definitions are scarce, if available at all for the service industries. A successful analysis of. aservice industry thus is more likely to be applicable as a general model for further studies than an analysis of a more straightforward case from the goods producing industry.
-
As the demand for banking services is a function of the general level of economic activity, the factors affect-ing it have to be specified and integrated into an
initial aggregate model.of the macro economy in any case.
Henize then analyzes the effects of information technology in banking.
Henize goes about to build up a micro economic model:
-
Determining what qualities and quantities of different.factor inputs are needed to provide a given quantity of each of the various types of banking services;
-
Investigating how the detailed input-output relationships have changed over time and what technical changes may have caused them;-
Determining the motives behind the introduction of new methods, e.g. relative factor costs, factor shortages or constraints, competition, prestige, other technical factors.An example is given demonstrating how the development of relative costs and even resource constraints induced the intro- duction of early computerization. Henize also demonstrates that the absence of relative cost advantages can offset the introduc- tion of new methods, however attractive they may appear in other respects (electronic funds transfer at retail vs. wholesale
b.anking levels). Against the example of th'e rapid growth of networks, Henize stresses that an additional effect associated with the introduction of new technology must be included in the analysis: the elicitation of new demand insofar as new technology not only changes the relative costs of performing certain types of services. It also may induce genuinely new services or new methods of performing old services, which now are becoming econ-.
omically feasible.
It is demonstrated how qualitative factors are accounted for and how they may be quantified. As far as new technology is concerned one should investigate the life-cycles of new technol- ogy introduced in the not so distant past in order to be able
t o e s t i m a t e l i f e - c y c l e s w i t h r e s p e c t t o c o s t a n 2 t h u s a c c e p t - a n c e j f e a s i b i l i t y o f newer t e c h n o l o g y . Henize o b s e r v e s t h a t n o t o n l y r e l a t i v e c o s t a d v a n t a g e s have a c c o u n t e d f o r t h e i n t r o d u c - t i o n of new t e c h n o l o g i e s a n d / o r s e r v i c e s . To a c e r t a i n e x t e n t even r e s o u r c e s c a r c i t i e s have p u t c o n s t r a i n t s on p o t e n t i a l developinents, e . g . a c c e s s t o s p e c i f i c t y p e s o f p e r s o n n e l . ( A s a m a j o r example H e i n z e d e ~ i c t s t h e i n t r o d u c t i o n of a u t o m a t e d t e l l e r m a c h i n e s , ATM. I n a d e t a i l e d e x e r c i s e h e c a l c u l a t e s t h e n e t l a b o u r d i s p l a c e m e n t of ATII t o ' 1 . 3 2 f u l l - t i m e e q u i v a l e n t p e r s o n s . ?men Henize i n a l a t e r s t e p a l s o i n c l u d e s non-banking p e r s o n n e l h e comes t o a n a p p r o x i m a t i o n 1:1, i . e . one ATM re- p l a c e s one f u l l - t i m e employee i n s i d e and o u t s i d e of b a n k i n g . I n a t h i r d s t e p , Henize t h e n i n t r o d u c e s l a b o u r a n d c a p i t a l r e q u i r e m e n t s i n p r o d u c i n g ATMs and of s u b s u p p l i e s t o ATM prod- u c e r s . He c o n c l u d e s i n t h e end t h a t a l t h o u g h ATlls do n o t seem t o have g r e a t l y changed t h e t o t a l amount o f l a b o u r r e q u i r e d , t h e t y p e o f l a b o u r i n p u t c e r t a i n l y h a s changed c o n s i d e r a b l y . Bank t e l l e r s had b e e n r e p l a c e d by equipment d e s i g n e r s , m a n u f a c t u r i n g w o r k e r s , computer. programmers, s a l e s p e o p l e and r e p a i r w o r k e r s . )
I n s p e c i f y i n g h i s g e n e r a l model, t h e a u t h o r s d e v e l o p s a number of a g g r e g a t e l a b o u r ~ r o d u c t i v i t y and c o s t f u n c t i o n s . He
t h e n ? r o c e e d i t o - a s t r u c t u r a l a n a l y s i s o f t h e b a n k i n g and bank- i n g equipment i n d u s t r y , c l a i m i n g t h a t t h e a n a l y s i s o f t h e bank- i n g equipment i n d u s t r y must be performed i n e q u a l d e t a i l a s t h a t o f t h e b a n k i n g i n d u s t r y i t s e l f . T h i s i s n e c e s s a r y b o t h i n o r d e r t o f i n d t h e c h a n g e s i n b a s i c f a c t o r c o s t r e l a t i o n s h i p s ,
t h a t have p r o v i d e d t h e p r i n c i p a l s p u r t o t h e i n t r o d u c t i o n o f t e c h n o l o g i c a l c h a n g e i n b a n k i n g and t o c o m p l e t e t h e a n a l y s i s o f t h e employment'impact o f t e c h n i c a l change. Beyond d e t e r - mining t h e e f f e c t s o f new i n f o r m a t i o n t e c h n o l o g y o n l a b o u r
p r o d u c t i v i t y w i t h i n b a n k i n g i t s e l f i t i s n e c e s s a r y t o c a l c u l a t e t h e t o t a l employment e f f e c t s o f new t e c h n o l o g y w i t h i n t h e a g g r e - g a t e economy. One n e e d s t o know b o t h t h e e f f e c t t h a t t e c h n o l - o g i c a l changes w i l l h a v e on t h e demand f o r a d d i t i o n a l b a n k i n g s e r v i c e s and t h e employment i n p a c t of t h e s e t e c h n o l o g y c h a n g e s n o t o n l y w i t h i n b a n k i n g b u t a l s o w i t h i n o t h e r i n d u s t r i e s . Given t h e v e r y complex s e t o f r e l a t i o n s h i p s which emerges, t h e a u t h o r a d m i t s t h a t i n a n i n i t i a l a n a l y s i s one must l i m i t o n e s e l f t o t r e a t i n g o n l y f a c t o r s o f f i r s t magnitude s i g n i f i c a n c e , l e a v i n g t h e b u l k of f a c t o r s o f s e c o n d a r y magnitude t o l a t e r e x e r c i s e s i f needed.
