Manifesto JOBS

Regular readers of the Deep End, will have noticed there are some topics to which we keep returning. Three of these are jobs, productivity and robots – which are, of course, closely related.

There’s nothing new about automation in the workplace. Indeed, it’s been around for so long that there’s an extensive literature based around the question ‘what have the robots ever done for us?’ In particular, there are those who ask whether robots are doing much for productivity – or for the prospects of the human workers potentially displaced by them.

According to an article by Mark Muro and Scott Andes for the Harvard Business Review, we now have some answers.

Firstly, on productivity:

“Provided in a new paper from London’s Center for Economic Research, the analysis offered by George Graetz and Guy Michaels of Uppsala University and the London School of Economics, respectively, offers some of the first rigorous macroeconomic research and finds that industrial robots have been a substantial driver of labor productivity and economic growth.

“…Graetz and Michaels conclude that the use of robots within manufacturing raised the annual growth of labor productivity and GDP by 0.36 and 0.37 percentage points, respectively, between 1993 and 2007. That might not seem like a lot but it represents 10% of total GDP growth in the countries studied and 16% of labor productivity growth over that time period.”

Here’s some historical context:

“…robotics have of late increased labor productivity by about 0.35% annually — or by about the same amount as did the steam engine… during the years 1850 to 1910.”

But what about jobs? If robots really are making that much of a difference to the economy, doesn’t that suggest that they’re also to blame for the hollowing-out of employment opportunities for ordinary working people?

The Graetz and Michaels paper “analyses the use of industrial robots across 14 industries in 17 countries between 1993 and 2007” – broad enough a study to make some useful comparisons:

“If robots are a substitute for human workers, then one would expect the countries with higher investment rates in automation to have experienced greater employment loss in their manufacturing sectors. For example, Germany deploys over three times as many robots per hour worked than the U.S….”

So what do the comparisons reveal? Prepare to be surprised:

“Despite the installation of far more robots between 1993 and 2007, Germany lost just 19% of its manufacturing jobs between 1996 and 2012 compared to a 33% drop in the U.S…. Korea, France, and Italy also lost fewer manufacturing jobs than the United States, even as they introduced more industrial robots.”

Overall there was no correlation between the use of robots and the loss of jobs. Indeed in a comparison of ten countries, the nation with the biggest drop in manufacturing employment (Britain, sadly) had the second lowest rise in the use of robots.

Therefore, on the strength of this particular study, it would appear that our mechanical pals are in the clear. Indeed greater investment in robotics might do something to boost our comparatively weak record on productivity.

One caveat, however:

“Specifically, their data suggest that the arrival of robots tended to increase the employment and pay of skilled workers even as it seemed to ‘crowd out’ employment of low-skill and, to a lesser extent, middle-skill workers. So while robots don’t seem to be causing net job losses, they do seem to change the sort of workers that are in demand.”

Sounds like we’d better be prepared.

5 comments for: Heresy of the week: Perhaps robots won’t steal our jobs after all

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