Automation is producing jobs through creative destruction

Investment in automation has accelerated across most industries since the start of the COVID-19 pandemic, with “companies automating faster than expected, displacing 85 million jobs in the next five years,” according to the World Economic Forum’s (WEC) “The Future of Jobs 2020” report. The authors note that, “More than 80% of business executives are accelerating plans to digitize work processes and deploy new technologies; and 50% of employers are expecting to boost the automation of some roles in their companies. In contrast to previous years, job creation is now slowing while job destruction is accelerating.”

Even though WEC’s report discusses job destruction, the authors also mention the need for reskilling nearly 50% of the workforce as automation expands. Of the employers surveyed, 66% expect to see a one-year return on investment for upskilling/reskilling current employees, while also expecting to redeploy 46% of workers within their own organization. WEC’s managing director, Saadia Zahidi, writes that “…the most competitive businesses are the ones that have invested heavily in their human capital.”

Economists from Oxford Economics echo this, terming it creative destruction.

“While automation is likely to disrupt existing business models and eliminate jobs, the productivity boost will also lead to the creation of new jobs in a process of creative destruction.” This is one of the key points in a mid-July Research Briefing for the U.S. from Lydia Boussour, lead U.S. economist, and Stephen Foreman, lead industry economist.

While automation helps increase productivity and profitability, one area that could spur additional investment in automation is the labor shortage. Boussour and Foreman note that prior research found the addition of one new industrial robot eliminates 1.6 manufacturing jobs, on average. Then, referring to Oxford Economics’ labor mismatch scorecard ranking industries based on indicators of labor shortages, Boussour and Foreman explain that industries hit hardest by the pandemic, such as manufacturing, are also seeing severe labor imbalances. The concern is this acute labor shortage “could lead to a permanent labor demand shortfall over the next 3 to 5 years.” Yet, the “COVID crisis should lead to the creation of new jobs in more innovative, higher-productivity industries in the process of creative destruction.”

This is why we continue to cover automation in every issue of Today’s Medical Developments (see articles on pages 22, 30, and 34) and offer many on-demand webinars about manufacturing advancements in automation and digital technologies.

As labor shortages abound, what is your company doing to address the challenge?