Automation: Stealing Jobs or Creating Them

In 1722, the lathe -the mother of machines- was invented. This invention lit the spark of automation in general and the western industrial revolution specifically. From that time till this day, thousands of machines and tools have been created and invented to optimize and facilitate various processes, courses, and activities. These machines certainly helped mankind to progress and develop, whether it was magnifying the manufacturing ability of humans or providing them with enormous power and capacity to store information and coordinate complex tasks and difficult operations. 

Yet automation and machines created fears and concerns among the workforces of various World companies and organizations. Will it affect the employment rate of the world? Will it increase the unemployment percentage? And now with integration of technology in jobs and work spaces these concerns and worries have been amplified and significantly increased. 

There is a debate among labor economists on the effects of the introduction of technology to increase productivity (or, economize on labor) in general, and automation by means of robots and AI on employment in particular. On one hand, an argument claims that the pace of destroying jobs and automating them is exceeding the pace at which mankind is finding new jobs and tasks for the unemployed. This argument foreshadows mass unemployment and redundancy which resuzlts in catastrophic effects that threaten the wellbeing of the world economy. 

On the other hand, there is a sizable body of researchers and industrialists that argue that although automation and technology may cause some people to lose their jobs it creates more opportunities and job domains for more people to pursue. This argument is backed up by several studies. Historical analyses showed that each industrial revolution and technological breakthrough triggered structural and fundamental transformations that caused frictional unemployment followed by prosperity and not poverty and economic hardships.

Labor replacing technologies, as the name implies, take jobs that humans already occupy. One of the most obvious examples of automation in our modern time is Assembly Robots in automobile factories. Assembly lines that once consisted of several assembly stations each subsisting a minimum of 5 to 6 workers that handled the assembling of certain car parts before it proceeds to the next station where other parts are assembled. 

Today, these stations have been substituted by 1 station with 1 robot handling all the assembling work that used to be handled by more than 20 workers and which took way more time than what a programmed robot would take. This technology has largely supplanted direct human effort in constructing cars, and is being adopted by a plethora of world leading Automobile companies such as Volkswagen, BMW, and Mercedes-Benz. More technologies such as the computer this research was written on, has eliminated an enormous number of occupations that were once common jobs in the 20th century. 

If advances in artificial intelligence (AI) and automation are heavily weighted towards these types of technologies, as experts predict, the potential of displaced workers and further erosion of labor share is quite high. But this is far from inevitable. The pace of development of new technologies that facilitate new tasks, for which humans are better suited, could potentially lead to a much better future for workers. 

For instance the widespread introduction of computers and AI into business offices has certainly displaced an indisputable number of secretaries and typists, on the other hand the new tasks and occupations that were created from this introduction are jobs that take over new tasks in associated industries, including computer technicians, software developers, and IT consultants. Moreover, broader structural changes in the economy such as the expansion of the service sector make it much less likely that technological change in artificial intelligence and robotics will result in a catastrophic job loss in the relatively near future.

Unlike labor replacing technologies, some technologies reinstate labor; they create new jobs that humans are better fit for than machines, while taking the humans’ place in jobs machines are better qualified for. For example computers; According to SCMO, since the invention of computers more than 2 billion computers have been made and for various goals and tasks. Computers now are present in almost any home, factory or store, why? 

Simply because they are faster, smarter and more reliable than humans. Yet with computers a new industry was born, and with it were born new occupations, like IT managers, software developers and computer engineers, etc. Dr. Michael Chua partner at the McKinsey Global Institute mentioned on an interview with MGI podcast: “Right now we have a bunch of people whose job it is to be an app developer for mobile smartphones. 

This isn’t a job that anyone necessarily imagined a couple decades ago. In fact, there’s an academic research report that says around half of 1 percent of jobs created every year are entirely new. By 2030, we could be looking at another 8 to 9 percent of jobs in that time period that simply don’t exist today.” This shows that automation isn’t only creating jobs it’s also creating new fields and domains which gives people more choices and varieties to start businesses and projects that benefits them and ultimately the economy.

The world’s most powerful countries economically are also significantly affected by automation. According to Deloitte/Office for National Statistics (2015) 800k UK jobs have been lost to automation since 2001, yet 3.5m have been created in multiple domains and industries. Moreover, according HfS research 700k low skilled Indian jobs will be lost in 2022 but it will create more than 300k highly skilled Indian jobs. Research shows that AI will have a huge impact on the GDP of countries like China and the United States. China’s GDP is expected to grow by an astonishing 26% due to AI, while North America faces a potential 14% boost. 

Almost half of these economic gains will come from product enhancements, experts say. It is projected that AI taking jobs away from humans will drive product variety, with increased attractiveness, personalization and affordability.. In the US 33% of new jobs are for occupations that did not exist 25 years ago. Adding more according to the World Economic Forum: automation will displace 75 million jobs but generate 133 million new ones worldwide by 2022. “One common fallacy is that machines are replacing people. The reality is that machines don’t work without humans. A more accurate description is that a large number of people are being replaced by a smaller number of people using machines” explains Thomas Frey, futurist and founder of the DaVinci Institute.