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Post-COVID world… More Robots?

By: Roozbeh Aliabadi

As Coronavirus advances its global assault, many believe that robots look like a pretty good investment right now.

Photo by Markus Spiske on Unsplash

CEOs around the world, alarmed by the pandemic’s substantial interruption of economies and supply chains, greater automation of production lines have a distinct appeal. Robots don’t get paid, need benefits, commute, take a vacation, or go on strike. Robots also don’t take any sick leave, ask for PPE (Personal Protective Equipment), or even sneeze on other robots. Also, crucially, companies can put robots wherever they like — making it easier to take manufacturing and production back to their home country.

Global investors are trying not to check the balance on their 401K right now; they might be thinking about how automation can help companies more efficient and more profitable, pushing shareholder value and stock prices higher so that they can retire before they turn 65.

Consumers around the world might see new value in transactions that don’t include the kind of personal contact that spreads deadly viruses.

For all these reasons, COVID-19 will expedite a process of automation that was already well underway in many sectors of the global economy. A lesson from the recent history shows that the global financial crisis of 2008–2009 previously caused the replacement of many workers with machines.

What are the implications this time?

It won’t happen all at once. This sort of change takes lots of investment that businesses won’t make when demand for their products is low, and many industries are entering a recessionary period.

Photo by David Levêque on Unsplash

Naturally, some jobs are easier to automate than others. Coronavirus doesn’t certainly change that, even if it creates economic incentives to think more deeply about what’s possible. In the United States and Europe, companies will be automating many of the millions of retail, services, and manufacturing tasks that have been abandoned in recent weeks.

Overseas jobs will also be an easy target if the pressure to bring production “home” now grows.

New sorts of jobs are coming. History reveals that technological change can generate more jobs than it destroys. But the new jobs are seemingly to fall into one of two major categories: digital-age jobs for a digital economy and service jobs that don’t pay like they used to. That leaves a lot of people out.

Automation will worsen inequality in rich countries. This transition to new forms of work won’t come easy. People with skillsets better suited to the digitized workplace will have a much easier time than people expected to develop those skills from scratch. The result could intensify the inequality that has already stoked populism and upended political establishments in so many countries in recent years.

Robots present a particular challenge in emerging markets. Millions of jobs are at risk in lower-wage economies that have operated for decades as factories for the world’s textiles and light manufacturing sectors. The International Labor Organization has cautioned, for example, that 140 million jobs in Southeast Asia alone are at serious risk of automation in the next two decades. That’s more than half the region’s salaried labor force. And that was before the pandemic created new reasons for companies to turn to robots to protect their production and supply chains against future disruptions.

In both wealthy and developing countries, governments must get ready. Lost jobs and greater inequality mean that political leaders better be thinking about ways to rewrite the social contract to help those people who can learn new skills and new jobs and support those who can’t. Displaced people make trouble in democracies and dictatorship alike.

Robots get viruses too. Maybe not COVID-19 but can get other kinds. Cyber-viruses can be just as destructive as biological ones. (maybe robots do take sick leave.) If companies move to automate their workforces, they’ll also have to invest massively in cybersecurity to immunize them against hackers.

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