Concern about the future of employment and jobs is causing widespread debate and political shifts. Attention has turned to the role of automation, with automation – and robots – more often than not presented as ‘job killers’. But this is not borne out by the facts. Research indicates that robots complement and augment, rather than substitute for, labour and in doing so, raise the quality of work and the wages of those fulfilling new tasks.

Demographics, structural changes, a focus on technology innovation in areas that do not drive productivity – such as entertainment – and the fact that we are only part-way through this innovation cycle are all contributing factors to low productivity growth. Studies focused specifically on robots show a contribution to productivity growth equal to that seen in previous industrial revolutions, with robot-driven productivity accounting for 10% of total GDP growth over 14 years and forecasts of continued automation-driven productivity growth of up to 1.4% annually over the next 50 years.

A concern about the decline of middle-skilled, middle-income jobs and increasing wage inequality is warranted but cannot be attributed solely to automation. Whilst automation appears to be increasing the demand for high-skilled, high-income employees, its impact on low-skilled, low-income employment is less clear. Wage stagnation appears to be far more attributable to structural issues such as employment conditions that force down wages and dampen investment by employers in skills training. A reduction in robot usage would neither help low-skilled workers, nor resolve these structural issues.

Robots and automation will increasingly shape the way we work in the future, with enormous potential for improvements in productivity, increased national competitiveness and the improved quality, and remuneration, of work . Governments and firms must work to create an environment that will enable workers, companies and nations to reap the rewards of these improvements. This means supporting investments in research and development in robotics and, most importantly, providing education and skills re-training for existing and future workers.

Robots increase productivity and competitiveness

Used effectively, they enable companies to become or remain competitive. This is particularly important for small-to-medium sized (SME) businesses that are the backbone of both developed and developing country economies. It also enables large companies to increase their competitiveness through faster product development and delivery. Increased use of robots is also enabling companies in high cost countries to ‘re-shore’ or bring back to their domestic base parts of the supply chain that they have previously outsourced to sources of cheaper labour. Currently, the greatest threat to employment is not automation but an inability to remain competitive.

Increased productivity can lead to increased demand

Increased productivity can lead to increased demand, creating new job opportunities. These ‘spillovers’ can be seen within an individual organization, along an industry sector’s value chain, and in other sectors, particularly services.

Positive impact on labor demand and wages

Automation has led overall to an increase in labor demand and positive impact on wages. Whilst middle-income / middle-skilled jobs have reduced as a proportion of overall contribution to employment and earnings – leading to fears of increasing income inequality – the skills range within the middle-income bracket is large. Robots are driving an increase in demand for workers at the higher-skilled end of the spectrum, with a positive impact on wages. The issue is how to enable middle-income earners in the lower-income range to upskill or retrain.

Humans and robots working together

Robots complement and augment labour: The future will be robots and humans working together. Robots substitute labour activities but do not replace jobs. Less than 10% of jobs are fully automatable. Increasingly, robots are used to complement and augment labour activities; the net impact on jobs and the quality of work is positive. Automation provides the opportunity for humans to focus on higher-skilled, higher-quality and higher-paid tasks.

A robot tax would hamper competitiveness and further economic growth

The IFR believes recent calls for the introduction of a robot tax are unwarranted given the proven positive impact of robotics on employment and wages. It would deter badly-needed investment in robots,hamper the further economic growth. Governments may need to assess the means of generating revenues to cover social payments due to a large number of structural factors – but there is no valid foundation for taxing a capital investment that improves productivity, increases competitiveness, creates more jobs than it replaces, and leads to workers moving up the skills/ income ladder.

Skills are the most important asset

Governments and companies must focus on providing the right skills to current and future workers to ensure a continuation of the positive impact of robots on employment, job quality and wages. This is the argument brought by all the experts cited in this paper, with which the IFR concurs. Governments must invest in robotics research and development to reap the employment benefits of this rapidly growing sector. They must also provide the policy incentives and education systems to support the acquisition of skills necessary to secure and thrive in jobs that are created or changed by the deployment of robots and automation. Companies must engage actively in appropriate retraining programmes for employees to equip them with appropriate skills. These goals will require intensified and coordinated public-private sector collaboration.

Example: automotive industry

The positive impact that the increased productivity of robots has on employment can already be seen in the most advanced industrial nations. The US automotive industry, for instance, installed more than 60,000 industrial robots between 2010 and 2015. During this same period, the number of employees in the US automotive sector increased by 230,000. In the German automotive sector the number of robots in operation increased to more than 93,000 units in 2015, a rise of about 14,000 compared to 2010. In the same period, employment rose by about 93,000 jobs to 813,000 (2010-2015). According to the McKinsey Global Institute, more than 90 percent of jobs will not be fully automatable in the future. Instead, robots and humans will work together.

Related IFR Positioning Papers

  • /downloads/papers/IFR_The_Impact_of_Robots_on_Employment_Positioning_Paper_updated_version_2018.pdf

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