The a u t h o r t h e n t u r n s t o t h e e s t i m a t i o n of new demand f o r b a n k i n g s e r v i c e s . E e i n t r o d u c e s a h y p o t h e s i s t h a t i n d i v i d u a l s ' b e h a v i o u r a s t o u t i l i z a t i o n of t i m e o r a l l o c a t i n g b u d g e t s i s q u i t e c o n s e r v a t i v e . " P e o p l e t e n d t o a l l o c a t e a c e r t a i n f i x e d amount of t i m e p e r week t o a g i v e n t y p e o f a c t i v i t y ( e . g . t'o d e a l i n g w i t h f i n a n c i a l matters a n d / o r c a r r y i n g o u t v a r i o u s c o m p u t a t i o n t a s k s ) . I f t h e t i m e r e q u i r e d t o a c c o m p l i s h s u c h an a c t i v i t y i s d e c r e a s e d , it may be t h a t p e o p l e , r a t h e r t h a n re- a l l o c a t i n g t h e i r t i m e a n d e f f o r t , s i m p l y w i l l i n c r e a s e t h e amount of t h a t a c t i v i t y u n t i l t h e t o t a l t i m e a l l o c a t e d t o i t r e m a i n s t h e same. O r i t may be t h a t t h e y w i l l t e n d t o a s s i g n a c e r t a i n f i x e d p r o p o r t i o n o f t h e i r b u d g e t t o s u c h an a c t i v i t y . I f t h e c o s t r e q u i r e d t o a c c o m p l i s h a g i v e n - a m o u n t o f t h a t
a c t i v i t y d i m i n i s h e s , t h e amount of t h e a c t i v i t y performed would
s i a p l y i n c r e a s e u n t i l t h e f r a c t i o n o f t h e t o t a l b u d g e t a l l o c a t e d t o s u c h t a s k s r e m a i n s t h e same." The a u t h o r f u r t h e r c o n j e c t u r e s t h a t a c t i v i t i e s w i t h i n b a n k i n g may be c o n t r o l l e d by s i m i l a r
( c o n s e r v a t i v e ) r u l e s o f b e h a v i o u r , a l t h o u q h u s i n g new methods and t e c h n o l o g i e s .
The l a s t b u i l d i n g - s t o n e i n H e n i z e ' s o v e r a l l model c o n c e r n s t h e i n t r o d u c t i o n o f g e n e r a l economic d e t e r m i n a n t s o f t h e demand f o r b a n k i n g s e r v i c e s .
H e t h e n b r i n g s t o g e t h e r t h e d i f f e r e n t f a c t o r s a n d r e l a t i o n - s h i p s ( o n l y b r i e f l y t o u c h e d upon i n t h i s o v e r v i e w ) i n t o a n o d e l o f s y s t e m s dynamics t y p e .
T h i s i s n o t t h e p l a c e t o a s s e s s t h e f e a s i b i l i t y o f a g r a n d scale model o f a n a t i o n a l economy t o be employed f o r t h e e s t i - m a t i o n o f employment e f f e c t s o f new t e c h n o l o g y o f t h e t y p e p r o p o s e d by H e n i z e . ( A s i n i t i a l l y i n d i c a t e d , H e n i z e u s e s t h e b a n k i n 9 , s e c t o r o n l y a s a n example o f a c e r t a i n s u b s e t o f s u c h a g e n e r a l model of a n a t i o n a l economy. C e r t a i n l y t h e i n v e s t i g a - t i o n s t o b e p e r f o r m e d , t h e amount o f d a t a n e e d e d , s e e m t o b e overwhelming. I n t h i s c o n t e x t , however, t h e . e x e r c i s e o f Henize is b e i n g u s e d o n l y f o r a comparison w i t h a n i n v e s t i g a t i o n p e r - formed i n t o t h e realm o f H e n i z e ' s example, t h e b a n k i n g i n d u s t r y o f Sweden).
A S c e n a r i o Approach
The t a s k g i v e n t o t h e Swedish a u t h o r s i s s l i g h t l y d i f f e r e n t from t h a t o f H e n i z e : t o s t u d y t h e i n t e r a c t i o n between computer- i z a t i o n , employment, c o n t e n t o r q u a l i t y o f work a n d work o r g a n - i z a t i o n . The i n v e s t i g a t i o n i s u n d e r t a k e n o n b e h a l f o f t h e D e p a r t - ment o f Labour. I t s u l t i m a t e g o a l i s t o p r o v i d e a b a s i s f o r
l a b o u r m a r k e t p o l i c y . One m a j o r d i f f e r e n c e i s t h a t t h e Swedish s t u d y a i m s a t t h e development o f a l t e r n a t i v e s , which o b v i o u s l y i s n o t i n t e n d e d i n t h e Henize model. Whereas Henize e s s e n t i a l l y assumes t e c h n o l o g i c a l d e t e r m i n i s m , Hedberg and Mehlmann h a v e t o i n t e g r a t e a " v o l u n t a r i s t i c " view o f t e c h n o l o g i c a l development:
i t i s n o t o n l y t h e l a w o f economics which c o n t r o l s t e c h n o l o g i c a l p r o g r e s s b u t a l s o h u m a n ' w i l l . T h i s a c c o u n t s f o r t h e m a j o r d i f - f e r e n c e between t h e a p p r o a c h e s t a k e n . The Swedish s t u d y employs t o a m a j o r e x t e n t methods s u r p r i s i n g l y s i m i l a r t o t h o s e pro- posed by H e n i z e ( a n d e v e n comes t o s u r p r i s i n g l y s i m i l a r r e s u l t s i n c a s e s o f d e t a i l e d c a l c u l a t i o n s a s e . g . f o r t h e e f f e c t s o f ATM u t i l i z a t i o n ) . I t d i f f e r s , however, d r a s t i c a l i y from Henize i n t h e development o f s c e n a r i o s and i n t h e u t i l i z a t i o n o f g r o u p f e e d b a c k methods when a s s e s s i n g t h e r e a l i s m and f e a s i b i l i t y o f t h e ( f i v e ) a l t e r n a t i v e p a t h s t o t h e f u t u r e , which a r e d e p i c t e d i n t h e s t u d y . It t h u s a l s o h i g h l i g h t s t h e d i f f e r e n c e between t h e t e c h n o l o g i c a l l y f e a s i b l e a n d t h e s o c i a l l y a c c e p t a b l e f u t u r e , b o t h o f which a r e e x p r e s s e d i n t e r m s o f employment c o n s e q u e n c e s .
