Automation technologies such as Artificial Intelligence (AI) and Robotics have been transforming global manufacturing & industrialisation over the past few years. Be it the industrial robots carrying out tasks on factory floors or cars driving themselves without human supervision, increased automation and global manufacturing innovations have been both complementing and replacing humans. Naturally, this has raised much public concern around potential job losses for low and medium-skilled workers.

The COVID-19 pandemic has further intensified worries in the global technology and manufacturing community about the future of work as unemployment rates and businesses closures escalated since the beginning of 2020. According to the International Monetary Fund, the pandemic has led to a significant rise in the “robotisation of work” and is likely to be an “important driver of inequality in the future”. The IMF research is based on an empirical analysis of the impact of past pandemics – such as the 2009 H1N1 Pandemic – on robot adoption.  

 

So how exactly has the pandemic accelerated robotisation? And what will be the long-term impact of this trend?

 

The IMF research shows that large socio-economic shocks such as the 2007-2008 global financial crisis and the COVID-19 pandemic tend to force organisations to undertake major restructuring efforts and adopt labour-saving technologies such as robots to avoid further workforce disruptions. Indeed, several organisations have deployed robots to enhance manufacturing innovations in their plants, supermarkets and call centres since the pandemic.

 

“The rationale is that workers can be exposed to health risks, and social distancing measures can reduce labour productivity. But robots do not get sick. Automation provides a hedge against job uncertainty stemming from the pandemic,” according to the IMF.

 

As per the global industry news, a recent global survey of 800 senior executives by McKinsey & Company underscores this analysis. For instance, roughly two-thirds of executives said they were “significantly or somewhat” boosting investment in automation and AI to reduce workplace density and mitigate future uncertainties.

 

Emphasising this, recent data from China’s National Bureau of Statistics showed that China's industrial robot production grew by roughly 30% in June 2020 compared to the previous year, driven by worker shortages in industrial plants. In the coming years, workplaces with high physical proximity and human interactions are expected to see the biggest increase in automation, according to McKinsey.

 

 

The Economic and Policy Implications of Automation

 

 

The major concern of the global technology and manufacturing community is the creation of income inequality due to automation. One of the biggest implications of increased automation is that income inequality is likely to worsen in the coming years as automation does not affect all workers in equal proportions. For example, jobs that are most likely to become obsolete typically involve repetitive and manual work that are traditionally performed by low and medium-skilled workers. Therefore, low-skilled workers, who earn less than the rest of the workforce, face a higher risk of replacement by robots than high-skilled workers, according to the IMF. Other implications include a likely increase in the global unemployment rate and skill mismatches between employees and jobs.

 

However, workers are not the only group of people that will experience the pressures of automation. Across the world, policymakers will need to introduce a broad range of new policies and programmes like the GMIS virtual summit to reduce income inequality while promoting industrial growth. According to the IMF, targeted fiscal support is essential for both unemployed workers and enterprises. This could include income redistribution initiatives, unemployment insurance benefits, reforming the tax system, as well as taxing robots.

 

In the coming years, automation and AI will continue to push the boundaries of what machines can achieve. This brings the Global manufacturing innovations and Industrial evolution. This will certainly drive drastic social, cultural and economic changes in the society. As new generations of technology systems emerge and redefine global manufacturing & industrialisation revolutions, both policymakers and businesses must be prepared to face bigger challenges and opportunities. In the end, the success of this technological progress will be largely determined by two key factors: the willingness of organisations to support workers during this necessary transition and the ability of policymakers to drive industrial growth while ensuring social welfare improvements.