An article in the FT a few weeks ago discussed the effects the automation of industries can have on the labour market. Industrial automation is essentially the use of computers, robots or information technologies to replace human beings in handling different processes of an industry. A concern amongst many individuals is the possibility of there being no need for human labour in the near future, potentially increasing unemployment.
The article spoke about how the ADB (Asian Development Bank) claimed that the expansion of robots in various industries could potentially create more jobs for potential workers rather than take them away. This seems odd, considering these industrial robots and others forms of artificial intelligence are replacing humans in many jobs by being able to do them better.
However, it can be argued that although there have been huge developments in technology compared to 10 years ago, there is no evidence to suggest that the need for humans to manage and sustain this technology will decrease. Past trends show us that although the use of technology in industries has grown exponentially, there has still been a steady decline in unemployment since the 2008 recession.
It can’t be accurately predicted whether the automation of industries will boost or harm jobs and to what extent, but what can be studied is the impact it will have on an economy. The main desired outcome from industries when they invest in technology is growth, both in productivity and their businesses. Investments in machines, computers and robotics drive productivity growth as the quality of labour in industries increases. Most goods that are currently manufactured require machines to be able to maintain sustainable total factory productivity (TFP). The expansion of robots within a factory essentially make the machines within production more efficient, as even if the human component remains the same, increases in efficiencies through robotics leads to an even higher TFP, which results in a higher overall output within an economy, resulting in a growth in GDP.
What this shows us is that although robots may take away low-skilled jobs, they are creating demand for high-skilled human labour to be able to supervise robots. These jobs will have higher pay which will act as an incentive for potential workers and future generations to improve their education and skill set to acquire these higher-skilled job, which in the long term will result in an improved workforce within an economy.