The b a s i c a p p r o a c h o f t h e Swedish s t u d y i s t h e f o l l o w i n g :
-
" H i s t o r i c a l " development ( e s s e n t i a l l y t h e l a s t t e n y e a r s ) o f Swedish b a n k i n g ;-
The g e n e r a l economic developmen-; o f S..<eden a s t h e major d e t e r m i n a n t o f t h e e n v i r o n m e n t f o r b a n k i n g ;-
I n v e s t m e n t i n c o m p u t e r i z a t i o n u n d e r way,, p r o d u c t i v i t y p o t e n t i a l , new s e r v i c e s ( e s s e n t i a l l y a n e x t r a p o l a t i o n ) ;-
Development of f i v e s c e n a r i o s d e p i c t i n g f i v e bank o f f i c e p r o t o t y p e s o f 1930;-
Comparison a s t o employment c o n s e q u e n c e s o f t h e a l t e r n a t i v e s ;-
"The r o a d from 1980 t o 1990";-
Two c o m p o s i t e s c e n a r i o s , e m p h a s i z i n g e n h a n c i n g and c o n s t r a i n i n g f a c t o r s ;-
P e r s o n n e l p o l i c i e s , p - e r s o n n e l s t r u c t u r e ;-
P o l i c y o p t i o n s .Banking i n Sweden D u r i n g t h e 1 9 7 0 ' s
Banking i n Sweden i s t e c h n i c a l l y more d e v e l o p e d t h a n i n any o t h e r European c o u n t r y . l ) I n t h e b e g i n n i n g o f t h e 1 9 8 0 ' s t h e Swedish b a n k i n g s y s t e m i s a t t h e a b s o l u t e f o r e f r o n t o f t e c h - n o l o g i c a l d e v e l o p m e n t ( q u i t e advanced b a n k i n g s y s t e m s e x i s t i n H o l l a n d , t o some e x t e n t e v e n i n F r a n c e ) . Some d e t a i l s i n s u p p o r t o f t h i s s t a t e m e n t a b o u t the- Swedish b a n k i n g s y s t e m w i l l be g i v e n i n s u b s e q u e n t s e c t i o n s .
The i n t r o d u c t i o n o f i n t e g r a t e d , o n - l i n e t e l l e r s y s t e m s by Swedish banks a n d s a v i n g s banks d u r i n g t h e 1 9 7 0 ' s c o i n c i d e d
w i t h d r a s t i c m a r k e t growth a n d a c o n s e q u e n t growth i n t h e volume o f t r a n s a c t i o n s . P r a c t i c a l l y a l l h o u s e h o l d s i n Sweden now h a v e bank a c c o u n t s . A well-known Swedish b a n k e r claims t h a t i n o r d e r
t o cope w i t h t h e growth i n a c c o u n t s a n d t r a n s a c t i o n s Swedish b a n k s would h a v e had t o employ a major p r o p o r t i o n o f t h e Swedish w o r k - f o r c e , i f no t e c h n o l o g i c a l change h a d accompanied t h e
change i n growth and c o n d i t i o n s . A t t h e same t i m e t h e c o s t o f t a k i n g c a r e o f t h e t r a n s a c t i o n s d i d n o t i n c r e a s e , d e s p i t e d r a s t i c a l l y growing c o s t s o f p e r s o n n e l .
1 ) F o r c o m p a r i s o n c o n c e r n i n g t h e d e g r e e o f r a t i o n a l i z a t i o n / c o m - p u t e r i z a t i o n r e a c h e d (1982 f i g u r e s ) h e r e some v e r y rough f i g u r e s a r e g i v e n : A u s t r i a ( p o p u l a t i o n a p p r o x . 7.5 m i l l i o n ) employs 67,000 p e r s o n s , (FTE) i n t h e f i n a n c e s e c t o r . With
- -
a p o p u l a t i o n - o f approx. 8.2 m i l l i o n i n Sweden t h i s would mean r o u g h l y 72.000 FTE. A c u t a l Swedish employment i s 29,000 FTE.I n t h e - ~ e d e r a l R e p u b l i c o f Germany t h e c o r r e s p o n d i n g f i g u r e is 550,000 FTE ( p o p u l a t i o n a p p r o x . 62 m i l l i o n ) . ( A c o r r e s p o n d - i n g employment i n t e n s i t y would mean 72,500 FTE f o r Sweden.) A r e c e n t e s t i m a t e f o r e s e e s a l o n g t e r m r e d u c t i o n o f f i n a n c e s e c t o r employment o f 60,000 FTE (which would c o r r e s p o n d t o a b o u t 8 , 0 0 0 FTE i n Sweden. The Swedish s t u d y e s t i m a t e s t h e f u r t h e r r e d u c t i o n i n t h e 1 9 8 0 ' s t o 9-10,000 FTE).
T a b l e 2 : Enployment i n Sviedish Banks
Year P e r s o n s Of which p a r t - C o r r e s p o n d i n g f u l l - t i m e employed t i m e e q u i v a l e n t s ( E Y E )
:: o f w h i c h m a n a g e r i a l p o s i t i o n s a c c o u n t e d f o r 1 , 4 4 0 , s u p e r v i s o r y o n e s f o r 5 , 6 7 0 p o s i t i o n s .
T a b l e 3 : Development o f A d m i n i s t r a t i v e C o s t i n S w e d i s h B a n k i n g ( m i l l i o n S w e d i s h K r o n o r ) '
Year C o s t o f , % o f O t h e r Admin. Sum Admin. c o s t i n P e r s o n n e l T o t a l C o s t Admin.% o f a v e r a g e
C o s t x C o s t b a l a n c e sum:: x
x a d m i n i s t r a t i v e , f i n a n c i a l a n d o t h e r c o s t
::x ( b a l a n c e sum b e g i n n i n g o f y e a r
+
b a l a n c e sum e n d o f y e a r ) : 2 The r a t i o b e t w e e n c o s t o f p e r s o n n e l . a n d a d m i n i s t r a t i v e c o s t f o r b a n k s o n t h e a v e r a g e d e v e l o p e d b e t w e e n 1 9 5 5 , 7 7 % , t o1978, 5 4 % .
