The Impact of Automation on Global Labour Market

Automation is the use of machines, control systems and information technologies to optimize productivity in the production of goods and delivery of services. Automation plays an increasingly important role in the world economy and has been responsible for the shift in the world economy from industrial jobs to service jobs in the 20th and 21st centuries.

It is obvious that automation has many benefits, such as increase in productivity, quality and consistency of output. One more advantage is reduced direct human costs and expenses. But increasing automation leads to an increase in unemployment because human labour is replaced by machinery.

There is a book regarding this topic from 1995 written by American economist Jeremy Rifkin: “The End of Work: The Decline of the Global Labor Force and the Dawn of the Post-Market Era”. He predicted devastating impact of automation on blue-collar, retail, wholesale employees and the growth of third sector.

The-end-of-work-bookcover

According to the International Federation of Robotics (IFR), global sales of robotics increased by 38.0% in 2011. China, Germany and the USA are the major drivers of this growth, though the biggest users of robotics are Japan and South Korea. The increased use of robotics in these markets has helped to contribute to a sharp rise in labour productivity in some of them. China saw its labour productivity more than double between 2007 and 2012.

Labour productivity in selected countries: 2007 – 2012

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Source: Euromonitor International from International Labour Organisation (ILO)/Eurostat/national statistics

Automation can save money on wages paid to staff, and also on labour taxes paid to the government. This can increase profits and competitiveness and it can be used to fill labour shortages: China is rapidly increasing its use of automation to counteract the predicted decline in its labour force due to the effects of its one child policy. It can also improve countries’ competitiveness by boosting labour productivity. On the other hand, the growing use of robotics and automation can contribute to long term structural unemployment, which means unemployment that can often be long term as it is part of a fundamental shift in the skills needed by an economy. This can weaken consumer spending and consumer confidence levels.

The use of automation and robotics is forecast by the IFR to increase in all regions by 2015. Asia/ Australasia is set to see the biggest increase and this will primarily be driven by an increase in China.

Estimated Operational Stock of Multipurpose Industrial Robots by Region: 2010, 2012, 2015

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Source: The International Federation of Robotics

The forecast increased use of automation could contribute to an increase in unemployment rates globally, as the working age population aged 15-64 is set to grow from 4.6 billion in 2012 to 5.0 billion by 2020. Many of the increased numbers of the economically active global population may be competing for a reduced number of available employment opportunities as a result of automation.

/By Andrea Blažević, Antea Božić, Kristina Piene and Agita Sarkane/

Sources:

http://blog.euromonitor.com/2013/04/the-impact-of-automation-and-robotics-on-the-global-labour-market.html accessed on 26.04.2013

http://en.wikipedia.org/wiki/Automation accessed on 26.04.2013

http://en.wikipedia.org/wiki/The_End_of_Work accessed on 26.04.2013

10 thoughts on “The Impact of Automation on Global Labour Market

  1. I think the ongoing automation on the global labour market is a process that will continue in the future. Today we can see some results of this development, because 70 % of the European citizens are working in the service sector. So a lot of work places have been shifted away from the industrial jobs. At my point of view, it is important to find the right amount of automation in the working world. In nowadays, robots are used for always recurring operations and tasks or for work which is dangerous to health. Here the robots work with a higher rate of accuracy, speed and without exhaustion. Moreover, a lot of employees especially in the industrialized countries are not willing to do difficult, monotone or even dangerous activities. In these areas it is really good to have robots. But it must be taken into account that the rapidly increasing automation can lead to the loss of many jobs and long term unemployment will occur. So I think if we find the right level, it will be really helpful for the economy to save money and to stay competitive.

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  2. I totally agree that automation will go on in the future but I do not think this situation would be counted as a “threat” for the people who seek for a job as long as education systems of the government keep it self updated according to the new developments. Of course it is easier to be said to be done but governments would find a lot of supporters from private sector to improve their technical education schools. In the long run, automation would create more safe and comfortable jobs for the blue collar employees.

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  3. I agree that it is essential to find the best amount of using automation in global labour market.
    It is obvious that nowadays employers and enterpreneurs want to accelerate and make the
    work easier in order to increase their profits but the balance must be achieved as in many
    countries the number of population is growing and it may lead to a huge unemployment rates.
    We can’t say that there are no positive aspects of this process like more detailed work can be done or the labour productivity increases but we have to remeber about the drawbacks and find the balance so that it can only lead to upgrading the global economy.

    Reply
  4. I agree that it is essential to find the best amount of using automation in global labour market. It is obvious that nowadays employers and enterpreneurs want to accelerate and make the work easier in order to increase their profits but the balance must be achieved as in many countries the number of population is growing and it may lead to a huge unemployment rates. We can’t deny that there are no positive aspects of this process like more detailed work can be done or the labour productivity increases but we have to remeber about the drawbacks and find the balance so that it can only lead to upgrading the global economy.

    Reply
  5. In conclusion if we consider the pros and cons of automation we don’t have other option like that we accept them, because now is no way back. We have to achieve the synergy between people and machines. No more feelings, holidays, sick leave and the role of trade unions…personally for me its difficult to accept that we have to displace people from business processes and the loss of jobs, but on the other hand I understand that this is the price of increasing the international competitiveness, which the humanity has to pay.

    Reply
  6. I agree with this article. Automation is almost all factories. People machinery control, but most of the work carried out machines. I do not think that automation is bad. Produces more products and faster. Horrible is when an employer finds that the same work can carry fewer people than it was before the economic crisis. I think that this is also the cause of high unemployment.

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  7. In my view, companies should use the automation because some works are dangerous for people, these must be done by the automation. Although using the automation leads to unemployment, it may protect people life from accidents. To decrease the unemployment people should be directed convenient jobs, such as tecnician to repair the machines. As a result of this, both accidents are reduced and unemployment can be balanced.

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  8. I agree that automation of the global labour market is inevitable.In the developing and growing world they must improve the technologie because the consumers need a higher quantity and better quality.Unfortunatley these robots in most cases are able to the the whole work instead of hiring humans.Although they have to hire humans because they have to controll and fix these machines.So its important to balance the number of automatics with human labour force. I think that at dangerous field of work it s better to use machines because they can t make mistakes,but humans can make e.g.: if they are tired or just thinking about they life,and one small mistake can cause a very big disaster.

    Reply
  9. “China saw its labour productivity more than double between 2007 and 2012.” – this sentence is the focal point and the main reason of increasing automation in the world. Robots are capable of executing more tasks in a shorter period of time than any human being, thus increasing company’s productivity, so of course people are getting fired from their jobs. Employers want to increase productivity and lower labour cost and it’s typical for capital intensive production.
    The thing we as human beings have to ask ourselves is: Where is the line? Of course people are going to have to admit to themselves that automation is going to excel, but we have got to think of another solution for the ones who have been made redundant and use them in some other way.

    Reply
  10. China is obviously proof that automation is very beneficial as their one of the most successful countries in terms of business. It can increase productivity and profit margins but clearly this means by introducing more machines and robots there will be an increase in unemployment. I agree that there needs to be a balance, although automation seems very impressive it can also cause mistakes like human work force.

    Reply

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