Registered users can unlock up to five pieces of premium content each month.
Robotics to Have Peripheral Effect on Labor for the Next Decade
Academic papers, business intelligence reports, government memos, and key note speeches from thought leaders point generally to one conclusion: robotics is going to have a significant and negative impact on jobs, and the task of our time is to learn how to adapt. According to some thinkers, the debate is over, and the question must now shift to what will be done to mitigate the inevitable windfall in employment.
However, ABI Research’s latest report on Robotics Opportunities and Socioeconomic Impact challenges this consensus by analyzing U.S. employment in relation to robotics adoption. The report finds robots, at most, will have a peripheral effect on labor for the next 10 years. There is a high threat to jobs in production operations, but there are increasing opportunities in other parts of the industry and services.
Robotics will be important in improving productivity growth and capital investment, empowering economic dynamism and allowing countries to compete successfully in world trade. Hindering robotic deployment through good intentions will not save jobs but will most certainly make you a laggard in high-value added exports.
Jobs, Nations, and Taxes
When assessing whether there was a correlation between a country’s adoption of robotics and loss of employment in manufacturing, none was found. Germany, with a Robot Density Rate (RDR) of 309 lost a smaller percentage of its manufacturing workforce in the last two decades than the United States (RDR of 189) and the United Kingdom (RDR 70). Britain, in particular, has seen its manufacturing workforce shrink by around 50% between 1990 and 2007, while Germany lost around 19%. If the narrative of job displacing automation rings true, the countries with the highest adoption of robotics, or the highest percentage of Gross Domestic Product (GDP) dedicated to R&D would see the highest levels of disruption. But, while Germany spends 2.9% of GDP on R&D, the United Kingdom spends 1.7%.
ABI Research found that the net change in jobs due to robotics adoption in the United States for the next 10 years would be a net gain of 8,512, with a loss of 24,496 in industry and a gain of 33,606 in services. Even in industry, the losses were concentrated in production occupations (-51,623) and there were gains in construction and extraction (27,127) in part due to Unmanned Aerial Systems (UAS), exoskeletons, and collaborative robots. Agriculture saw mild net losses.
These losses are trivial when compared to external forces such as the China shock of the mid-2000’s, general trade policy, GDP growth or investment. Understanding that there are is a huge range in projected job losses, ABI Research created two hypothetical scenarios: one where deploying a robot would take more of a human’s role (automation revolution) and one where robots and humans worked more in collaboration (augmentation revolution). Between these scenarios, the range of U.S. labor change was 1,133,863 lost (Automation Revolution), and a gain of 2,290,611(Augmentation Revolution). In either case, this represents less than a 2% change in the labor force between 2018 and 2028. Therefore, other factors are likely to play a greater role in unemployment than robotics adoption.
Different robot subtypes are going to have differing effects on employment. Industrial robots are essentially fixed automation designed to do specific tasks outside of human collaboration, so they would be expected to replace certain low-end tasks. Exoskeletons, on the other hand, are worn by operators and can extend their useful employment through alleviating injury. On top of that, there is the potential of robot subtypes, like autonomous mobile robots and UAS, to develop new ecosystems of employment, from data processing analysis to supply chain management for e-commerce fulfillment.
This report does not stop at the question of employment. It discusses how robots are a key technology enabler that requires attention not just from business, but from government, too. A competitive analysis between the top four manufacturers (China, United States, Japan, and Germany) emphasizes the importance of robotics for countries to stimulate their economies and compete on the world stage. All of the countries mentioned, to varying degrees, have programs designed to significantly increase adoption to allocate resources of robotics, both in the industrial and commercial spaces.
The United States has perhaps the most informal commitment to robotic deployment, with the latest memorandum on R&D priorities detailing the importance of technologies and trends associated with robotics, like AI and smart manufacturing, not specifically naming robotics. A 2016 robotics roadmap lends more details, but clear policy commitments remain vague.
By contrast, Asian economies like Japan and China have placed robotics at the forefront of their future economic plans. Based on its 2015 robotics whitepaper, Japan is acknowledging that its excellence in industrial robotics will not be sufficient to meet the needs of the future and it must take a more holistic approach, with a push toward increased public-private partnerships and optimization of robotic deployment across all major verticals to mitigate demographic challenges.
But, China put the most money upfront, as part of Made in China 2025 (MIC2025). Beijing’s Advanced Manufacturing Fund ([AMF] US$3.1 billion) and National Integrated Circuit Fund ([NICF] US$22 billion) amounts to US$25.4 billion, and these are some of many government initiatives designed to modernize the country’s economy and implement robotic solutions. China currently has more than 6,000 robotics companies but they are, for the most part, not competitive with international rivals.
In terms of deployment, the International Federation of Robotics (IFR) reported that in 2016, 87,000 industrial robots were shipped to China, making up 30% of the total world supply. This accounts for China’s high rating for ‘Industrial Base’. However, while Chinese robot companies are improving, they still rely mainly on foreign sources for key parts like gear reducers, servo motors, and controllers¾the most high-value components in industrial robots.
China’s main advantages are its talent pool and government assistance. In 2016, the number of recent Chinese STEM graduates was more than 4 million. The comparative number for the United States was 560,000. While the sheer quantity of graduates does not imply a talent advantage, the US is keenly feeling the pinch of skilled worker shortage in manufacturing while China is not.
Government assistance in China goes beyond the advancement of MIC2025. Local governments have opened, or are planning to open, nearly 40 parks for the development of the robotics industry. There are concrete robotics subsidy pledges in 21 cities and five provinces across China, with local efforts amounting to double the investment of the Central Government’s AMF.
Increasing evidence supports ABI Research’s understanding that robotics will not have a particularly detrimental effect on employment, and major industrial nations are deploying ever-increasing resources to the adoption of robotics. Nevertheless, the idea of negative consequences remains persistent and there is increased talk of legislating taxes on robotics and automation in general.
In 2017, South Korea amended its tax laws to limit tax incentives for investment in automation in robotics, in what was called the first ‘robot tax’. The reasoning behind a ‘robot tax’, which has been touted by Bill Gates and the British Labour Party, was that as machines replace workers, it would be necessary to counter the windfall in income taxes.
The problem with this is threefold;
Recommendations for Key Stakeholders
ABI Research recommends that key stakeholders (OEMs, solution providers, and end-users) should involve themselves in the robotics discussion and advocate for increased public-private interaction and against punitive taxes that will restrain adoption and hinder the robotics industry.
Solution providers should develop associations and workshops that provide evidence of the benefits of robotics. This can take the form of linking up with trade groups like Robotics Industry Association (RIA), IFR, or A3, or setting up advisory boards.
For public entities, keep in mind that robotics is still a nascent technology and is unlikely to have such ubiquitous use as general IT or AI. ABI Research’s analysis finds little cause for the impact of robotics on jobs and does not believe it will be dramatic one way or the other. Frame any discussion about robotics around the clear benefits it provides to the wider economy, including spurring capital investment growth, increasing productivity, and its worth in relation to competition from other countries. There is a general trend toward increasing R&D funding across large economies¾mainly driven by China’s impressive growth¾and robotics should be seen as a key strategic technology that should be prioritized by both government and business.