Last week, e-commerce giant Amazon announced it would re-train a third of its US workforce under an “Upskilling 2025” initiative. Arguably, the company wants to appease the growing voices predominantly raised in the west that blame so-called technology disruptors for the massive loss of manufacturing and retail jobs. Though it’s not just Amazon. A host of other tech companies have been making similar efforts to help raise skills level so their employees can transition from dying jobs to those that are growing.
The fear of job losses is imbedded in hard data. Just last month, global forecasting company Oxford Economics calculated that across the world, about 1.7 million manufacturing jobs have been lost to robots since 2000. The prevalence is the highest in Europe, China and the US, but other countries are not far behind.
By 2030, according to the firm, up to 20 million manufacturing jobs across the world will be lost to automation. Evidently, labour skills are often not transferable from one industry to another or even one sector to another which poses a problem. But the firm argues that in cases where there are similar skilled jobs available in the services industry for people working in manufacturing, it is possible that service sector jobs will also have automated away. In fact, sectors such as construction, transport, administration which are typically low-skilled jobs but which people turn to in times of need are also being automated.
The study estimates that one industrial robot can eliminate the need of 1.6 manufacturing jobs. Interestingly, the study also claims that those economies with lower skills level will feel the brunt of automation more. The same finding was made in a 2013 OECD study—that workers in rich countries are less at risk than those in middle-income countries.
Many studies preceding Oxford Economics’ findings show similar results. It has long been feared that automation would kill millions of jobs across the world as innovative technology, robotics, artificial intelligence and algorithms take over. The earlier mentioned OECD study for instance found that 14 percent of the jobs across 32 rich economies were 70 percent vulnerable to automation while more than 30 percent jobs were 50-70 percent vulnerable. Other studies have found that as tech giants’ earnings have ballooned (think, Facebook, Google, Amazon etc.); their labour intake has dramatically shrunk.
Of course, economies like Pakistan should rest assured robots are not taking over this part of the world just yet. Weaker economies that depend on abundant labour with low levels of skills rather than capital may not have the fiscal or industrial space to automate. Industrial processes will have to be upgraded. Plus, industrial robots cannot join industries that don’t exist. Manufacturing industries are hardly driving this economy. One robot may replace two labourers, but Pakistani manufacturers are producing too low value a goods to justify spending on robotics. Even so, e-commerce solutions and gig economy has sped up in this region, far more than it was first thought, so never say never!
For the developed world, what happens now? Oxford Economics suggests that policymakers and business leaders need to think about developing workforce skills that would adapt to this radical economic transformation. Amazon’s re-training program clearly has the same idea. Will it work, and what does it mean for Amazon’s own bottom-line, more on that next time.
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