Automation and the Employment Market

With the opening of the new Amazon Go store in Seattle, many people can’t help but wonder about the impact automation is having on the employment market. Amazon’s new store involves simply walking in, picking up your products and walking out – no checkout service included. The way customers pay for products is through in-store sensors, which monitor the items placed in a person’s basket and bill those products to their Amazon Prime account. It may sound simple, but software developers have been working on the idea for years. Amazon are now considering opening around 200 similar stores across the United States.

What impact will the automation of services such as this have on the employment market more generally? We are currently going through the ‘fourth industrial revolution’, where it is easy to find examples of technology being used to replace everyday human workers. For example, in China, there has been the introduction of a new robot barista named Soya, which serves coffee in a fully automated, no human-employee coffee shop. In LA too, a new burger flipping robot – Flippy – started its first shift in a Pasadena restaurant.

Many economists highlight that the effect of automation will impact employment unequally. It is predicted that there will be an increase in demand for high-paying creative and cognitive jobs, while middle and low-skill occupations will face decline. Indeed, PWC report that the risks appear highest in sectors such as transportation and storage, and manufacturing and retail, while health and social work sectors are the least likely to be affected. Essentially, those sectors that are most capital-intensive face the biggest threat, in comparison to those which involve a much higher level of human contact, as they cannot be sufficiently replaced through automation.

Nonetheless, it is key to note that only around 5 percent of current occupations stand to be completely automated if today’s cutting-edge technology is widely adopted. Furthermore, automation is aiding in the creation of new jobs in the digital technology sphere and, through productivity gains, is generating more wealth and spending that will support additional jobs of existing kinds, primarily in services sectors that are less easy to automate. As the automation market continues to gain momentum, there will be more jobs available for entrepreneurs too, whose innovations, if successful, will improve standard of living and create further jobs. Think ‘the multiplier effect’.

It is also important to take into account the effect the technology and automation movement will have, and indeed is having, on existing jobs. Automation and technology are augmenting human capability and making people’s jobs more interesting by removing the tedium of repetitive tasks –  in administrative work for example, where tasks like bundling documents and proof reading can be automated. By taking up the role of these repetitive, low skilled tasks, automation allows time to be freed up for undertaking higher level tasks, such as coming up with complex and creative solutions to problems. With higher productivity and more free time, employers need to consider how best to utilise their employees’ time in their changing roles. Overall, spending more time on advanced tasks will add value to both the work people are doing and the service/products people are receiving.

This is similarly seen in the pharmaceutical industry, where I’ve previously discussed how artificial intelligence is aiding in the discovery of new drugs, by crunching through huge amounts of data at a quicker rate than humans could manage.

However, in the sectors most likely to be affected, governments can play a key role in addressing potential inequality. An historic example which illustrates this well is America’s transition away from agriculture. There was a dramatic decrease in farming jobs across the US, yet this was accompanied by major spending on secondary education and new laws enforcing compulsory school attendance. What this shows is that governments play a key role in ensuring gains and pitfalls resulting from automation are shared more widely and equally between society.

Fundamentally, automation isn’t going to lead to mass scale unemployment. Instead, it is speeding up simple processes and allowing for more complex tasks to be completed by humans. This brings a wealth of opportunity to the employment market whilst also adding value, rather than the opposite effect.

References:

James Vincent (30 November 2017) “Automation threatens 800 million jobs, but technology could still save us, says report” The Verge https://www.theverge.com/2017/11/30/16719092/automation-robots-jobs-global-800-million-forecast

Richard Berriman (March 2017) “Will robots steal our jobs? The potential impact of automation on the UK and other major economies” UK Economic Outlook https://www.pwc.co.uk/economic-services/ukeo/pwcukeo-section-4-automation-march-2017-v2.pdf

Rupert Neate (5 December 2016) “Amazon Go store lets shoppers pick up goods and walk out” The Guardian https://www.theguardian.com/business/2016/dec/05/amazon-go-store-seattle-checkouts-account

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