Automation’s Impact on Business and the Workforce

For many years, outsourcing has been a hot-button topic. Jobs going overseas to countries with cheaper labor than that available in the United States, Canada, various parts of Europe, etc. but now there is a new scarier potential job stealer on the table: automation. Technology has moved at such a rapid pace that many are finding that a lot of jobs being performed by human workers can be done cheaper and more efficiently by machines. For businesses this move towards automation is incredibly appealing, increased efficiency and lower costs undoubtedly lead to a higher revenue, but what about the workers? What happens to the current workforce replaced by machines? On the other hand, will the productivity boost from automation help alleviate the stagnation that has occurred in many advanced economies?

Automation Data

According to a study by McKinsey & Company, about 15% of the global workplace will see their jobs taken over by automation by the year 2030. Of course, the impact of automation varies significantly by country due to the rates of wages and activities performed by workers.  The idea of 15% of the global workforce seeing their jobs done by machines is rightfully concerning, but it is also believed that jobs created in this new automated economy will make up for those that are lost. However, even if there are new jobs available, the impact of 75-375 million people changing occupations by 2030 is not insignificant.

Repetitive Work at Risk from Automation

The work that is at the highest risk of automation tends to be repetitive work such as data processing or physical labor. Although repetitive jobs are likely to be automated, automation requires an investment in technology by businesses. As a result, certain low-wage jobs are less likely to be automated because the cost of investing in automated technology is not as beneficial. Additionally, jobs that require complex social interactions and management will have lower automation due to the inherent difficulty of programming machines to do such jobs. Check out the probability of your job being automated here.

Automation Will Produce Mixed Affects on Jobs & The Economy

The new jobs available in the changing economy will require more education and cognitive ability beyond repetition. The kinds of jobs created and job sectors that will flourish depend on the country and how automation transforms their economy. In a country like China, automation will likely lead to a burgeoning middle class and, with it, higher incomes and higher spending. Countries with a rising middle class will see job creation in education, leisure, financial services, and more. As automation and technology become more widespread, there will most likely be notable demand for jobs in the IT and tech related fields as businesses are incentivized to invest in these areas.

As automation will affect countries differently, some countries may choose to try and stifle automation as a response to lessen the impact on the workforce, but these efforts may be trivial at best and detrimental at worst. How governments and societies react to automation is of the utmost importance and could be the difference between prosperity and disaster. With the right amount of planning, governments can invest in training and programs to help workers transition into new fields of employment. It will take the combined effort of the public and private sectors to make process of automation one that can benefit everyone.