By 2014, there were 7.6 robots per thousand German workers, compared to 1.6 in the US. The rise of the robots, coming first for our jobs, then maybe our lives, is a growing concern in today’s increasingly automated world.On Oct. 10, the World Bank chief said the world is on a “crash course” to automate millions of jobs. But a recent report from Germany paints a less dramatic picture: Europe’s strongest economy and manufacturing powerhouse has quadrupled the amount of industrial robots it has installed in the last 20 years, without causing human redundancies.
In 1994, Germany installed almost two industrial robots per thousand workers, four times as many as in the US. By 2014, there were 7.6 robots per thousand German workers, compared to 1.6 in the US. In the country’s thriving auto industry, 60–100 additional robots were installed per thousand workers in 2014, compared to 1994.
Researchers from the Universities of Würzburg, Mannheim, and the Düsseldorf Heinrich-Heine University examined 20 years of employment data to figure out how much of an effect the growth of industrial manufacturing has had on the German labor market.
They found that despite the significant growth in the use of robots, they hadn’t made any dent in aggregate German employment. “Once industry structures and demographics are taken into account, we find effects close to zero,” the researchers said in the report.
Robots are changing career dynamics
While industrial robots haven’t reduced the total number of jobs in the German economy, the study found that on average one robot replaces two manufacturing jobs. Between 1994 and 2014, roughly 275,000 full-time manufacturing jobs were not created because of robots.
“It’s not like jobs were destroyed, in the sense that a manufacturing robot is installed and then the workers are fired because of the robots—that never really happened in Germany,” study co-author Jens Südekum, from Düsseldorf Institute for Competition Economics, told . “What happened instead is that in industries where they had more robots, they just created fewer jobs for entrants.”
“In a sense the robots blocked the entry into manufacturing jobs.” “Typically around 25% of young labor market workers went into manufacturing and the rest did something else, and now more workers have immediately started in the service sector—so in a sense the robots blocked the entry into manufacturing jobs.”
The study also found that those who are already in jobs where they were more exposed to automation, were significantly more likely to keep their jobs, though some ended up doing different roles from before. The big downside for some medium-skilled workers, who did manual, routine work, was that it meant taking pay cuts.
“This is where these wage results come in, what we find is that no one was really fired because of a robot, but many swallowed wage cuts. And this has mostly affected medium-skilled workers who did manual routine tasks.” Around 75% of manufacturing workers are medium skilled, and the wage cuts have so far been moderate, he says.
“The robots really fueled inequality.” But Germany hasn’t got it perfect. One core reason for why Germans haven’t been fired in favor of robot, is the country’s famously powerful unions and work councils, which have are often keen to accept flexible wages on behalf of workers, to maintain high employment levels.
“Unions of course have a very strong say in wage setting in Germany,” Südekum says. “It’s known that they are more willing than unions in other countries to accept wage cuts to ensure jobs are secured.”
While robots have increased productivity and profits, and not driven people into unemployment (yet), they haven’t been good news for blue collar workers in Germany.
“The robots really fueled inequality, because they benefitted the wages of highly skilled people—like managers and scientists, people with university education—they even gained higher wages because of the robots, but the bulk of medium-skilled production workers suffered.”
Disruptive technologies are dictating a new future for humankind. Almost every day we hear of new advances that blur the lines between the realms of the physical, the digital and the biological. Robots are now in our operating rooms and fast-food restaurants. It’s possible, using 3D imaging and stem cell extraction, to grow human bone from a patient’s own cells. 3D printing is creating a circular economy – rather than the linear model of making things then throwing them away – by altering how we use and recycle raw materials.
This tsunami of technological change is clearly challenging the ways in which we operate as a society. Its scale and pace are profoundly changing how we live and work, and signposting fundamental shifts in all disciplines, economies and industries.
In what we now call the Fourth Industrial Revolution, we will see the confluence of several technologies that are coming of age, including robotics, nanotechnology, virtual reality, 3D printing, the Internet of Things (IoT), artificial intelligence (AI) and advanced biology.