D u r i n g t h i s t i m e , t h e w o r k i n g h o u r s w e r e r e d u c e d , s e r v i c e s d r a s t i c a l l y e x p a n d e d . A number o f m e r g e r s t o o k p l a c e ( w i t h c o c - s e q u e n t c l o s u r e s o f b r a n c h o f f i c e s ) . The number o f a c c o u n t s a n d t r a n s a c t i o n s mushroomed. C o m p u t e r i z a t i o n w a s i n t r o d u c e d . From t h e m i d d l e o f t h e 1 9 7 0 ' s a new g e n e r a t i o n o f c o m p u t i n g s y s t e m s w a s b e i n g i n s t a l l e d c o m p r i s i n g a n a t i o n - w i d e d a t a - n e t a n d on-
l i n e i n t e r a c t i v e o p e r a t i o n s a t t e l l e r s , i n t r o d u c t i o n o f a u t o - mated t e l l e r m a c h i n e s e t c . (The s t u d y g i v e s no d e t a i l s a b o u t t h e g r o w t h i n t h e number o f t r a n s a c t i o n s a s p e r t i n e n t s t a t i s t i c s a r e n o t a v a i l a b l e . I t h a s n o t b e e n p o s s i b l e t o c o m p i l e t h e t o t a l i n v e s t m e n t i n c o m p u t e r i z a t i o n s o f a r )
.
G e n e r a l Economic C o n d i t i o n s i n Sweden D u r i n g t h e 1 9 8 0 ' s
The e c o n o m i c o u t l o o k f o r Sweden f o r t h e 1 9 8 0 ' s i s b l e a k . The e s t i m a t e d a v e r a g e a n n u a l g r o w t h i n t h e g r o s s n a t i o n a l p r o d u c t i s e x p e c t e d t o b e 2.5% ( a low estimate f o r t h e 1 9 8 0 1 s , h o w e v e r , f o r e s e e s a n a v e r a g e a n n u a l g r o w t h by o n l y 1 ' . 1 % ) . The l a b o u r m a r k e t w i l l c o n t i n u e t o b e s l u g g i s h , w h i c h means a s l o w g r o w t h
for Sanks to be expected as far as narket growth or growth of transactions is concerned. As there most likely will be a very slow growth in volume, banks may have to compete with quality and services. Xost likely new services will have to be taken over (e.g. to utilize the capacity of the general data-net of Sweden, which has been in operation since 1380 and which will be completed by 1985, allowing virtual message switching and distributed computing over the entire country).
Investment, Productivity Totential, New Services
The study comprises a stock-taking of on-going and decided upon investment into computers and systems; further interviews with a great number of banks on planned investment of the same type; further a number of studies in other countries concerning the banking systems there have been penetrated.
Interviews with Swedish bankers and.personne1 representa- tives have comprised organizational changes, new market segments, new services to be offered, the effects of new technology on the working situation etc. Interviews with banks and consulting
organizations abroad as well as with computing and system firms abroad and in Sweden have been undertaken.
The study concludes:
-
Investment into systems and computing under way or in mature planning stages reduce employment bybetween 9,000 and 10,000 full-time employees (equi- valent) ;
-
The number of branch offices will be reduced by one sixth;-
The net effects of planned investment will be of marginal type only as the personnel made superfluous will be kept employed in other tasks;-
New services under way or contemplated will not provide enough new jobs to compensate the ration- alization effects of the new technology.The investment under way to mature during the 1980's com- prises:
Computer: main frames
+
10 unitsdistributed approx. 280 units
together approx. 300 to 400 % of growth Termina1s:writers
+
2,200, screens + 4,000 unitstogether: 1 terminal per employed Automatic
teller
machines: up to 2,000 units
S a n k n o t e
boxes : up t o 3 , 5 0 0
( t h e a c c o u n t g o e s i n t o much d e e p e r d e t a i l ) , .
The c o n s e q u e n c e s a s t o j o b s b e i n g made s u p e r f l u o u s a s w e l l a s new j o b s c r e a t e d h a v e t h e n been e s t i m a t e d , i n c o o p e r a t i o n w i t h b a n k e r s , p e r s o n n e l r e p r e s e n t a t i v e s , c o n s u l t a n t s , e t c . The
e s t i m a t e comes t o minus 10,600 a n d p l u s 670 ( f o r new FTEs).
New s e r v i c e s t o b e o f f e r e d d u r i n g t h e 1 3 8 0 ' s a r e d i s c u s s e d a n d e s t i m a t e d a s t o t h e i r employment c o n s e q u e n c e s . The main c o n c l u s i o n s a s t o s e r v i c e development may b e summarized i n t h e f o l l o w i n g way :
-
E x t e n s i o n of f u n c t i o n s o f f e r e d a t p r e s e n t , a s f a r as p o s s i b l e ;-
Development of new services, f o r example Household b u d g e t a c c o u n t s ( t o "smooth" t h e c a s h f l o w o f t h e i n d i v i d u a l h o u s e h o l d ) ;-
Extended b u s i n e s s s e r v i c e s , e.g. i n f o r m a t i o n . services, a n a l y t i c a l s e r v i c e s ( h e l p i n g i n p a r t i c u l a r s m a l lb u s i n e s s e s t o a n a l y s e t h e i r a c c o u n t s a n d t o s u p p o r t o t h e r a n a l y t i c a l s e r v i c e s t o i m p r o v e / s u p p o r t manage- ment o f t h o s e f i r m s ) ;
-
( E x t e n d e d ) i n t e r a c t i v e b a n k i n g ;-
S e r v i c e a r o u n d t h e c l o c k ;-
F u r t h e r d e v e l o p m e n t t o w a r d s t h e " c a s h - l e s s s o c i e t y "( e . g . by e x t e n d i n g u t i l i z a t i o n o f pay c a r d s , many more services t o become a v a i l a b l e "by p l a s t i c c a r d "
i n s t e a d o f by c a s h money, e v e n t o r e d u c e t h e f t , damage a n d r o b b e r y ) ;
-
Extended u s e o f t h e " e l e c t r o n i c v a l l e t " (which i s a n a l t e r n a t i v e t o t h e p l a s t i c c a r d making t h e t r a n s - a c t i o n l e s s r i s k y and a l s o somewhat s i m p l e r f o r t h e r e c i p i e n t of money);-
I n t r o d u c t i o n o f a " u n i t y a c c o u n t " , i n s t e a d o f h a v i n g t o a t t a c h s p e c i f i c c o n d i t i o n s t o s p e c i f i c a c c o u n t s , making i t p o s s i b l e t o e . g . d i f f e r e n t i a t e t h e i n t e r e s t p a i d / l e v i e d i n o n e and t h e s a m e a c c o u n t .The employment c r e a t i o n p o t e n t i a l o f s u c h new s e i v i c e s i s b e i n g e s t i m a t e d a t 3 , 0 0 0 FTE by t h e y e a r 1990 ( t h i s makes
n e c e s s a r y a m a j o r e d u c a t i o n a l and t r a i n i n g e f f o r t f o r t h e b a n k s ) . The a p p r o x i m a t e l y 3,000 new j o b s w i l l , however, t o between 30 and 50% b e f i l l e d w i t h p e r s o n s , who a r e b e i n g k e p t employed, d e s p i t e t h e i r j o b s h a v e been t a k e n o v e r by c o m p u t e r s o r l o s t
f o r o t h e r r e a s o n s . The new employment t h u s w i l l be c o r r e s p o n d - i n q l y . lower.
