Mark Carney’s comments last week that the technological revolution will ‘mercilessly destroy jobs and livelihoods’ is contrary to certain logic. Greater automation in the UK and other developed markets is the answer to greater productivity and so to GDP growth. To that end, expect companies operating in and around technology and robotics to grow their share of the equity markets in years to come.

Productivity doesn’t rise meaningfully that often, but it does happen every now and then. Is there anything in the pipeline that could cause productivity to grow to new heights and save developed economies from looking into an extended period of abysmal economic growth? In demographically challenged developed markets, I would argue the answer lies in greater automation.

Bank of America (BofAML) released a monster of a research report in 2015 arguing that robots will take over nearly 50% of all manufacturing jobs and shave $9 trillion off labour costs within a decade.

Take the car manufacturing industry. A spot welder is paid on average $25 per hour. A robot can do the same job for $8 an hour (all in). Those countries that don’t embrace the new technology will simply be left behind, such are the advantages.

Developed economies have a massive advantage over China in this respect. China (because of the sheer number of people) cannot allow robots to replace hundreds of millions of workers. There are simply too many mouths to feed every day.

The old world has exactly the opposite problem. A shrinking workforce will force robots to be installed if we want to keep industry alive, partly because we won’t have enough people to fill the manufacturing floors, and partly because those who are left will be too expensive. The best line of defence against Chinese competition is therefore likely to be more automation.

On the point of labour costs – the significant gap in hourly earnings between DM and EM countries is likely to foster two very different approaches to automation.

Whereas robots are almost always the most cost effective solution in DM countries, labour costs in most EM countries are still sufficiently low to warrant a different approach. Germany tops the chart with hourly manufacturing wages of approx. $50 per hour, whereas most EM countries do not exceed $5 per hour.

A likely side effect of increased automation is even lower inflation, at least in DM countries. Not only do manufacturers save considerable amounts of money by replacing human beings with robots as already mentioned, but robots are also getting cheaper to install. BofAML reckons that whilst robots have on average become 27% cheaper over the last ten years, they will fall a further 20%+ over the next ten years. All this has the potential to boost productivity whilst keeping inflation low, and could be the saving grace for otherwise doomed DM economies.

One final point – The consensus appears to be that this is largely a manufacturing issue and that relatively few jobs have been lost elsewhere. Nothing could be further from the truth. Take the financial industry, where many transactional jobs are lost every day, or take education – as Ambrose Evans-Pritchard of the Daily Telegraph pointed out in November last year “A single professor can teach a course to 150,000 students through digital technology.”

Niels Jensen is CIO of Absolute Return Partners

Arno Kitts, head of UK institutional, BlackRock

Auto-enrolment is changing how the UK population saves for retirement. But it also means the pensions industry needs to think differently about how it presents retirement saving options for workers up and down the country. The Department for Work and Pensions (DWP) estimates that since the introduction of auto-enrolment, participation in a workplace pension has increased from 61% to 83%. This is a welcome development and reflects how, given the right tools and information, Britons will take positive action to help fund their future retirement.

But there are also concerns about the threat of opt out rates rising which could undo the progress achieved so far. Opt out rates currently stand at around 8% for larger employers, according to the DWP. However, findings from BlackRock’s recent Investor Pulse Survey suggest that the number of opt-outs could rise considerably among the workforce if personal contributions were doubled to 4%, with 17% of those surveyed saying they would opt-out, and a further 29% currently undecided.

This reflects a general lack of awareness of how much retirement will cost, and how auto-enrolment can help people meet their future financial needs. The difficult truth is that auto-enrolment shifts responsibility for retirement saving to the individual. This means employers and providers need to increase their education efforts and demonstrate to people how saving more, earlier, will significantly improve people’s retirement outlook. And they need to show how increased auto- enrolment contributions can help deliver that.

But there is some positive news for those who plan. The Investor Pulse Survey found that 61% of people take financial planning seriously and this in turn means they are twice as likely to feel in control and confident about their financial futures, than those who do not. As an industry, we have a responsibility to encourage the population to plan and to help people build a decent pension pot, because when they do they feel more confident about their financial future.

While auto-enrolment is an important part of the savings solution, the industry needs to communicate the benefits of pensions saving better. And in this regard we can compare pensions to mortgages.

Thirty years ago a mortgage was simply a long-term loan from a bank used to buy a property. However, this is no longer the case – mortgages are now part of the financial landscape. As auto-enrolment leads to more people up and down the country having a sizeable retirement saving pot, the pensions landscape will shift.

People will start to engage more with their pensions just as they started to engage with their mortgages as more providers start to offer new products. People will be prepared to have more in-depth conversations about different funds and income requirements.

Pension providers should also recognise that when people first start saving, their target retirement date is not set in stone and their expectations are not yet clearly defined. In this case, pensions need to be flexible. It means looking again at the type of default fund which is provided for members and recognizing that it is acceptable to start saving a little at the start.

We need to be part of the activity which shifts the public’s approach to pensions and encourages them to think positively about choices available to them in funding their retirement.

If we can do this, opt outs will remain low.