Some believe that the ongoing technological revolution could cause mass unemployment, where human workers will be replaced entirely by machines. Others are more sceptical about this opinion and argue that humans have always successfully adapted to any new automation technology that has come during the last century and that the predicted “end of work” never came.
There is no doubt that technology and automation transform the way work is being done. The reason is efficiency — robots and automation have gradually allowed us to make more things for less. This pattern can be seen across the 20th century, causing profound changes on a global scale. Up until now, the impact was felt mainly in the agriculture and manufacturing sectors. To put it in numbers, according to the Bureau of Labor Statistics in the US, the agriculture share of total employment declined from 60 percent in 1850 to less than 5 percent by 1970. As a share of total employment in the US, the manufacturing sector fell from 26 percent in 1960 to below 10 percent in 2020. In China, one-third of the workforce moved out of agriculture between 1990 and 2015. The decline is staggering, but guess what? The overall employment as a share of the population has continued to grow. New industries and occupations have emerged, absorbing workers previously displaced by evolving technology and automation. Based on what history tells us, in the short term, technology often causes displacement of jobs, but on the other hand, it also creates many new jobs in the long term. Is this time any different? Do we have to be worried about our jobs?
The term “disruptive technology” is being tossed around regularly in the media to describe the rapid technological development we are now witnessing. As we’ve seen in the past, there is no doubt that technology has the power to completely reshape entire industries, economic sectors, upend the job market, and put at risk millions of primarily low-wage jobs. Right now, we can see such a trend in the service sector, where self-service checkout lanes are slowly replacing employees behind the counter, allowing to reduce numbers to a minimum. This is only a minor example of the technology disruption that is waiting behind the corner. There is little reason to believe machines won’t eventually be serving up burgers across the fast-food industry. And the recent pandemic has even sped up this automation strategy. Take a close look at Japan’s Kura sushi restaurant chain, where robots help to make sushi. To ensure freshness, the system even keeps track of how long individual plates have been circulating on the conveyor belt to automatically remove those that reach their expiration time.
A similar wave of automation is spreading across the whole service sector like a tsunami. It is largely caused by the technological investments made by businesses in response to the pandemic. Even though this could cause faster growth and higher wages in the short run, it might also reduce the number of available low-wage jobs. The push towards automation could also significantly increase inequality across the whole world population in the coming years, as predicted in the working paper published by the International Monetary fund.
Technological investments have not only accelerated in the restaurant sector but also in the retail industry, hotels, manufacturing businesses, and others. In an interesting report published by the World Economic Forum in 2020, we can see that 43 percent of 300 global companies surveyed expect to reduce their workforces through new uses of technology soon, despite this fact, there is still a large majority of employers who recognize the value of human capital investment. As stated in the report, an average of 66% of employers surveyed expect to get a return on investment in upskilling and reskilling within one year. On the other hand, only 42% of employees are taking up employer-supported reskilling and upskilling opportunities. Reskilling and upskilling displaced workers will be also a great challenge for the public sector, which needs to step up its effort and provide more support.
It is safe to say that, unlike previous times, the impact of automation will be felt across the whole spectrum of jobs and not only in specific sectors. It will be up to businesses and governments to create programs to help workers in low-wage jobs acquire new skills, so they could become part of this new job market. However, automation will also make the economy more productive and create faster growth, which could mean that employees could get better as a whole. In the future, the most successful businesses will be the ones that focused on reskilling or upskilling their human capital while successfully deploying automation systems.
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