Although at different stages of development and adoption, as these technologies bed in, becoming more widespread and convergent, we will see a radical shift in the way that individuals, companies and societies produce, distribute, consume and re-use goods and services.
Will the robots & new industrial revolution destroy jobs?
These developments are prompting widespread anxiety about what role humans will have in the new world. As the pace of change accelerates, so the alarm levels ratchet up. A University of Oxford study estimated that close to half of US jobs could be lost to automation over the next two decades. In the opposite camp, economists like James Bessen argue that, on the contrary, automation and jobs often go hand in hand.
It’s impossible at this point to predict what the overall impact on employment will be. Disruption will happen; of that we can be certain. But before we swallow all of the bad news, we should take a look at history. Because this tells us that it is more often the nature of work – rather than the opportunity to take part in work – that will be impacted.
How industrial revolutions changed the nature of work
The first industrial revolution took British manufacturing out of people’s homes and into factories, creating the beginnings of organizational hierarchy. People moved from rural areas to industrial ones, change was often violent – the famous “Luddite riots” in early 19th century England are a case in point – and the first labor movements emerged.
The second one was characterized by electrification, large-scale production and the expansion of transportation and communication networks. It led to the birth of the professions – such as engineering, banking and teaching – created the middle classes, and introduced social policies and the role of government.
And as electronics and information technology automated production during the third industrial revolution, many human jobs started to become service-driven. When automated teller machines (ATMs) arrived in the 1970s, it was initially viewed as a disaster for workers in the retail banking industry. Yet branch jobs actually increased over time as branch cost went down, becoming less transactional in nature and more about managing customer relationships.
What can we learn from history?
Each industrial revolution has brought attendant disruption, and the fourth wave will be no different. We must remember this and use what we have learned to manage the change:
Focus on skills. Instead of focusing on the specific jobs that will appear or disappear, we should instead concentrate on the skills that will be needed, then educate, train and reskill the human workforce to leverage the new opportunities afforded by technology. HR departments, educational institutions and governments will be at the forefront of driving this.
Protect the disadvantaged. Experience points repeatedly to the need to protect the disadvantaged and create the time and means for them to adjust. As we have seen this year, it is more important than ever not to let inequalities create social groups who have lost all hope on the altar of progress.
Work together to create new ecosystems. Government will have a crucial role to play, along with business and civil society leaders, in driving the appropriate levels of collaboration, regulation and standards that will be needed to ensure that the fourth industrial revolution translates into economic growth and creates benefits for all.
I am not under any illusions this will be easy. Particularly in democracies, change will be hard and slow. It will require a mix of forward-looking policy-making, agile regulatory frameworks and – above all – effective partnerships that cross our organizational and national boundaries. Politics, rather than technology, will determine the pace of change.
Denmark is rightfully an often quoted example here, where its “flexicurity” system allows for a high degree of labour law flexibility, while offering citizens a safety net of benefits, training and reskilling.
Despite the exponential pace of technological change, we should not forget the all-important role of time. While the changes ahead will be momentous – indeed, revolutionary – they will not land as a big bang. On the contrary, they will likely take place over many decades. We have time, therefore, to adjust; as individuals, as companies and as societies. For sure, this is no reason to wait and see, but rather one to get to work and create the new future.
Create jobs in the age of robots and low growth
The growth economy suffers from a productivity paradox. Corporations compete to reduce the time and effort that goes into production processes, which is generally seen as a sign of efficiency, but in reality has a troubling outcome.
Unless more stuff is produced and consumed, people lose their jobs as the same output can be achieved with fewer workers. This is why so many well-meaning people around the world fear the prospect of low growth, even when they recognise that the current form of industrial development is destroying the social fabric and natural ecosystems of societies.
Such a structural unemployment problem is further compounded by the real prospect of massive automation replacing humans in production chains. A study by Oxford University predicts that robots are likely to displace no less than 50% of jobs in the US and Europe in the next 20 years.
