Deciphering Robots, Automation, and Jobs attempts to shed light on non-conclusive ongoing discourse: future of work or jobs. In fact, technology has multi-dimensional effects on jobs. The net effect on jobs varies over industries, state of technology maturity, and countries. Hence, it demands a deeper understanding for adopting better strategy and policy for deriving higher quality at a lower cost, driving economic growth, and creating jobs simultaneously. Deciphering Robots, Automation and Jobs also points out that we should accelerate Automation for sustainable development; and universal income is not a solution; rather it’s a problem.
1. Technology-driven automation is central to the process of increasing our living standards
“That is because better “tools” allow us to produce more. It is only by producing more that workers can earn more and companies can lower prices, both of which increase living standards.”
Automation performs production tasks at higher precision, causing less wastage. Of course, Automation helps us to produce higher quality products at a lower cost. But, it does not necessarily mean that workers earn more with the progression of Automation.
As a matter of fact, Automation’s purpose has been to reduce the value-added role of workers. It targets to automate workers’ codified, as well as tacit, knowledge and skill, which they earn through education, training, and experience. Hence, Automation keeps reducing the relevance of the hard-earned competence of workers. Consequentially, it lowers the demand of workers’ competence; weakens bargaining capability; and creates downward pressure on factory workers’ wages. Perhaps, this reality has been the cause of the stagnant salary of factory workers in the advanced countries, particularly in the USA. Moreover, the continued reduction of the need for codified knowledge and skill due to Automation has been the cause of manufacturing job migration. Due to the decreasing need for workers’ competence, high-skilled factory workers have been losing jobs to the less skilled workforce of developing countries.
Digging down sheds further light
Investigation on the genesis of Automation sheds further light. Machines are developed using inanimate materials. Innovators develop ideas in designing machine capability for task execution capacity that we term as Automation. Hence, Automation is about the deployment of ideas of innovators for taking over roles from human workers. Therefore, the progression of Automation creates high-paying jobs in performing R&D for producing ideas. However, those ideas in the form of task execution capacity of machines reduce the value-added role of human workers. As a result, high paying job creation for innovation leads to creating downward wage pressure on factory workers. It’s about transferring the role of economic value creation from the knowledge and skill of individual workers to the ideas of innovators. Moreover, these ideas are non-rivalry—copied in multiple machines. Hence, increasingly ideas are taking over the role of labor—for producing better quality products by making less wastage.
Of course, Automation’s contribution of producing higher quality products at lower cost enables producers to make a profit. Such profit-making supports the offering of higher dividends for shareholders. But that does not necessarily mean higher pay for the workers. Of course, due to competition and profit maximization, producers have been compelled to charge lower prices for higher quality products. As a result, consumers are getting better quality tools to get their jobs done better at less cost. Thereby, consumers, producers, and also innovators are benefiting from Automation. But, workers appear to be losing the market value of their hard-earned knowledge and skill, and they are compelled to earn less due to Automation’s progression. Hence, Deciphering Robots, Automation, and Jobs should get due focus to understand this varying effect.
2. There are two kinds of technologically driven productivity effects
The first one is to take away the role of humans. The other one is to empower human workers in performing certain tasks that they could not qualify to perform before. The role of taking away roles from the human is easily visible. As explained, ideas of Automation are after human roles requiring codified knowledge and skill. As a result, Automation is creating downward pressure on the wages of factory workers. The second aspect of Automation is to augment human capability to qualify for certain tasks. For example, X-ray imaging or MRI is enabling physicians to deliver certain healthcare services. In the absence of those machines, those physicians would have not qualified to deliver those services. Hence, Automation is not always after taking over the jobs from human beings.
3. Automation has differing effects on occupations
To our surprise, the codified knowledge and skill that we earn through formal education and training is highly amenable to Automation. Hence, professionals who are engaged in producing services or economic value out of hard-earned education and training are highly vulnerable to Automation.
On the other hand, our innate abilities are highly difficult to automate. Occupations having high reliance on our innate abilities are showing high resistance to Automation. Hence, low skilled workers performing tasks, mostly relying on innate abilities, appear to be less vulnerable to Automation than their educated white-collar counterparts. For example, it takes a couple of months of programming exercise to write software code to automate basic mathematical equations that we learned by spending years at schools. On the other hand, even upon spending billions in R&D we are falling short in automating simple innate abilities, like how we coordinate eye contacts to share resources.
By the way, Automation is about the production of ideas and integrate them into machines in taking over task execution roles from the human. Hence, there is an increasing need for an R&D workforce to produce ideas for building better machines. Particularly, our attempt of automating innate abilities is increasing the demand for R&D exponentially.
