A cartoon image of several people working on cogs in a cloud symbolising automation.
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How automating jobs can reduce unemployment

30 Mar 2022

Hays’ Tim Olsen explains why automation doesn’t take away jobs and can actually help to narrow the skills gap.

The Czech word for forced labour is ‘robota’ – the origin of today’s word ‘robot’. It’s not something automation evangelists such as myself would want to associate with, but the reality is that robotics has a difficult history surrounded by fear ever since the mills were mechanised and workers replaced.

Even in today’s modern times, robophobia is rife. We regularly hear that 50pc of our activities could be automated and we are led to wonder whether our hard-learned skills will shortly become redundant as we are replaced by our robot overlords.

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Certainly, the pandemic has accelerated some key aspects of automation. As organisations struggled to cope with lockdown and employees worked from home, manual processes and bottlenecks were brought into sharp focus, exacerbated by sharp increases in demand for some products and services that could not be met in the short run.

Automation and jobs

There is no doubt that automation is being adopted at a tremendous rate, but are we seeing unemployment increasing as a result?

Many expected that the jobs lost during the pandemic would not return, that humans would be replaced forever in many sectors, but the reality is that employment markets are booming and unemployment levels are now nearing pre-pandemic levels in most countries. Even low-skilled workers are seeing wage increases as demand outstrips supply.

There is a new school of thought, a growing groundswell of opinion based on recent research, that supports the controversial opinion that the process of automating tasks in an organisation might lead to an increase in employment, rather than the expected alternative.

Prof Philippe Aghion, writing with colleagues for an OFCE report, found that: “At all levels of analysis – plant, firm and industry – the estimated impact of automation on employment is positive, even for unskilled industrial workers. We also find that automation leads to higher profits, lower consumer prices and higher sales.”

Furthermore, the report said: “The results indicate that automation can increase labour demand and can generate productivity gains that are broadly shared across workers, consumers and firm owners. In a globalised world, attempts to curb domestic automation in order to protect domestic employment may be self-defeating due to foreign competition.”

Joonas Tuhkuri of MIT draws similar conclusions in his paper. “Our main finding is that advanced technologies, such as CNC machines, welding robots and laser cutters, did not reduce employment, replace production workers, or increase the share of highly educated workers in industrial and custom manufacturing firms. We find that these technologies led to increases in employment and no change in skill composition.”

So what conclusions can we draw from this research?

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Firstly, there is an overwhelming consensus that the introduction of robotics will increase productivity and competitiveness – this will lead to growth and a net increase in employment. On a macro-societal level, this is very positive news.

Secondly, a note of caution. While growth does indeed lead to net increases in employment, it does not mean that there will be no disenfranchised employees who become displaced as a result of their tasks being automated.

I think it is becoming clear that we will not see the droves of unemployed proposed by the doom-mongers, but some high-risk sectors such as office administration will need to adapt and upskill to remain in demand in our future workplaces.

Is this pure theoretical narrative or does is play out in the real world? In my experience of automating in more than 70 different businesses, it is remarkably difficult to reduce existing headcount as a result of automation. Most employees undertake more than one task and most would still play a valuable role even if that task were removed.

By automating, we remove the repetitive tasks and free up the employee to add more value in their other activities as they become more productive. Automation brings a host of other benefits, but most commonly it allows companies accelerating out of the pandemic to grow with a flat headcount in the areas addressed.

Automation’s role in closing the skills gap

Can automation solve the skills gap we are experiencing? Let’s look at the healthcare sector as a prime example.

We’ll never automate the job of a nurse (nor would we want to) but do the nurses add value by rearranging appointments, collating paperwork, preparing outpatients, managing patient transfers – all repetitive, administrative activities? Of course not. If we can automate the drudgery and allow nurses to spend more time caring with patients one to one, we can reduce the critical gap in skills in the market.

Automation becomes more viable when salaries spike as a result of a demand unbalance. As we see some lorry drivers’ salaries near double and retail brought to its knees with supply chain issues, the attractiveness of self-driving lorries suddenly comes to the fore of our imaginations.

If skill shortages are bad now, they’re going to get worse – ageing populations and declining birth rates are beginning to create a gaping chasm for economic growth that needs to be bridged.

The generational demographics are unlikely to change, so we need other options to grow GDP. Recruitment and training companies will play a critical role in retraining and ensuring fluidity within the labour market, but automation will provide the productivity boost to create growth.

Robots should be a force for good, a tool for growth, a means for balancing supply and adding value.

Automation is not something to be feared as long as we remain adaptable. It will bring many benefits both to society and to us, the employees. If we want to reduce unemployment, automate jobs. Contentious, but true.

By Tim Olsen

Tim Olsen is intelligent automation director for Hays Technology. A version of this article previously appeared on the Hays Technology blog.

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