Automation and Employment in the 21st Century

Información de publicación: Dow Jones Institutional News ; New York [New York]10 Mar 2017.

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By Irving Wladawsky-Berger
Ever since the advent of industrialization over 200 years ago, there've been periodic fears about the impact of
technology-based automation on jobs. In the 1810s, for example, the so-called Luddites smashed the new
machines that were threatening their textile jobs. But each time those fears arose in the past, technology advances
ended up creating more jobs than they destroyed.
Automation anxieties have understandably accelerated in recent years, as AI-related innovations, including robots
and smart machines of all kinds, are now being applied to activities requiring intelligence and cognitive capabilities
that not long ago were viewed as the exclusive domain of humans. The concerns surrounding AI's long term
impact on jobs may well be in a class by themselves.
There's a broad consensus that AI will have a major impact on jobs and the very nature of work, but it's much less
clear what that impact will be. Will AI play out like past technology innovations -- highly disruptive in the near term,
but ultimately leading to the creation of new jobs, whole new industries, and a rising standard of living? Or will this
time be different, as AI-based innovations end up replacing a large portion of the workforce, leading to mass
unemployment, economic dislocations and social unrest?
In January, the McKinsey Global Institute published A Future that Works: Automation, Employment and
Productivity, the results of a two year study of automation technologies and their potential impact on jobs over the
next several decades. McKinsey's comprehensive report, over 130 pages, is the most detailed analysis I've seen on
the subject. The report examines in great detail how things might likely play out over a broad spectrum of
possibilities, from the pessimistic expectations of mass unemployment at one end, to the more optimistic
expectations that AI will follow the path of past technology revolutions and be ultimately beneficial. I ts overriding
conclusion is succinctly captured in this paragraph:

" Many workers will have to change, and we expect business processes to be transformed. However, the scale of
shifts in the labor force over many decades that automation technologies can unleash is not without precedent. It
is of a similar order of magnitude to the long-term technology-enabled shifts away from agriculture in developed
countries' workforces in the 20th century. Those shifts did not result in long-term mass unemployment, because
they were accompanied by the creation of new types of work. We cannot definitively say whether things will be
different this time. But our analysis shows that humans will still be needed in the workforce: the total productivity
gains we estimate will only come about if people work alongside machines. That in turn will fundamentally alter
the workplace, requiring a new degree of cooperation between workers and technology."

The report explains in great detail the key findings that led to this overall conclusion. I'd like to discuss a few of
these findings.
Only a small percentage of occupations can be fully automated by adapting current technologies, but some work
activities of almost all occupations could be automated

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Most jobs involve a number of different tasks or activities. Some of these activities are more amenable to
automation than others. But just because activities have been automated, does not imply that the whole job has
disappeared. To the contrary, automating parts of a job will often increase the productivity and quality of workers
by complementing their skills with machines and computers, as well as by enabling them to focus on those aspect
of the job that most need their attention.
Given that few jobs will be entirely automated, the report focused instead on the kinds of activities within jobs that
are more likely to be automated, as well as how those jobs will then be transformed.

"While less than 5 percent of all occupations can be automated entirely using demonstrated technologies, about
60 percent of all occupations have at least 30 percent of constituent activities that could be automated. More
occupations will change than will be automated away..."

Automation will not happen overnight, but will likely take decades
The McKinsey study modeled how various factors will impact the automation adoption. "Our scenarios suggest
that half of today's work activities could be automated by 2055, but this could happen up to 20 years earlier or later
depending on the various factors, in addition to other wider economic conditions." Five key factors will influence
the pace and extent of automation.
Technical feasibility. Technologies have to be invented, integrated, and adapted into solutions that automate
specific activities. Machines can already match or outperform humans in many tasks, however, many other
capabilities require a lot more technological development.
Cost of developing and deploying solutions. The costs of developing and deploying these solutions will affect the
business case for adoption. It's important to remember that developing and engineering automation technologies
takes considerable time and capital.
Labor market dynamics. The supply, demand, and costs of human labor as an alternative to automation will affect
which activities will be automated. Labor dynamics will differ by geography, given the widely different
demographics and wage rates around the world.
Economic benefits. These include higher throughput and productivity as well as labor cost savings. In addition,
factors beyond financial benefits like improved safety and higher quality are sometimes even more important in
making the business case for automation.
Regulatory and social acceptance. Even when automation makes business sense, regulatory and social
acceptance will affect the rate of adoption. Government policies can significantly slow adoption, as does the need
to change organizational processes and practices across the economy.
Automation can boost productivity and help close a GDP growth gap resulting from declining growth rates of
working-age populations
A recent issue of Foreign Affairs was devoted to How to Survive Slow Growth. "[G]rowth has ground to a halt
almost everywhere, and economists, investors, and ordinary citizens are starting to confront a grim new reality: the
world is stuck in the slow lane and nobody seems to know what to do about it," notes its introductory article.
According to the McKinsey report, the automation of work activities can make a significant contributions to
productivity growth for individuals and businesses, as well as for entire economies where rising productivity is
sorely needed. "At a macroeconomic level, based on our scenario modeling, we estimate automation could raise
productivity growth on a global basis by as much as 0.8 to 1.4 percent annually."
In addition, automation is badly needed given demographic changes and the decline in the share of the working-
age population in many countries, a major reason for slow economic growth. "While much of the current debate
about automation has focused on the potential for mass unemployment, predicated on a surplus of human labor,
the world's economy will actually need every erg of human labor working, in addition to the robots, to overcome
demographic aging trends in both developed and developing economies. In other words, a surplus of human labor

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is much less likely to occur than a deficit of human labor, unless automation is deployed widely."
Irving Wladawsky-Berger worked at IBM for 37 years and has been a strategic advisor to Citigroup and to HBO. He
is affiliated with MIT, NYU and Imperial College, and is a regular contributor to CIO Journal.

(END)
March 10, 2017 12:29 ET (17:29 GMT)

DETALLES

Materia: Technological change; Productivity; Occupations; Automation; Demographics;

Economic growth; Employment; Cost control

Título: Automation and Employment in the 21st Century

Título de publicación: Dow Jones Institutional News; New York

Año de publicación: 2017

Fecha de publicación: Mar 10, 2017

Editorial: Dow Jones &Company Inc

Lugar de publicación: New York

País de publicación: United States, New York

Materia de publicación: Business And Economics

Tipo de fuente: Wire Feeds

Idioma de la publicación: English

Tipo de documento: News

ID del documento de 1875999186

ProQuest:

URL del documento: https://search.proquest.com/docview/1875999186?accountid=43860

Copyright: Copyright Dow Jones &Company Inc Mar 10, 2017

Última actualización: 2017-03-11

Base de datos: ProQuest Central

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