Machines are putting people out of work in emerging economies too, including in China, which has long been the global job creator. According to Martin Ford, bestselling author of The Rise of the Robots, most routine jobs are becoming obsolete. As Ford says: “We must decide, now, whether the future will see broad based prosperity or catastrophic levels of inequality and economic insecurity.”
Unless societies change their approach to growth and development, they will not only end up with a broken planet and conflict-ridden communities: they will also face massive unemployment. There is no way the vertical structures of production dominating the current industrial system will generate enough jobs, let alone good jobs, to satisfy our needs.
The only way out of this predicament is to empower people to become producers and consumers at the same time. Or what I call “prosumers”. They must be capable of making most of the things they need through local systems of co-production and networks of small businesses.
And certain technologies can help develop a new form of post-industrial artisanship. Thanks to open source hardware, small business networks are building computers. With the assistance of 3D printers, artisans are taking on big business in a way that may challenge conventional assumptions about the efficiency of economies of scale.
Changing the focus
Rethinking work is crucial for industrialised economies as well as emerging economies, where job losses are being felt even in the presence of substantial, although diminishing, economic growth.
For instance, Africa is expected to achieve a record 2.8 billion people by 2060, becoming the largest continent in the world. Most of these people will be young and thirsty for work. There is no way the continent will create decent employment opportunities by adopting an industrial model that’s already eliminating jobs globally.
A new approach is needed. The wellbeing economy forces us to rethink the nature of work by shifting the focus from the quantity of the production-consumption cycle to the quality of the relations underpinning the economic system. The growth economy pushes for mass consumption through an impersonal relationship between producers and consumers (which can be more efficiently performed by robots). The wellbeing economy must embrace a customised approach to economic exchanges, in which it’s the quality of the human interaction to determine the value.
Take a doctor as an example. From the perspective of the growth economy, the best doctor is the one that visits as many patients as possible in the shortest period of time. In theory, this function could even be performed by a robot. By contrast, in the well-being economy, the personal attention invested in the doctor-patient relationship becomes the key to value creation.
Intuitively, all of us associate the value of good health care with the personal attention that comes with it. The same holds true for education: any reasonable person would frown upon a school that asked teachers to teach faster and faster to an ever larger number of students. Common sense tells us that value is being lost through the mass consumption of these relationships, even when profits (both for the clinic and the school) may increase.
Productivity is certainly a good thing, but it should not be embraced blindly. Above all, we need to ask what productivity is for.
The economy is nothing else than a system of social relations. If productivity undermines those relations, the economy itself crumbles, even when profits (at least for someone) may go up.
Many professional activities based on the quality of the performance cannot, by their own nature, become more productive. Asking an orchestra to play faster would not increase productivity: it would simply turn a melodic experience into a nightmare. The same applies to painters, dancers, barbers, teachers, nurses and the like.
This is why it still takes the same number of people to play a Mozart opera today as it did when Mozart first composed it. So, what about extending the same intuition to the rest of the economy?
What if the mechanic of the future won’t be a robot churning out new spare parts every second, but rather a qualified artisan that helps us fix, upgrade and upcycle our vehicle for the entire duration of its life? What if the engineer of the future won’t be a remote computer taking care of our house appliances but a personal advisor helping households produce their own energy. They would help optimise the use of natural resources, from water to vegetable gardens, and make sustainable use of building materials?
A circular economy in which production is optimised and no waste is produced can be achieved in two ways. It can be achieved through robots-dominated production chains or by a horizontal network of qualified artisans and small businesses operating as a collaborative organism. In the first case, a few people will dominate the global economy. In the second case, everyone will be empowered.
A wellbeing economy cannot exist without empowerment, access and equal opportunities for personal and collective fulfilment. Developing countries can now leapfrog to such a new trajectory without being held back by a model of industrialisation that’s increasingly unfit for the 21st century