A s f a r a s t h e o r g a n i z a t i o n a l consequences , f o r banks a r e c o n c e r n e d , t e c h n o l o g i c a l development h a s made p o s s i b l e and w i l l c o n t i n u e t o make p o s s i b l e b o t h d e c e n t r a l i z a t i o n and c e n t r a l i z a - t i o n of s e r v i c e s and t a s k s .
S c e n a r i o Development t o V i s u a l i z e New A l t e r n a t i v e Developments So f a r , t h e Swedish s t u d y i n p r i n c i p l e f o l l o w s t h e Henize p r o p o s a l . I t o c c a s i o n a l l y g o e s a s much i n d e t a i l a s Henize p r o p o s e s . However, i t d o e s n o t i n v e s t i g a t e f o r example t h e employment c o n s e q u e n c e s i n computer m a n u f a c t u r i n g i n d u s t r i e s e t c . : t h e aim o f t h e Swedish s t u d y i s d i f f e r e n t from t h a t o f
~ e n i z e ' s l )
.
What t h e Swedish s t u d y p r o v i d e s now i s v e r y d i f f e r e n t from Henize i n s o f a r a s i t , s o t o s p e a k , p r o j e c t s a m i r r o r image o f t h e f u t u ~ e and b r i n g s i t b e f o r e t o d a y ' s d e c i s i o n makers and t h e g r o u p i n g s i n t e r e s t e d i n t h e f u t u r e of b a n k i n g and employment i n i t .
Based o n t h e now a v a i l a b l e , t o some e x t e n t a l s o o n d e v e l o p - ments d i s c e r n i b l e ( a n d a v a i l a b l e e . g . i n t h e U n i t e d S t a t e s o f America), f i v e m a j o r p o l i c y a l t e r n a t i v e s f o r b a n k i n g a r e t r a n s - formed i n t o "model bank o f f i c e s " o f 1990. The f i v e p r o t o t y p e s a r e c a l l e d
( a ) Lending c u l t u r e , ( b ) F i n a n c e b o u t i q u e ,
( c ) Automatic bank, (Autobanks)
( d ) P e r s o n n e l
-
t h e banks' f b r e m o s t r e s o u r c e , and ( e ) The economizing bank ( H i b e r n a t i o n S t r a t e g y ).
The a l t e r n a t i v e s c e n a r i o s a r e e x t r e m e s i n s o f a r a s most l i k e l y none of them w i l l m a t e r i a l i z e i n i t s " p u r e " form. F o r t h i s r e a s o n a n d a f t e r t h o r o u g h d i s c u s s i o n of t h e f i v e a l t e r - n a t i v e s i n a g r e a t number of g r o u p s , t h e s c e n a r i o s w e r e c o l - l a p s e d i n t o two s c e n a r i o s , Alpha and B e t a (see b e l o w ) .
1 ) N e i t h e r Henize (whose aim i t is t o e s t i m a t e t h e t o t a l employ- ment e f f e c t s ) n o r Hedberg/Mehlmann (who a r e c o n c e r n e d w i t h -
employment i n b a n k i n g o n l y ) pay a t t e n t i o n t o t h e s e c o n d a r y employment e f f e c t s o f t h e d r a s t i c a l l y e x t e n d e d b a n k i n g ser- v i c e s d u r i n g t h e p e r i o d u n d e r s t u d y , n e i t h e r t h e r e t r o s p e c - t i v e one n o r t h e t i m e t o come. Even i f many o f t h e services o f f e r e d a r e o f g e n u i n e b a n k i n g t y p e , n o t a f f e c t i n g employ- ment e l s e w h e r e , a m a j o r p a r t of them c e r t a i n l y w i l l h a v e had a n d w i l l h a v e e f f e c t s on employment e l s e w h e r e , e . g . i n f i r m s o r a t work p l a c e s ( c a s h payments have p r a c t i c a l l y d i s a p p e a r e d , w i t h t h e e x c e p t i o n o f desk s a l e s . The Swedish s o c i a l i n s u r a n c e e . g . h a s c o m p l e t e l y abandonded a l l k i n d s of c a s h s e r v i c e s ) .
D 2 p o s i t o r
-
o r Lending-
C u l t u r eBanks a r e t r a d i t i o n a l l y dominated by t h e b o r r o w i n g o r c r e d i t c u l t u r e . P r o m o t i o n i s v i a c r e d i t d e p a r t m e n t s . I n p r i n - c i p l e money i s made a v a i l a b l e from d e p o s i t o r s a n d g i v e n , a g a i n s t n r o p e r f e e s , t o f i r m s o r p e o p l e who need t o , t e m p o r a r i l y ,
Lorrow money f r o m t h e b a n k s . S i n c e t h e c a p a c i t y o f b a n k s t o , p r o f i t a b l y , make money a v a i l a b l e t o b o r r o w e r s d e p e n d s on t h e amount a n d d u r a t i o n o f d e p o s i t s made, b a n k s h a v e t o s t i m u l a t e d e p o s i t o r s t o p u t t h e i r s a v i n g s a t t h e b a n k ' s d i s p o s a l . The b a n k i n g p o l i c y " l e n d i n g c u l t u r e " o r " d e p o s i t o r s ' c u l t u r e "
i m p l i e s t h a t more e m p h a s i s i s p a i d t o t h e h i t h e r t o n e g l e c t e d
" s u p p l y s i d e " . (The s h i f t i n emphasis i n t h i s d i r e c t i o n t o o k p l a c e a b o u t s i x t o s e v e n y e a r s a g o . The e x p e r i e n c e h a s been q u i t e p o s i t i v e . The p o l i c y emphasis p e r m i t s f u r t h e r development i m p l y i n g i n p a r t i c u l a r c o n s u l t a t i o n a n d a d v i c e g i v e n t o depos- i t o r s a s t o how t o make t h e most of t h e i r money.)
