Advanced Computing in the Age of AI | Thursday, February 22, 2024

Robots Take Aim at Low Wage Workers, 20M Job Losses by 2030 Predicted 

(Matej Kastelic/Shutterstock)

A new report on robotics in manufacturing paints a bleak picture for lower wage manufacturing workers, predicting 20 million jobs will disappear over the next decade and that for each new robot installed, 1.6 manufacturing workers are displaced.

The report from Oxford Economics of the UK is noteworthy for its comparison to robotics job losses since 2000 – only 1.7 million worldwide – underscoring the increasingly capability of robots as they incorporate innovations in engineering and AI.

In an interview today on BBC Radio, Oxford Economics’ James Lambert, director of economic consulting, Asia, painted a balanced picture of the emerging robot-driven manufacturing world, saying that robots will be both jobs killers and creators.

“There are many opportunities that emerge from the transformation in the way we do things,” Lambert said. “So within a production line, for example, you see a new breed of ‘co-bots,’ which are collaborative robots that work with humans on the production line.  Also, as you can imagine, it generates jobs in the design of technology, and in installation and maintenance.”

But he readily stated that robots will cost the manufacturing jobs of lower end workers.

source: Oxford Economics

“That’s an important finding from our research,” Lambert said. “At the macroeconomic level you can see growth, you can see improvements in productivity, but when you drill down into the local level impacts, the implications are disproportionate… we found that there are twice as many manufacturing jobs displaced by an additional robot in a lower income area than there are in higher income areas… It will cause displacement, and where the pain hits most may well occur in very much the weaker areas of the economy, the areas of higher levels of unemployment, lower wage growth, are precisely the same areas that are most vulnerable to this. “

Asked what government can do, he urged policy makers “to be prepared for this, to analyze the skills competition across the economy, look for the areas that will be most vulnerable and to put policies in place in an aggressive way to combat that.”

The good news, Lambert said, is that although roboticization is “an unstoppable trend in constant innovation,” he also said there’s time to adjust to the emerging manufacturing landscape.

“It’s important to look into the rate of change here,” he said. “And it’s not the case that we’re facing a kind of sci-fi dystopian future just around the corner, so we're not predicting the fall of society. But we are identifying that there are nuances in terms of where the positive and negative implications of this change occur, and we need to be prepared for trying to smooth that transition.”

In the report, Oxford Economics stated that over the past 20 years, robots worldwide multiplied 3x to 2.25 million. “Trends suggest the global stock of robots will multiply even faster in the next 20 years, reaching as many as 20 million by 2030, with 14 million in China alone.” In fact, Oxford stated that one of every three new manufacturing robots is being installed in China, adding that the firm’s econometric modelling finds that “on average each newly installed robot displaces 1.6 manufacturing workers.”

It follows that China also will sustain the most job losses, according to Oxford, totaling approximately 12 million by 2030. In the U.S., losses are expected to reach roughly 1.7 million; in the EU: close to 2 million.

Adrian Cooper, Oxford CEO and chief economist, foresees a period of major disruption.

source: Oxford Economics

“The implications are immense,” he wrote in the report, “and the emerging challenges for governments and policymakers are equally daunting in their scale. The rise of the robots will boost productivity and economic growth. It will lead, too, to the creation of new jobs in yet-to-exist industries, in a process of ‘creative destruction.’ But existing business models across many sectors will be seriously disrupted. And tens of millions of existing jobs will be lost, with human workers displaced by robots at an increasing rate as robots become steadily more sophisticated… In many places, the impact will aggravate social and economic stresses from unemployment and income inequality in times when increasing political polarisation is already a worrying trend.”

Findings in the report underscores the urban/rural and knowledge worker/blue collar worker cultural, economic and political divides increasingly seen in many industrialized and developing countries.

“In many cases, our Index highlights that the most vulnerable regions are somewhat removed from the wealthier districts of their home countries — such as Cumbria in the UK, Franche Comté in France, and the high desert of Eastern Oregon in the U.S.,” the report stated. “These rural regions often include towns or cities with strong manufacturing heritages that play a surprisingly large part in the regional economy.”

By contrast, Oxford reported, “regions that surround knowledge intensive cities, such as Toulouse and Grenoble in France, or Munich and Stuttgart in Germany, typically show much lower levels of vulnerability to the rise of the robots. This is also true of capital cities such as London, Paris, Seoul, and Tokyo.”

But the overall economic impact of robotics’ impact, Oxford stated, is positive, calling it “the $5 trillion robotics dividend.”

“While regional impacts vary, fears about permanent global job destruction generated by robots appear somewhat exaggerated,” stated the report. “Our study shows that the current wave of robotization tends to boost productivity and economic growth, generating new employment opportunities at a rate comparable to the pace of job destruction. We estimate that a 1 percent increase in the stock of robots per worker in the manufacturing sector leads to 0.1 percent boost to output per worker across the wider workforce.”

This in turn leads to faster economic growth.

“Overall, we found that a faster adoption of robots has a positive impact on both short- and medium-term growth. For example, boosting robot installations to 30 percent above the baseline forecast by 2030 would lead to an estimated 5.3 percent boost in global GDP that year. This equates to adding an extra $4.9 trillion per year to the global economy by 2030 (in today’s prices)—equivalent to an economy greater than the projected size of Germany’s.”