Rise of the Machines. How Automation Impacts the Economy

Published in Spanish: El Pais Journal: NOV-14-2017

Lately anti-globalization sentiment has been on the rise with Great Britain leaving the EU, Trump threatening NAFTA, and countless political parties around the globe promising similar results should they become elected. The reason behind this movement is the belief that these trade agreements are taking jobs away from their respective nations which has many in the manufacturing sector worried. While these politicians are vowing to protect these jobs, as automation becomes more common in the manufacturing sector one must wonder if these jobs will even be there to protect soon.

As machinery becomes more affordable and the cost of labour going up, many companies are seeing automation as an attractive option to lower labour costs and increase productivity. It is estimated that 60% of jobs in the United States could potentially be replaced by robots. Even in the retail sector we are seeing computers performing tasks that normally would be done by workers. Fast food retailers like McDonalds now have automated kiosks where you can order and pay for your meal. Stores are also using self- serve check out machines with Walmart even taking it a step further by allowing customers to scan objects with their phone and pay for their goods online. While Walmart and McDonalds claim this is not to eliminate jobs and merely to improve customer experience, it is difficult to see them not cutting their workforce as more customers start to embrace these technologies.

Countries in Latin America are at risk too, with half of the workforce in Mexico, Brazil and Argentina at risk of losing their jobs to machines. Countries like Brazil, Argentina and Bolivia often try to stimulate their manufacturing industry by imposing protective tariffs to encourage companies to manufacture within their borders could be more vulnerable than others as companies frequently try to find ways to reduce costs and see replacing the workforce as an attractive option.

Before you panic, automation is not all bad, it can help companies produce goods at a much more efficient rate, which can then be sold at lower prices that were once thought not possible. If governments prepare for this move rather than fight it, they can use their human capital more efficiently and simply shift jobs rather than lose them and the standard of living would go up for all. Fortunately, automation will likely be a gradual one and not happen overnight which means there is still plenty of time. Governments need to work on re-educating the workforce to develop skills that are difficult for machines and computers to replace such as critical thinking, creativity and the ability to adapt when the unexpected occurs. For our younger generation we should include basic coding as part of the curriculum along with traditional math and science.

Countries could theoretically pass legislation to prevent this from happening but that would likely just force companies to look elsewhere where such laws do not exist. Automation is happening and while it can be worrying if we prepare for it now it can be an exciting time and be a new industrial revolution, fight it and we could see a global unemployment level that has never been seen before. The choice is ours to make.

About Matthew Glezos 376 Articles
Matthew is Canadian and has a Master in Business Administration. He has international experience in marketing and strategy. He has a strong interest in technology and combines it with the business side.

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