As regular readers of my blogs will know, I’m in the more optimistic camp when it comes to the impact automation will have on both the economy, but also the labor market. Indeed, I wrote recently at Forbes about a recent study that examined the role of technology in so called ‘jobless recoveries’. The aim was to explore whether technology was the main reason behind the apparent lack of new jobs created even as economies recover from slumps.
The paper reveals that whilst economic recoveries in previous decades would usually involve average increases in employment of around 5% per year, this has slowed significantly since the 90s. The argument has gone that this is down to technology, and as the economy has recovered, relatively routine work has gone to machines rather than humans.
When the numbers were crunched, the researchers found no real difference in terms of the joblessness of recovery in industries prone to automation, and those that were not, and this was consistent across nations.
Boosting the economy
Further support for the benefits of automation comes via a recent report from Redwood Software and the Centre for Economic and Business Research (CEBR). The paper analyzed the use of robotics and automated tools across 23 countries over the last 20 years. The aim was to examine the impact such technologies had on both the productivity of those nations, and their GDP per capita.
The results were certainly fascinating, with the analysis revealing that robotics currently adds more value to economic performance than similar investments in areas such as finance and transportation. What’s more, in an echo of the paper mentioned at the start of this post, the analysis also found that society isn’t losing workers to automation.
“There is clear evidence that points toward robotic automation in many cases being a complement for human labor, rather than a direct substitute,” CBRE say. “Human effort becomes more valuable as it is focused on higher-level tasks, creativity, know-how, and thinking.”
This is reflected in the improving job figures coinciding with record investment in automation and robotics. Whilst it’s hard to dispute that the nature of work will change, and the skills required to thrive in the labor market, the report is firm in its support for automation, and the need to work with it rather than against it.
Investing in the technology
The report finds that investment in technology such as robotics has a greater positive impact on the economy than almost any other form of technology. Indeed, a 1% increase in investment correlates with a growth in GDP per capita of 0.03%.
Suffice to say, investment in robotics and automation has not been spread equally around the world. The US leads the way, investing heavily in robotics and automation. By contrast, the UK languishes behind peers such as Japan, Germany and the US. In PPP terms, the US invested $86 billion in 2015, which is roughly 62 times the amount invested in the UK in the same period.
“Robotics and automation in manufacturing has been a contentious topic in the last 12 months – but the research shows that the sector is one of the best places to invest today, and the returns are likely to improve as time goes on. Even in such uncertain times in the post-Brexit economy, the UK government must do more in collaboration with businesses and industry to bolster such investment,” the authors say.