4. Automation has differential effects on regions, also varies over time
Automation has polarization effects on jobs. The effect also varies over time. Automation has a general tendency of reducing the knowledge and skill requirements of human workers, as those abilities are being taken over by machines. Continued reduction of knowledge and skill requirements has led to demanding only innate abilities from workers. As a result, the low-skilled or unskilled workforce of developing countries have got eligible for factory jobs. Hence, decades ago, multinationals started shifting manufacturing jobs from advanced countries to least developed ones. Hence, Automation has become a blessing for the workers of less developed countries while making it a curse to the workers of developed countries.
On the other hand, Automation’s further progression has been reducing labor content in manufactured outputs to such a low level that does not make it economically attractive to get outsourced to developing countries. Hence, Automation is now posing a threat to manufacturing job migration from less developed countries to near the end market. Moreover, Automation has been a blessing for retaining jobs in those countries which are suffering from an aging population and growing wages. Furthermore, automation innovation has been creating high-paying jobs in advanced countries. But the import of the same machinery is causing job loss in less developed countries.
5. The employment impacts of Automation in a particular industry depend on the nature of the industry
The effect of Automation on employment is not the same in every industry. Yes, Automation reduces labor content in produced outputs. But it also improves the quality and reduces the cost of production outputs. Thus, Automation increases the demand for outputs. If the rate of demand increase outweighs the rate of reduction of labor content, the effect of Automation on labor demand or jobs in that industry will be positive.
For example, in the 1950s, there was a very little role of Automation in semiconductor manufacturing. Once we compare with the current situation, the number of jobs and revenue generated by the semiconductor industry was insignificant. Automation’s role has been critical for the rapid growth of chip density, quality improvement, and cost reduction. Consequentially, the semiconductor industry has witnessed high growth in demand and the number of jobs. As a matter of fact, at the early stage of technology growth, Automation has a positive effect on job creation.
6. Automation itself does not lead to net job gain or loss
Of course, Automation takes away roles from the human. It does not necessarily mean that it has a net negative effect on jobs. On the other hand, Automation increases quality and reduces cost; thereby demand for produced outputs increases. That does not also mean that Automation induced demand creation will lead to more job creation. The net outcome of Automation on jobs will depend on the combined result of these two effects. Due to a lack of deciphering Robots, Automation, and Jobs, we often run the risk of developing an incomplete understanding of the scenario, leading to inappropriate policies.
7. Limiting Automation to protect workers would hurt competitiveness and growth, and also jobs
Limiting Automation appears to be a politically attractive option. It gives the impression that Government is very supportive to the welfare of workers. However, in this globally connected market, no country is immune to the effect of additional progress made anywhere in the world– in quality and cost by leveraging Automation. Limiting Automation will lead to the erosion of the competitive advantage and loss of jobs down the road. Furthermore, slowing down the Automation will end up into lowering the progress of improving quality and reducing cost. As a result, the demand growth will be on a slower lane, lowering the overall growth.
8. The rate of Automation will never exceed the rate of compensating job creation
Some people are under the belief that, like the past, technology will eventually create more jobs than being killed. It depends on our strategy and policy. For example, Bangladesh’s ready-made garments and textile industry has not become successful in maintaining the demand growth higher than the progress of Automation in eroding labor role in the production. Similarly, the US manufacturing sector could not do so either. As a result, the rate of Automation has taken over the rate of compensating job creation effect.
On the other hand, the semiconductor industry has produced the opposite job creation picture due to the effect of Automation. The challenge has been on strategy and policy for opening a new path of wealth creation for ensuring the positive net effect of Automation on jobs. Furthermore, we need industry and also country-specific strategy and policy—as opposed to the cookie-cutter approach of giving a prescription.
9. We do not need universal basic income (UBI)
Universal income is a popular option for dealing with the job loss effect caused by technology. As opposed to a solution, it appears to be a recipe for creating a long-term problem. On the one hand, UBI takes away the resource which could have been invested for producing ideas for opening new job opportunities. On the other hand, UBI contributes to unhappiness and social problems. Hence, as opposed to UBI, the focus should be on creating wealth and job creation opportunities out of technology and Automation.
10. We need to accelerate Automation for sustainable development
The human race is under the pressure for meeting growing consumption with depleting resources. The progress of sustainable development hinges on our ability to produce higher quality outputs by consuming less natural resources while causing less harm to the environment. To meet this challenge, Automation is one of the means—perhaps, a primary means. It helps us to increase the precision and effectiveness of our productive activities, leading to lowering wastage and emission. Hence, for sustainable development, we need to accelerate Automation. On the other hand, we must maintain the positive effect of Automation on jobs. That is why there has been a daunting challenge of leveraging Automation for driving our progression.
Therefore, there is a need to develop a comprehensive understanding of the rivalry between humans and machines. Deciphering Robots, Automation and Jobs should get due focus for developing smarter strategy and policy for driving our long-term growth. In the absence of it, we run the risk of following populism policies for slowing down Automation, thereby creating more problems down the road.