The argument in favor of automation’s impact on jobs

Thus far, automation hasn’t had a significant effect on overall employment across industries. A research, “Robots at Work” by Georg Graetz and Guy Michaels, underscores the impact of robots in cumulative employment, productivity and wages across 14 industries in 17 countries between 1993 and 2007 and reveals that there is no “systematic empirical evidence” of their impact. The study notes that the impact of industrial robots, if any, has only been on low-skilled workers and in increasing total factor productivity, labor productivity and wages, but no significant influence on the overall employment. 

Sales figures of industrial and service robots disclose that organizations haven’t held back from using robotic capabilities at the workplace, for their impact on productivity is well-established. The investments in industrial robots have only gone up since the market crash of 2008. The estimated worldwide annual supply of industrial robots was 229,000 units in 2014, according to World Robotics 2015 Study by IFR Statistical Department. The total number of professional service robots sold stood at 24,207 units. The number had only been projected to go up – it is believed that 152,400 new professional service robots and 1.3 million industrial robots will be installed between 2015 and 2018. The Study has noted China to be the biggest consumer of industrial robots, with the sale of industrial robots increasing by 56 percent from 2013, and the total number standing at 57,096. The figure in India for industrial robots stood at 2,100 in the same year, marking it as an important market in Asia. Factor in the penetration and usage of software robotics and the adoption and application of robots at work is immense.

The antics of robots at Amazon’s fulfillment centers in the US are well-known around the world. The way the robots move around the warehouse floor, skimming, selecting, picking, moving, dropping, and shipping products is a sight to behold. But such advanced application of robots has not resulted in job losses at the world’s largest e-commerce company. As a matter of fact, Amazon, despite deploying Kiva robots in 13 warehouses, has always looked to hire more employees for its fulfillment centers. The warehouses have humans and machines working in sync and getting the work done. 

Technology, however advanced, has been augmenting human capabilities and emerging in areas where humans are either absent, or it is displacing human activities that are repetitive in nature and directing people towards more value-adding work.

Even a fully-functional robot that greets customers at a bank and directs them to service touch points (somewhat similar to a receptionist) hasn’t displaced anybody from the bank. 

Click here to read an article about more such examples.

Extending the augmentation argument to the future, take the case of the e-commerce industry. It was expected to revolutionize the way people shop across the country. However, due to constraints of the reach of courier services, the penetration of e-commerce has also been limited to the pin codes to which the courier services deliver. Meher Sarid, Group President - Corporate Affairs, Oxigen Services explains that “technological advancements, say drones and droids, can challenge that notion, help break those barriers and add to the existing human capabilities.” This though is yet to be tested for feasibility and applicability, she says, which has left us in a grey space as of today.

Creation of new avenues. Automation is refurbishing the established system. While some avenues might get shut in the future, there are many newer avenues that have opened, and experts expect many more to open up. Faridun Dotiwala, Master Expert, Partner, Lead Human Capital Practice, Asia at McKinsey&Company believes so. He says, “Technological advancements will always open up something new which is unheard of.” 

Big Data Analytics is one avenue which has been created by machine learning systems. There are advanced systems available today that are able to do Big Data Analytics independently. It might be argued that instead of having one machine to play that role, an organization could have a team of people working on making sense of Big Data (with limited support of technology). Even if it was remotely possible for humans to make sense of Big Data in its raw form and it might have given employment to people, “organizations were anyway not doing that,” argues McKinsey’s Faridun. So in hindsight, machine learning did not take away the jobs of data scientists. In fact, the presence of a machine doing data analytics has opened up new avenues for – i. people who create that technology; ii. people who sell that technology; iii. people who help implement that technology; iv. people who are eventually using the analyzed data to make decisions.

Maybe when Hal Varian, Google’s Chief Economist, in a media interview with McKinsey in 2009, claimed that the hottest job in 10 years will be of statisticians, he was right! A legacy automobile manufacturer BMW “hiring experts in machine learning and artificial intelligence” and Porsche hiring 1400 people for its electronic car project ‘Mission E’ are examples of technology and automation opening up avenues unheard of. 

At McDonald’s India, the standardization and automation of back-end processes have indeed led to the establishment of a service center which handles all the technical queries/complaints about the system. Could the jobs of people working at these service centers be at risk from AI-powered customer service systems? Seema Arora Nambiar, Vice President – Business Excellence & People Resources, Hardcastle Restaurants, doesn’t think so. “For rendering any kind of service, there is an element of human interaction that has to be there, and hence I don’t think it will come to a point where machines will overtake such roles,” she says. Looking at the BPO industry, such a level of impact on jobs by AI-powered chat support hasn’t been seen. The IT/BPO sector has been the creator of the maximum jobs in India as of 2015 among eight key industries, according to the Labour Bureau’s quarterly report on “Changes in employment in selected sectors”. This sector created 76,000 jobs in the year 2015.

Another example of technology creating new avenues relates to startups and the jobs they provide – both permanent and temporary. A research paper “Who Creates Jobs? Small vs. Large vs. Young” by John Haltiwanger, Ron Jarmin, and Javier Miranda (NBER Working Paper No. 16300) suggests that “the younger companies create more jobs, regardless of their size.” Something which can only be a good sign for India – the India Startup Outlook Report 2016 predicted 130 startups to create 5,000 jobs in 12 months.

When Oxigen, a Fintech company, automated some parts of its revenue management system, the company did not layo-ff the employees who were rendered redundant. They were deployed to work on devising ways to optimize the stock that the company is purchasing by analyzing user consumption data, something which is of much more importance to the business and directly impacts their bottom-line.

A McKinsey Research on automation carried out in the United States reiterates the above argument, and with a large sample size. The research highlights four key points about automation and its impact on jobs:

1. Automation of activities

The research reveals that very few occupations will be automated and eventually eliminated in their entirety. Only certain activities will get automated. For instance, at Oxigen, the activity of a salesperson involving filling KYC documents and sending couriers was automated, the occupation of the salesperson wasn’t threatened. If at all, the salesforce at Oxigen has only strengthened and every salesperson can now focus on his/her real occupation, which is client acquisition. 

Predictable physical work is the activity that has been found to be the most automatable. 

Click here to see an infographic detailing the least and most automatable activities and industry sectors

2. Redefinition of jobs

The research states that only less than 5 percent of occupations can be completely automated using current technology. But, approximately 60 percent of occupations could have 30 percent or more of their constituent activities automated. So the kind of work people engage in, will change. For instance, Wipro’s employees and managers have an automated self-service mechanism to manage their daily operations, and also have bots with Artificial Intelligence capability in the employee helpdesk area. This has allowed for people managing transactions to work towards actually improving the employee experience. 

3. Impact on high wage occupations

There are even some highest paid jobs that can be automated using the current technology. The study estimates that 20 percent of a CEO’s working time could be automated. On the flip side, only a fraction of activities can be automated in some lower-wage occupations like maintenance work, landscaping work, etc.

4. Future of creativity

Automation of mundane tasks will allow for people to focus more on activities that utilize creativity and emotion. Automation can enable employees to spend maximum time on thinking, ideating and innovating.