Story Of The Week

Automation and Jobs: The Future

Technological unemployment, a sentence that has created a buzz in the present scenario and was a focal point of discussion during the recently held World Economic forum Conference. It is defined as the loss of jobs caused by technological change. Such change typically includes the introduction of labor-saving “mechanical-muscle” machines or more efficient “mechanical-mind” processes.

Technologies such as big data analytics, artificial intelligence, internet of things, advanced robotics are finding their way into the factories. This digital wave is revolutionizing the manufacturing sector and is contributing to major enhancements in productivity and with the emergence of innovative production paradigms there is promise in delivering more efficient solutions.

Cognitive technology such as artificial intelligence is no longer about a machine playing chess. It is on the streets driving our cars, in our call centers talking to our customers. It is even trading using indices derived from satellite imagery.

Businesses are expecting these technologies to bring in disruption along with growth and opportunity for all the stakeholders involved which include the employees and the customers. But for many, the potential for disruptive change also brings in a fear and uncertainty of the future. Adding to that is the uncertainty introduced by the geopolitical events such as Brexit, the presidential election in the United States, demonetization in India, the issue of Cyber security, the refugee crisis, global terrorism etc.

What leads to Automation?

Rising labor cost, the quest for productivity and efficiency, technological advancement at a low cost, major competition and time saving are some of the factors that have lead various industries to automate.

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Why was it not a threat in the past?

In the past technology has always ended up creating more jobs than it destroys. According  David Autor, an economist at the MIT, automating a particular task, as to do it more efficiently, increases the demand for human workers to do the other tasks around it that have not been automated.

There are many historical examples of this, says James Bessen who is an economist from the Boston University School of Law. According to him, during the Industrial Revolution more and more tasks in the weaving process were automated, which prompted workers to focus on tasks such as operating a machine, and then tending multiple machines to keep them running smoothly. This caused output to grow explosively. In the 19th century in America, the coarse cloth production increased by a factor of 50 in an hour, and the labor required per yard of cloth dropped by 98%. This made cloth cheaper and increased demand for it, which in turn created more jobs for weavers. In other words, technology gradually changed the nature of the weaver’s job, and the skills required to do it, rather than replacing it altogether.

In a recent example, automated teller machines (ATMs) reduced the cost of running a bank branch, allowing banks to open more branches in response to customer demand. The total number of employees increased as a result of the number of urban bank branches rising by 43%. Rather than destroying the jobs of the bank employees, ATMs changed the work mix of the bank employees towards customer service and sales rather than routine tasks.

What is the scenario now?

In previous waves of automation, workers could move from routine jobs from one industry to another. However, now the same “big data” techniques which allowed companies to improve their customer service and marketing operations have also given them the raw material to train machine-learning systems (MLS) to perform the jobs of more and more people.

What are the challenges?

According to an article published in the guardian, Steven Hawking wrote “Automation will accelerate the already existing economic inequality around the world.” According to him, though it is progress but it is socially destructive. It allows very small groups of individuals to make enormous profits while employing very few people.

Combined with the other issues of overpopulation, climate change and disease, Hawking has warned that, we are at “the most dangerous moment in the development of humanity” and that humanity must come together if we are to overcome these challenges.

Some of the major challenges are:

  • The reduced need for human capital, that is, unemployment which is a huge battle for society in general.
  • The reduced tax stream for the government (all types, federal, local and city).Robots and automated computer programs don’t pay taxes and the government loses tax revenue as a result.
  • Automation just adds on to the inequality in wealth that’s is already too prevalent in the world.
  • If documentation of the task is not done when the task is automated. Then it’s the only way that the task can be done.

Which Jobs are most vulnerable?

According to a report which was done by Citibank in partnership with the University of Oxford it was predicted that 47% of the US jobs are at the severe risk of automation. In UK the percentage is 35%. Also in China which is a country which dominates the manufacturing sector, 77% of the jobs are at risk of automation while across the OECD it’s an average of 57%.

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Three of the world’s 10 largest employers are now replacing their workers with robots.

How to overcome the challenges?

The various ways through which the challenges posed by automation could be overcome are:

  • Education: By reorienting the education system to scalable programmes of personalized learning. Basic digital literacy should be provided to every individual to dispel the fear around technologies such as Artificial Intelligence and we should make it possible for everyone to build and use these systems.
  • Employment: Education will help build a more adaptive workforce and sharpen the skills necessary for future professions which involve more creativity, flexibility, agility etc.
  • Healthcare: Artificial Intelligence will help in creating a huge transformation in healthcare by increasing the capabilities of the mind and body. It will also help us to consider problems on a much larger scale and give us the tools to solve the most complex problems in health and wellness.
  • Ethics: By paying attention to how severely these disruptive changes will affect real lives and by working to preserve human integrity and dignity throughout the changes.

This time is it different?

So who is right: the techie types, who say this time it is different and machines really will take all the jobs, or  economists and historians, who insist that in the end technology always creates more jobs than it destroys? The truth probably lies somewhere in between. Automation might not cause mass unemployment, but it will certainly speed up the existing trend of computer-related automation, disrupting labor markets, and requiring workers to learn new skills more quickly than in the past. There would be a difficult transition but despite the wide range of views, as the impact of automation is rising fast, governments and companies will need to make it easier for the employees to acquire new skills and switch jobs.

According to recent report published by the United Nations It was suggested that most of the disruption from automation will be for now in just routine tasks, and developing world will be affected more than the developed world.

References:

https://www.weforum.org/events/world-economic-forum-annual-meeting-2017

http://www.economist.com/news/special-report/21700758-will-smarter-machines-cause-mass-unemployment-automation-and-anxiety

http://www.forbes.com/sites/adigaskell/2016/12/22/automation-and-the-future-of-work/#68b6d95e3117

https://www.theguardian.com/australia-news/2016/feb/26/future-of-work-remote-controlled-vehicle-operators-in-demand-in-2035

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