T h i s p r o t o t y p e i m p l i e s f u r t h e r d e v e l o p m e n t o f c o n s u l t i v e s e r v i c e s , d i f f e r e n t i a t i o n of d e p o s i t o r y s e r v i c e s , p l a c e m e n t s a n d s o f o r t h . I n i t s e x t r e m e form it w i l l t o some e x t e n t b e a t t h e e x p e n s e o f t e l l e r s e r v i c e s , which w i l l b e a u t o m a t e d a s f a r a s p o s s i b l e .
The q u a l i f i c a t i o n s of t h e p e r s o n n e l w i l l s h i f t q u i t e d r a s - t i c a l l y . T h i s t y p e o f b a n k i n g i s p e r s o n n e l - i n t e n s e . I t w i l l , compared t o t h e p r e s e n t s i t u a t i o n , mean a r e d u c t i o n amounting t o a p p r o x . 4,000 j o b s by 1930.
Amongst t h e p r o s a n d c o n s e n h a n c i n g o r c o n s t r a i n i n g t h i s t y p e o f d e v e l o p m e n t , e x t e r n a l c o n d i t i o n s s e e m t o S e most i m p o r t a n t ( f i s c a l / f i n a n c i a l p o l i c y , g e n e r a l economic climate, p o i i t i c a l t e n d e n c i e s t o w a r d s s o c i a l i z a t i o n e t c )
.
The " f i n a n c e b o u t i q u e " i s b e i n g b u i l t a r o u n d t h e i d e a o f b a n k s b e i n g m e d i a t o r s . A bank i t e m o f t e n s t a r t s w i t h a connec- t i o n made, i n which t h e bank may o r may n o t p l a y a r o l e . I t e n d s w i t h a f i n a n c i a l t r a n s a c t i o n . Given t h e f a c t t h a t b a n k s have a c c e s s t o p o w e r f u l d a t a - n e t s , t h e y may a t t r a c t b r a n c h o f f i c e s o f o t h e r b u s i n e s s e s t o t h e i r b r a n c h o f f i c e s o r , u n d e r . s p e c i f i c c i r c u m s t a n c e s , a l s o a c t a s a g e n t s f o r o t h e r f i r m s . A f i n a n c e b o u t i q u e may c o n s i s t o f a bank o f f i c e , which a l s o h o u s e s a t r a v e l a g e n t , a n i n s u r a n c e agency, a m a i l o r d e r a g e n t , a l a w y e r ' s o f f i c e , p e r h a p s a l s o a s o c i a l s e c u r i t y o r s i m i l a r o f f i c e . A s m e n t i o n e d , some o f t h e s e r v i c e s may o r may n o t b e o f f e r e d by t h e b a n k s . I t s h o u l d b e reminded o f t h a t f o r example banks o f t e n a c t as l e g a l a d v i s e r s . T h i s t y p e o f b a n k i n g s e r v i c e m i g h t b e o f f e r e d t o a w i d e r r a n g e o f c u s t o m e r s .
A p r o t o t y p e f i n a n c e b o u t i q u e may b e c h a r a c t e r i z e d i n t h e f o l l o w i n g way: i t w i l l n o t b e t h e g e n e r a l b r a n c h bank b u t r a t h e r c o m p r i s e o n l y a p p r o x . o n e s i x t h of t h e b r a n c h o f f i c e s . I t w i l l p r o v i d e b o t h manual and a u t o m a t i c bank s e r v i c e s . I t w i l l
a s s e m b l e a number o f c a s h t r a n s f e r p o i n t s , which now a r e
d i s p e r s e d a n d d i s t r i b u t e d . I t w i l l i n p l y a c t i v e s e l l i n g o f bank s e r v i c e s , e . g . c a p i t a l b r o k i n g i n c o m b i n a t i o n w i t h e l e c t r o n i c s e r v i c e s o f d i f f e r e n t t y p e s i n c l u d i n g a c c e s s t o n e t w o r k s , t e l e - t y p i n g a n d t e l e c o m p u t i n g s e r v i c e s a n d s o f o r t h .
A l t h o u g h t h i s t y p e o f s e r v i c e i m p l i e s a c t i v e s e l l i n g o f bank s e r v i c e s , i t s employment c o n s e q u e n c e s would i m p l y a g r e a t e r r e d u c t i o n o f j o b s t h a n t h e p r e v i o u s a l t e r n a t i v e .
T h i s t y p e o f a r r a n g e m e n t i s i n o p e r a t i o n a l r e a d y , a l t h o u g h t o a v e r y l i m i t e d e x t e n t . I t w i l l most l i k e l y n e v e r b e t h e most f r e q u e n t l y a p p l i e d t y p e o f bank b r a n c h . I J e v e r t h e l e s s , u n d e r c e r t a i n c i r c u m s t a n c e s i t h a s a good f u t u r e .
