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How will the automation of jobs impact the labor market?

29 Jan 2018
The automation revolution with robots is in full swing, but how will this impact the labor market?

Distant-future theories are quickly turning into tangible realities. Robots can do increasingly more, constantly improve, and are deployed for an ever-growing variety of purposes. The benefits are clear: lower production costs, longer production hours, and an increase in quality as well as reliability. If robots are faster, cheaper, and safer, there might not be a reason why we would put such tasks on the shoulders of people. The resulting question is: what will happen with the jobs that are replaced by robots? In this blog, we will paint a picture of state-of-the-art research and discuss some possible outcomes. 

Research-based predictions: from hopeful to alarming

According to a large study conducted in 2013, 47 percent of US jobs can be replaced by automation. Andy Haldane, chief economist of the bank of England, states similar results, saying half of UK jobs will be eliminated by automation. These are mainly positions involving repetitive, routine-based, and predictable work, such as logistics, warehouse, and factory jobs. People who perform creative, relationship-intensive, and unpredictable tasks on a daily basis, on the other hand, are difficult to replace by robots due to the requirements for these types of jobs, which have a more ‘human’ side. Therefore, they are least likely to see automation change the nature of their jobs.

McKinsey states that only a few jobs can be fully automated. Nearly all jobs involve one or more tasks that cannot be performed by a robot, which means that they will always be carried out by a human being in some way or another. However, part of the tasks can be automated – a total of 51 percent, according to McKinsey. This implies a thorough change in the way people have grown accustomed to work, but it does not mean that jobs will disappear altogether.

Transformation of employment: possible outcomes

Replacing half of the people by robots does not necessarily mean that there will be a 50% decrease in employment. Before the Industrial Revolution, a 60-hour work week was the norm. The replacement of employees by machines led to the 40-hour work week without a dramatic decrease in purchasing power or radical change in contemporary lifestyles. Automation may lead to a significant reduction in expenses, which will, in turn, lower product prices. This means that while working less hours, we could maintain our purchasing power.

Moreover, the conception and implementation of new automation technologies may call for a transformation in the nature of jobs. Jobs will be replaced by robots, but at the same time, new jobs will be created: one study found that the implementation of a million robots created three million jobs, which were required to create and implement new automation and robotics technologies. We should anticipate on these changing job descriptions by:

  • Retraining current workers. The craft of sewing clothes, for example, may become superfluous, but sewing employees can opt to learn how to assemble small machine parts instead. Similarly, an administrative worker who currently enters records manually may help develop a model that performs this task for him – and he can continue to check the model and correct it if any errors occur.
  • Altering the way in which we educate new students, creating more study programs focusing on Science, Technology, Engineering, and Math (STEM).

Finally, there will always be jobs that require a human’s mind and eye. A painter will probably never be fully replaced by his machine counterpart. Likewise, jobs that require a high degree of social interaction will be extremely difficult to be replaced by a robot.

In short, there is no question that automation with robots will fundamentally alter employment as we know it. But the imminent change could very well lead to a 20-hour work week or less, and by embracing the technology and adapting your way of thinking, your company and your employees to it, it may present you with a variety of other great opportunities that are currently still beyond our imagination.

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