Most commentators bemoan the impending impact of robots. Forbes magazine commented 93% of investors say that artificial intelligence is going to destroy jobs, and smart robots are putting 10.5 million U.S. jobs at risk, according to one report.
Robots will take our jobs. Robots will put mankind out of work.
A simple look at some data will actually show the exact opposite. Those companies that use more robots employ more people. Those companies that don’t use robots employ less.
The evidence is pretty overwhelming that the adoption of robots has had a very positive impact on Productivity . To shed light on that, here’s a study conducted by the Centre for Economic Policy Research (CEPR). CEPR measured direct efficiency gains amongst robot adopters as well as indirect gains through reallocation of labour from non-adopters to adopters. If you look at job creation amongst robot-adopters vs. non-adopters, a similar picture emerges. Whereas simple (but overly simplistic) logic would suggest that the adoption of robots kills jobs, precisely the opposite has happened. As you can see, robot adopters have created many new jobs over the last 20 years, whereas non-adopters have not.
Assuming recruiting is a sign of a growing business and laying off staff a sign of the opposite, robot-adopting companies have done far better than non-adopters. In other words, despite adopting a technology that, at the face of it, destroys jobs, robot-adopting companies have been so successful that more jobs have been created than have been lost.
But how prevalent will that be?
According to McKinsey, as many as 375 million workers worldwide could be displaced by robots and other automated systems between now and 2030. In the countries to be most affected, that is about one-quarter of the workforce . That is a hair-raising number and has forced some serious thinking.
If you go back in history, on a net basis, no new technology has ever caused job losses, and the early indications are that robots might not do that either. Having said that, no new technology has ever caused as many job losses as robots will, so it is hard to say. Regardless of that commentators have reached the following conclusions:
1. The introduction of robots will most likely cause problems initially, so the rate of unemployment could rise in the short term.
2. Many new job opportunities will present themselves over the medium to long term, meaning that the problem will gradually fade away again. Some of the new job opportunities would include:
- technology-related opportunities in an increasingly automated society (and there will be many of those);
- caring for the elderly in an ageing society;
- producing goods and services for the expanding middle classes of EM countries;
- modernising an outdated infrastructure in the developed world; and
- establishing a first-world infrastructure throughout the developing world.
3. As you have probably already deduced when looking at that list of job opportunities, the introduction of robots is not the only megatrend that will affect our livelihoods in the years to come. At least in the short term, some countries are better equipped to deal with the displacement problem than others and, ironically, those with the most adverse demographic outlook may have the smallest mountain to climb. for example the declining workforce’s in Germany and Japan means rather than being displaced from work more people will simply retire.
4. As the use of robots spreads across society, current disinflationary trends could possibly even turn deflationary. One consequence of increased automation is therefore for interest rates to stay low for a long time to come.
5. As already mentioned, total factor productivity will gradually replace labour productivity as the de facto measure of productivity in society.
6. Assuming automation is rolled out across society, GDP growth shouldn’t be dramatically affected by a shrinking workforce, but there are many other reasons why GDP growth will be low in the years to come. Negative drains from obesity, smoking and lifestyle related preventable diseases (diabetes) will have an increasingly negative impact on productivity.