The A u t o m a t i c Sank
The a u t o m a t i c bank i s t h e most i n t e n s e l y a u t o m a t e d a l t e r - n a t i v e , i m p l y i n g t h e most d r a s t i c r e d u c t i o n i n p e r s o n n e l . 1.t would u t i l i z e a l l t h e t e c h n o l o g i c a l p o s s i b i l i t i e s a v a i l a b l e a n d c a p i t a l i z e o n t h e s u r p r i s i n g l y p o s i t i v e r e c e p t i o n t h e a u t o m a t e d t e l l e r machine h a s e x p e r i e n c e d . P e o p l e h a v e l e a r n e d t o o p e r a t e s i m p l e a u t o m a t i c m a c h i n e s . The t e l e t e x t d e v e l o p m e n t may b e p u s h i n g t h i s t y p e o f a l t e r n a t i v e f o r w a r d . However, i t w i l l a l s o make n e c e s s a r y t h e a v a i l a b i l i t y o f " f u l l s e r v i c e o f f i c e s n e l s e w h e r e . I t would, t h u s , mean a c e n t r a l i z a t i o n o f q u a l i f i e d bank s e r v i c e s a n d c o u n s e l l i n g . The c u s t o m e r must b e p r e p a r e d t o a c c e p t t h i s c e n t r a l i z a t i o n . I t would a l s o i m p l y a f u r t h e r d e v e l o p m e n t o f p r e p a r e d documents (e. g
.
p r e p a r e d pay s l i p s ' a t t a c h e d t o i n v o i c e s , b a s e d on o p t i c a l c h a r a c t e r r e a d i n g o r o t h e r t y p e s o f a u t o m a t e d t r e a t m e n t ) . H a n d l i n g o f c a s h would d e c l i n e . One c o n s t r a i n i n g f a c t o r may b e t h a t b a n k s would n o t w a n t t o l o s e t h e i r i d e n t i t y v i s - d - v i s t h e c u s t o m e r t o a n e x t e n ts o t h a t t h e c u s t o m e r d o e s n o t know w i t h which bank h e i s comrnun- i c a t i n g .
T h i s a l t e r n a t i v e would make p o s s i b l e a r e d u c t i o n o f p e r h a p s more t h a n 50% o f t h e p e r s o n n e l employed a t p r e s e n t .
O f f e r i n g P e r s o n n e l S e r v i c e s
Banks a l l o v e r t h e w o r l d a d v e r t i s e t h e s e r v i c e s o f t h e i r c o m p e t e n t employees: "Our p e r s o n n e l i s o u r u t m o s t r e s o u r c e " . T h i s t y p e o f b a n k i n g s e r v i c e would o f f e r t h e h i g h e s t d e g r e e o f q u a l i t y i n b a n k i n g . T h i s a l t e r n a t i v e m i g h t p o s s i b l y a l s o come- a b o u t b e c a u s e of employment r e g u l a t i o n a c t s , e . g . n o t p e r m i t t i n g l a y - o f f s of p e r s o n n e l . The b a n k s would t h e n h a v e t o employ t h e i r p e r s o n n e l i n t h e most u s e f u l o r m e a n i n g f u l ways. T h i s a l t e r - n a t i v e would mean no c h a n g e i n employment.
The Economizing Bank
The e c o n o m i z i n g bank w i l l , g i v e n t h e i n v e s t m e n t f o r g r o w t h made d u r i n g t h e 1 9 7 0 ' s a n d g i v e n t h e ( o v e r - ) c a p a c i t y a v a i l a b l e , b e h e s i t a n t t o i n c u r f u r t h e r f i x e d c o s t . I t would e i t h e r k e e p i t s computing equipment l o n g e r t h a n i n t e n d e d o r go f o r l e a s i n g i n s t e a d o f b u y i n g . I t would, i n p r i n c i p l e , be t r y i n g t o c u t i t s
7 - 7 7 -
~ . . , , ~ s t . , , ~ r ? t s a s w e l l a s c c s t s a s much a s p o s s i b l e . I t would also r c d u c e i t s t r a i n i n g a c t i v i t i e s f o r p e r s o n n e l . I t i s , i n
? r i n c i p l e , a p a s s i v e s t r a t e g y .
Coinparison o f t h e A l t e r n a t i v e s ' Employment E f f e c t s
T h e n e t e f f e c t s ( p r e s e n t p e r s o n n e l minus p e r s o n n e l s a v i n g s p l u s new j o b s c r e a t e d = , n e w employment) a r e p l o t t e d a l o n g a l i n e o n ;;hick a z c a l e i m p l y i n g f u l l t i m e e q u i v a l e n t s i s u s e d . The f o l l o w i n g p i c t u r e would a p p e a r f o r t h e f i v e s c e n a r i o s :
I I I
I
1
1 4000 22700 25000 2 9000
= 1380 B a n k i n g S e c t o r Employment ( F u l l T i n e E q u i v a l e n t s )
a = Automated Bank; b = F i n a n c i a l boutique";^ = D e p o s i t o r C u l t u r e , a n d E c o n o m i z i n g Bank; d = P e r s o n n e l as P e s o u r c e .
A s a n n o u n c e d b e f o r e , t h e Swedish s t u d y ~ i v e s t h e r e a d e r t o u n d e r s t a n d t h a t a u t o m a t i o n i s n o t s o m e t h i n g w h i c h i s " g i v e n from t h e o u t s i d e " , b u t t h a t i t d e p e n d s on t h e g e n e r a l v i e w s b u t a l s o t h e p o l i c i e s a d o p t e d b o t h i n s o c i e t y a n d , o f c o u r s e , w i t h i n t h e b a n k s a n d a m o n g s t t h e u n i o n s , what " p h i l o s o p h y R i s s e l e c t e d f o r bank a u t o m a t i o n . A l s o H e n i z e c o n f r o n t s t h e o p t i o n s o f t h e t e c h - n i c a l l y f e a s i b l e w i t h t h e e c o n o m i c a l l y f e a s i b l e . Hedberg/Mehl- mann i n t r o d u c e beyond t h i s t h e m a r k e t - w i s e f e a s i b l e , t h e
s o c i a l l y f e a s i b l e a n d t h e p o l i t i c a l l y f e a s i b l e . To S e l e c t a F u t u r e
The f i v e a l t e r n a t i v e s w e r e p u t b e f o r e a number o f g r o u p s o f r e l e v a n t d e c i s i o n m a k e r s a n d e x p e r t s , a s w e l l a s u n i o n r e p r e s e n - t a t i v e s .
The outcome o f t h i s f e e d - b a c k p r o c e s s r e s u l t e d i n a con- c l u s i o n s a y i n g t h a t two a l t e r n a t i v e s s h o u l d b e d e v e l o p e d , o n e b a s e d on t h e p r i n c i p l e o f t h e o p t i o n " p e r s o n n e l a s a r e s o u r c e " , t h e o t h e r o n the " e c o n o m i z i n g b a n k " . However, b o t h o f them
s h o u l d a l s o i n t e g r a t e f e a t u r e s from t h e o t h e r o p t i o n s .
