Jobs upheaval as world adapts to era of automation

A new report from the Economist Intelligence Unit and UiPath claims that organisations around the world currently making extensive use of automation technologies, with 67 percent of UK business executives claiming to be satisfied satisfied with the results of their automation initiatives, 48 percent describing their organisation’s progress with automation as advanced, and 73 percent expecting their company’s operating costs to improve as a result of automating business processes. It is published on the same day as another report suggests that up to 20 million manufacturing jobs could be lost to robots across the world’s leading economies by 2030, replaced by a range of new jobs.

The EIU / UiPath survey, entitled The Advance of Automation: business hopes, fears and realities, questioned senior executives of mid- and large-sized enterprises in the UK, Canada, France, Germany, India, Japan, Singapore and the United States. The survey was broken down into ‘leaders’ – those making extensive use of automation technologies – and ‘laggards’ – those making moderate or limited use of automation. UK respondents were one of four countries populating the leader pack (11 percent). The other leaders are Germany, France and the US.

Ahead of the curve

67 percent of UK business executives report being satisfied with the results of their automation initiatives so far – and are experiencing business benefits as a result. 73 percent of UK firms expect their companies operating costs to improve as a result of automating business processes – whilst 65 percent predict revenue growth and 62 percent forecast increased profitability.

[perfectpullquote align=”right” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]Over 90 percent of businesses already use technology to automate business processes[/perfectpullquote]

As a nation, the UK is ahead of the curve when it comes to business automation. Nearly half (48 percent) of UK businesses describe their use of automation as ‘extensive’, whilst 48 percent describe their organisation’s progress with automation as advanced. 15 percent consider their progress to be very advanced.

Globally, over 90 percent of businesses already use technology to automate business processes, companies in every industry surveyed – including manufacturing, healthcare and financial services – find value in it. Furthermore, nearly one-in-ten businesses (88 percent) worldwide believe that automation will accelerate human achievement.

84 percent of respondents globally report that the c-suite is the driving force behind automation initiatives for their business, with automation responsibility rolling up to the CEO (22 percent), CTO (29 percent) and CIO (17 percent). Over 70 percent of c-suite respondents also report that RPA and AI are a high or essential priority to meet their strategic objectives, predicting that it will make them more competitive as a business. Specifically, RPA is an extremely high priority to meet strategic objectives for 70 percent of UK businesses.

Jobs set to tumble

However, up to 20 million manufacturing jobs could be lost to automation across the world’s leading economies by 2030, as research (registration) published by Oxford Economics finds. Around 1.7 million manufacturing jobs have already been lost to robots since 2000—including around 400,000 in Europe, 260,000 in the US, and 550,000 in China.

[perfectpullquote align=”right” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]Use of robots in services industries will also accelerate sharply in the next five years, fuelled by advances in AI, machine learning and engineering[/perfectpullquote]

The rate of ‘robotization’ is increasing rapidly: Since 2010, the global stock of industrial robots has more than doubled.
If this rate holds, the global manufacturing workforce will be 8.5 percent smaller by 2030. Each new robot installation already displaces (on average) 1.6 manufacturing workers, according to our econometric study of major economies. Use of robots in services industries will also accelerate sharply in the next five years, fuelled by advances in AI, machine learning, and engineering. This will particularly affect logistics industries but spread to sectors including healthcare, retail, hospitality, and transport.

Approximately every third robot worldwide is now installed in China. By 2030, the report projects China could have as many as 14 million industrial robots in use, dwarfing figures for the rest of the world as China further consolidates its position as the planet’s primary manufacturing hub.

Crucially, the great displacement of jobs from the rise of robots will not be evenly spread around the world, or within countries. Lower-skilled regions, which tend to have weaker economies and already-high unemployment rates, are much more vulnerable to the loss of jobs due to robots. On average, each additional robot installed in these regions leads to almost twice as many job losses as those in higher-skilled regions of the same country. economic inequality and political polarisation. Given these stakes, policy-makers need an early warning system to help them to mitigate the risks to employment from automation.

Click to learn more and to see maps of the most vulnerable regions in:  the US, Germany, the UK, France, Japan, South Korea, and Australia.

Robots to advance on the services sector

The report examines how robots are steadily gaining traction in specific segments of the service economy from airport baggage handling to warehouse stock management, and even bricklaying on construction sites. It claims that jobs where repetitive functions are required are most affected, with those such as warehouse work at imminent risk. Jobs in less structured environments and which demand compassion, creativity or social intelligence are likely to be carried out by humans for decades to come. But the report charts the growing role robots will play in sectors including retail, healthcare, hospitality, and transport as well as construction and farming.

The $5 trillion robotics dividend

[perfectpullquote align=”right” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]Within countries and sectors, the positive and negative impacts of robotization will be felt very unevenly[/perfectpullquote]

Within countries and sectors, the positive and negative impacts of robotization will be felt very unevenly, with workers in the manufacturing sector, especially those in lower skilled regions, particularly vulnerable to devastating job losses. Yet at the global level our study shows that the current wave of robotization ultimately boosts productivity and economic growth, generating new employment opportunities at a pace comparable with the rate of job destruction.

This ‘robotics dividend’ will lead to millions of new jobs being created throughout all sectors of the global economy.
Across the world, the report suggests that a 1% increase in the stock of robots per manufacturing worker leads to a 0.1% boost to productivity, measured by output per worker—enough to drive meaningful growth.

Using Oxford Economics’ Global Economic Model it claims that faster adoption of robots boosts both short- and medium-term growth. A 30% rise in robot installations above our baseline forecast for 2030 would, for example, trigger a 5.3% boost to global GDP in that year—equivalent to $4.9 trillion to the global economy that year, or an economy greater than the projected size of Germany’s.

Profound policy implications

As robotics adoption intensifies, policy-makers will face a dilemma: while robots enable growth, they exacerbate income inequality. Automation will continue to drive regional polarisation in many advanced economies—and this trend will intensify as automation spreads to services.

The challenges are not insignificant. The analysis of jobs moves of more than 35,000 US workers over their careers found more than half of those leaving production jobs in the past two decades were absorbed by just three occupational sectors: transport, construction and maintenance, and office and administration work. These sectors are among the most vulnerable to automation over the next decade.

But this should not lead policy-makers to slow the adoption of robotic technology. Instead the focus should be to use the robotics dividend to help those in vulnerable regions ready themselves for the major upheaval ahead. The report concludes with a framework of action for policy-makers, business leaders, technology companies, educators and workers to navigate the challenges and opportunities that robots will bring.