Is automation killing jobs?

The typical, thoughtful answer to this question is a big No with a lecture on the lump of labour fallacy. Also, the answer always finds its way in your typical RPA evangelist presentation. However, I am going to provide a different response this time around.

Lump of labour fallacy

“In economics, the lump of labour fallacy is the misconception that there is a fixed amount of work—a lump of labour—to be done within an economy which can be distributed to create more or fewer jobs.” The idea has been applied to many aspects of an economy. For example, in the automation industry, the idea is that even though it kills some jobs, but in aggregate, it creates newer jobs and the net of the new jobs – killed Jobs is a positive number. In the Automotive industry, e.g. the robotic assembly lines have created low/er skilled jobs for maintaining/cleaning the instruments and high-paid jobs for people who make the robots. Meanwhile, the typical jobs of humans assembling in the line have been chiefly disappeared.

The great decoupling

In the early 2000s, something quite interesting took place. For the first time since World War II, productivity growth and employment decoupled from each other. It means that we create new jobs but not nearly enough to keep the employment level growing. The most significant contributor to this decoupling is technological progress, according to Erik Brynjolfsson and Andrew McAfee.

Computers and Robots are the two most significant technological innovations growing exponentially in the past century. Automation first started for routine manual work, and now Intelligent Automation with machine learning is after more cognitive tasks. And because of acceleration in the growth of these areas, there is no hope for a reversal of the great decoupling trend. Microchips are getting cheaper every year, and at the same time, their power is increasing exponentially.

The great decoupling, in essence, contradicts the lump of labour fallacy. When the technology acceleration is so fast, innovation will kill more jobs than it creates.

Where are the jobs going

A new phenomenon called Job Polarization is happening in the labour market.  

“Job Polarization refers to the growing share of employment of low and high skill workers in the overall workforce and the declining share of middle-skill workers, as opposed to the growth or decline in the number of jobs by skill level. See the chart below for your reference:

The figure below categorized the jobs into high, medium and low skill levels.

Technology has played a vital role in the new demand for high-skill workers and the decline in the middle-skill workers but had little impact on non-routine manual jobs, shown by the yellow box. In addition, this trend is expected to accelerate soon.

Impact for automation builders

As someone who kills routine-cognitive tasks for a living, I can attest firsthand that these jobs do not get replaced once automated. Many departments in BFSI industry grow their power by the number of people they employ. When you go after automating employees in these departments, expect resistance and conflict from middle managers when accepting the improvements you have made in productivity. Intelligent automation is now a strategic pillar of digital transformation in many BFSI companies. These companies need structural changes to embrace intelligent automation and allow it to flourish.

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