The employment c o n s e q u e n c e s i n b r i e f would b e f o r t h e Alpha o p t i o n a p p r o x . 2 4 , 0 0 0 FTEs, f o r the B e t a s c e n a r i o b e t w e e n
2 5 , 5 0 0 a n d 2 7 , 0 0 0 ; I m p l e n e n t a t i o n
I n t h e c o n c l u d i n g c h a p t e r s s t r a t e g i e s a r e b e i n g d e v e l o p e d t o t h e i m p l e m e n t a t i o n o f f u t u r e o p t i o n s .
F u r t h e r , t h e q u a l i f i c a t i o n s o f t h e b a n k i n g p e r s o n n e l o f 1990 a c c o r d i n g t o t h e a l t e r n a t i v e s a r e b e i n g s p e c i f i e d a n d
b r o k e n down i n t o a s u b s t a n t i a l number o f c a t e g o r i e s . A t r a i n i n g s t r a t e g y i s b e i n g d e v i s e d . I t i s b a s e d o a t h e e x p e c t e d
Zeveiopzent of v a r i o u s p r o f e s s i o n a l c a t e g o r i e s .
';he e s t i m a t e d development ( d e c l i n e ) o f employment i n ban!;s i s compared w i t h r e c e n t l y p u b l i s h e d f o r e c a s t s from F r a n c e ,
(Nora & Minc 1 9 7 9 ) and a n A u s t r a l i a n i n v e s t i q a t i o n . Both f o r e - c a s t s a r e a p p r o x i m a t e l y i n l i n e w i t h t h e f o r e c a s t by Hedberg/
Mehlmannl). I n t e r n a t i o n a l c o n p a r i s o n s a r e n o t always q u i t e v a l i d , s i n c e t h e banking s e c t o r i n most c a s e s i s r e g u l a t e d i n one way o r t h e o t h e r . A comparison of t h e Swedish banking s e c - t o r w i t h i t s e q u i v a l e n t s i n o t h e r c o u n t r i e s i s f u r t h e r con- s t r a i n e d b e c a u s e o f t h e q u i t e s u b s t a n t i v e d i f f e r e n c e s i n t h e l e v e l s o f a u t o m a t i o n and even i n t e g r a t i o n . A s i n d i c a t e d above, e . g . t h e " i n t e n s i t y " o f a c c o u n t s h e l d i n t h e broad p o p u l a t i o n i s p r o b a b l y much h i g h e r i n Sweden t h a n i n o t h e r c o u n t r i e s . The same i s t r u e when i t comes t o d i s p e r s i o n of c a s h c a r d s o r c r e d i t c a r d s t o broad masses. Also t h e a v a i l a b i l i t y o f o n - l i n e
c o n n e c t e d ATMs, which a r e n o t b a n k - s p e c i f i c i s q u i t e unique.
T h i s even i m p l i e s t h a t a s u b s t a n t i v e s h a r e of t h e Swedish pop- u l a t i o n i s a c q u a i n t e d w i t h ATMs, h a s a c c e p t e d t h i s s t a g e of development o f automation and most l i k e l y i s p r e p a r e d t o a c c e p t
f u r t h e r s t e p s i n t h a t d i r e c t i o n , compared w i t h t h e a v e r a g e c i t i z e n i n o t h e r (European) c o u n t r i e s .
T h i s development a l s o i m p l i e s t h a t many of t h e e a r l y f a i l u r e s and m i s t a k e s i n t h e p r o c e s s o f a u t o m a t i o n , have been overcome, a l e a r n i n g p r o c e s s which o b v i o u s l y i s unavoidable. A s a n i n d i c a t i o n of t h e t r u s t i n t h e f o o l - p r o o f n e s s and t e c h n i c a l r e l i a b i l i t y it may be mentioned t h a t t h e f i r s t ATM network i n Germany, which a t p r e s e n t i s i n a n advanced t e s t phase, p e r m i t s payments of up t o DM 300.-, whereas t h e w e l l r u n i n c o u n t r y - wide i n t e r - b a n k o n - l i n e AT13 system i n Sweden p e r m i t s payments o f up t o DM 800.- ( S k r . 2 , 0 0 0 . - ) a t a t i m e . The n e x t s t e p s i n
t h e t e c h n o l o g i c a l development a f f e c t i n g t h e banking s e c t o r most l i k e l y w i l l be t h e e x t e n s i o n o f t h e u t i l i z a t i o n o f c a s h c a r d s t o a t l e a s t l a r g e r r e t a i l o u t l e t s b u t a l s o towards t h e i n t r o d u c - t i o n of t h e " e l e c t r o n i c v a l l e t " , i . e . t h e m i c r o p r o c e s s o r -
equipped p l a s t i c c a r d , which may be "charged" w i t h " e l e c t r o n i c c a s h " . I t may be used i n s t e a d o f c a s h i n payinq f o r t e l e p h o n e c a l l s , p e t r o l a t non-manned p e t r o l s t a t i o n s , p u b l i c t r a n s p o r t - a t i o n , a t r e t a i l s t o r e s of many d i f f e r e n t k i n d s , e t c .
The a d v a n t a g e of t h e e l e c t r o n i c v a l l e t i s t h a t it may be o p e r a t e d w i t h o u t a c c e s s t o o n - l i n e networks, t h u s p e r m i t t i n g i t s d i s p e r s i o n t o a w i d e r range of p o i n t s of s a l e s , even t o t h o s e where t h e f r e q u e n c y of u t i l i z a t i o n would n o t m o t i v a t e o n - l i n e c o n n e c t i o n s around t h e c l o c k .
H e n i z e ' s assumption t h a t p e o p l e i n g e n e r a l would be pre- p a r e d t o a l l o t a p p r o x i m a t e l y t h e same s l i c e of t i m e o r of money t o c e r t a i n a c t i v i t i e s i s d i s r e g a r d e d when i t comes t o a s s u e c o n t i n u i t y of money h a n d l i n g / m a n i p u l a t i n g b e h a v i o u r .
1 ) Cf., however, Schmidt, H . D . 1980, who e s t i m a t e s employment i n banking i n t h e F e d e r a l Republic of Germany t o i n c r e a s e by 80,000 between 1980 and 1990.
