The ‘robot revolution’ and the future of our economy

When we think of China’s economic growth over the last 30 to 40 years, the immediate image that comes to mind are millions of low-paid workers toiling away under terrible conditions to supply the rich world with cheap retail goods.

For many workers in China, this is simply an unfortunate fact of working life. Although millions of workers have welcomed these jobs, technological advancements in automation and robotics are placing many of these same jobs in question.

It’s getting harder for Chinese manufacturers to make money. Profits are dwindling and the cost of doing business in China is rising exponentially. Moreover, China’s political leaders and business elite are getting anxious to move the economy into the modern high-tech era.

The CCP (Chinese Communist Party) believes China is on the verge of a technological revolution. In 2014, President Xi Jinping gave a speech in which he called for an “industrial robot revolution,” insisting that robotics are the future of the country’s economy.

In response to these economic and political pressures, hundreds of Chinese factories are starting to replace human labour with robotic and automation technology. Jan Zhan, for example, an automation expert at IHS Technology in Shanghai, says manufacturers in China “will all need to face the fact that only by successfully transitioning from the current labor-oriented mode to more automated manufacturing will they be able to survive in the next few years.”

Shenzhen Rapoo Technology Co, for instance, based in southern China, is one of hundreds of companies experimenting with automation and robotics to offset rising labour costs. Pboll Deng, the company’s deputy general manager, said “what we are doing here is a revolution.”

The government has started to introduce subsidies and tax breaks for companies as a way to incentivize manufacturers to replace their workers with robots. There are even programs in some provinces called “Man for Machine” to accelerate the process.

One Chinese province, Guangdong, has invested nearly $200 billion to encourage some 2,000 manufacturers to transition to an automated workforce. Guangzhou, the capital of Guangdong, for example, is aiming to have 80 per cent of its manufacturing automated by 2020.

However, it’s not only China where advancements in robotics have made it possible to replace thousands of workers. Much of the Western world has already been through this revolution in automation.

Hundreds of thousands of manufacturing jobs have been lost over the last couple decades as a result.

/businessinsider.com

/businessinsider.com

The scary part is that it appears another revolution in robotics is on the way. According to Boston Consulting Group, by 2025 as many as 25 per cent of all jobs, just in the United Kingdom, are at risk of being axed due to emerging robotic and automation technologies. Oxford University has predicted that the number could be as high as 35 per cent of all jobs over the next twenty years.

Waiters, office workers, taxi drivers and retail workers are just some of the jobs analysts are predicting that will be overtaken by robots. Companies such as Target, Amazon, Lowe’s, McDonald’s and some taxi providers in England have started experimenting with robots as a way to streamline services and make their bottom line more productive and efficient.

Harold Sirkin, a senior partner at Boston Consulting, stated in his report that “As labour costs rise around the world, it is becoming increasingly critical that manufacturers rapidly take steps to improve their output per worker to stay competitive.”

“Companies are finding that advances in robotics and other manufacturing technologies offer some of the best opportunities to sharply improve productivity,” he added.

If you think I’m exaggerating, all you need to do is see the robots that are currently being developed by companies such as Boston Dynamics. They are still prototypes, but once you see them in action you will understand why some analysts are predicting massive changes in the workforce over the next few decades.

You might think that this complaint is nothing new. Whenever a new technology is introduced to the market or an old piece of technology is improved, whole new industries are created in the process. Yes, many people lose their jobs but eventually they adapt and move on. So should we really be worried over self-driving taxis and robot cashiers?

In one sense it is a welcome change. Whole new industries will be created, work for many people will get easier, perhaps less dangerous, and our overall standard of living will rise. However, unlike other technological revolutions throughout history, never has human labour itself been threatened. What do I mean by this?

Its not simply a question of which jobs will be lost and how people can adjust themselves to a new economy, rather, we are faced with the very real possibility that many companies and indeed whole industries – even the new ones that emerge – can do away with human labour entirely. If robots can replace taxi drivers, retail and office workers and a host of other jobs, what are the consequences going to be?

Will our economy be able to absorb such massive job losses? If 25 or 35 per cent of all jobs are going to be done by robots over the next twenty years, how will this impact our standard of living and the stability of our economy? Moreover, what impact will this have on economically and politically fragile societies such as China if it means millions are permanently out of work?

These are difficult questions to answer but what we can say for certain is this: this is the first time in human history where the question of human labour, the nature and function of work, and how the economy relates to both will be up for discussion.

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