Robots are projected to displace 20 million manufacturing jobs by 2030, but the impact will be felt most by low-skilled laborers in rural areas.
The job prospects for switchboard operators are bleak.
This is one of the many examples that demonstrates how the labor market shifts based on technological advancements. Human ingenuity is always pushing the limits of what is possible. Just as the advent of the automobile forever changed the transportation sector, the impact of robotic automation on the manufacturing sector will be felt for generations to come.
The state of the labor market
Industry 4.0 technologies have impacted the job market fairly heavily. Displacement has followed the advancement in technologies such as robotic automation, Internet-of-Things-connected devices, advances in additive manufacturing and wireless communications, and Smart business strategy. The data seemed to undeniably lead to significant job displacement for low-skilled laborers in the manufacturing sector. A new report released by Oxford Economics has confirmed that manufacturing jobs will be displaced – 20 million jobs to be exact. And while the study anticipates the creation of new yet-to-exist jobs of almost equal measure, the opportunities for new opportunities will be aggregated in urban areas and for those with moderate-to-high levels of skill.
Since 2000, approximately 1.7 million manufacturing jobs have been lost to automation globally. This includes 260,000 jobs lost in the U.S., 400,000 in Europe, and 550,000 in China. In its study, Oxford Economics found the installation of each new industrial robot displaces 1.6 workers. The number of industrial robots installed has tripled since 2000 and the rate of installation is expected to increase over the next decade, with an anticipated 20 million newly installed industrial robots (14 million alone are anticipated in China, which already leads globally in industrial robots). This shift is expected to displace at least 20 million workers in the manufacturing industry.
Economists agree on three major trends that explain mass adoption of robotic automation installations. First, robots’ labor is cheap. Advancements in technology — such as extended battery life and increased processing power — has driven down the real cost of automation, making it more accessible and affordable than human labor. Robots also generally exhibit a lower rate of production error and enable valuable Smart Manufacturing processes, such as predictive machine maintenance and safety features to reduce dangerous work conditions.
With this, industrial robots are also becoming more complex and capable of executing advanced functions never before possible. This includes robots that use AI and machine learning to learn from the environmental factors and key performance metrics. Lastly, the demand for manufactured goods continues to rise. As the world becomes more reliant on connected devices, the demand for electronic devices such as sensors and microcontrollers increases significantly. At the heart of this mass production is China. China has become the leading nation for automotive manufacturing and producer of consumer electronic devices. China is already one of the leading nations in industrial robotic installations and this trend is projected to continue. These factors lead economists to expect the widespread displacement of at least 20 million laborers in the manufacturing sector.
The Displacement of Jobs May Increase Wealth Disparity in Rural Areas
For every robot installation, the economists at Oxford found the average unemployment ratio increased by 1.5, but the impact was felt differently by region. In regions with high-skilled laborers, the unemployment ratio was 1.2, compared to rural regions with lower skilled workers at 2.0.
In some regions, such as Germany, the loss in manufacturing jobs is expected to be offset by the creation of new jobs in the service sector. For some industries, such as those that require creativity, compassion, and social intelligence, jobs are expected to continue to be filled by human laborers “for decades to come.” Other sectors, including service industries such as hospitality, will eventually see a robot takeover, according to the study.
Actions to Take
The consequences of Industry 4.0 are plentiful. While the average price of consumer goods is expected to decrease due to higher efficiency in manufacturing — while still allowing for increased profits for corporations – the fact remains that the widespread adoption of robotic installations results in millions of job losses for medium- and low-skilled laborers worldwide. This impact will be felt disproportionately in rural economies reliant solely on manufacturing plants for revenue. This presents a dilemma for local policymakers. While Industry 4.0 is projected to boost the overall global economy by $4.9 trillion per year, it will also increase the wealth disparity in many nations.
The 250 analysts who worked on the report devised an action plan for policymakers. It is important to note that most laborers who historically leave manufacturing jobs often find work in construction, transportation, maintenance, office, and administrative roles – all of which are vulnerable to automation. Instead, training these laborers in jobs that require a more “human” touch – such as advanced customer service, negotiation, art, and social work – can allow these at-risk populations to have more long-term security against job loss due to automation.
The analysts proposed actions plans for a number of populations either potentially impacted by automation or in decision-making positions that could shape how these robotic installations are adopted. The economists suggested strategies such as getting buy-in from laborers, cross-training laborers in soft skills that are less likely to be automated, and encouraging educators to prepare future workforces to be adaptive. We are shifting into an era where few jobs if any are jobs for life.
What the Future Holds
While many of the 20 million manufacturing workers to be displaced by automation are expected to find work in yet-to-exist industries, some economists argue as technology advances, there simply will not be enough jobs to go around. Elon Musk predicted technology would result in a somewhat socialistic society, where families would require a universal basic income provided by the government to survive.
Switzerland is among one of the first countries to vote on the adoption of a basic universal income (at roughly $2,578 per month). The plan was rejected, but the option is at least on the table. Other economists predict individuals may piece together several part-time jobs to make ends meet, such as making deliveries for Amazon and driving for ride-share company Lyft.
But most workers in these job functions still struggle to make enough money despite working overtime each week. The wealth disparity may continue to worsen, broadening the gap between the haves and the have-nots if policymakers do not intervene to protect the livelihood of the average middle-class family. The time to take action is now. The very future depends on it.