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Get ready for robolution

02 February 2017

Molly Connell from TradeMachines discusses the growing robotics trend and how it is affecting the importance of human employees.

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“The field of robotics promises to be the most profoundly disruptive technological shift since the industrial revolution”. Industry 4.0 has brought changes to the manufacturing industry and looking at statistics, the current trend of automation and data exchange is nowhere near to slowing down. There are over 1.8 million industrial robots in operation worldwide. According the International Federation of Robotics, in 2015 robot sales increased by 15 percent to 253,748 units which is by far the highest level ever recorded for one year. Between 2016 and 2019 they estimate further 1.4 million robots to be installed.

There are many interesting facts regarding the industrial robots market. 70 percent of all robots went to only five countries, South Korea being one of them. They are installing robots at a pace that is four times the global average. The application of robots can increase productivity significantly even on a national level. To illustrate, Graetz and Michaels calculated that robotics have increased labour productivity in the 1990s and the 2000s by about 0.35 percent annually - by about the same amount as did the steam engine, a classic example of a GPT, during the years 1850 to 1910. The pervasive IT revolution supported 0.60 percent of labour productivity growth and 1.0 percent of overall growth in Europe, the United States, and Japan between 1995 and 2005.

While industrial robots have an undoubtedly positive effect on labour productivity, what can be said about the consequences regarding the labour market in general? The reason why automation is a highly debated subject is that it is uncertain how the importance of human employees will change in the future. With the development of technology, robots can be applied in more fields than ever before, may that be milking a cow or laying bricks. Not only have robots become suitable for more types of tasks, but their acquisition has also become easier. Robots like Baxter from Rethink Robotics can be purchased for only £17,322 ($22.000), which is less than paying a full-time human worker £3.15 ($4) an hour over the life of the machine.

The World Economic Forum predicted that robotic automation will result in the net loss of more than 5 million jobs across 15 developed nations by 2020. Even without looking at the numbers they based their prediction on, the logic behind it is clear: why hire humans for those positions which robots can also fulfil when they are cheaper and reliable making manufacturers less prone to unexpected events. 

Despite all this, there is another approach as well. Examining specific statistics, it turns out that there is no proven relationship between a country’s use of industrial robots and the percentage of manufacturing jobs lost. As an example Korea, France, and Italy lost fewer manufacturing jobs than the United States, even as they introduced more industrial robots. Some experts represent an even more optimistic point of view, which states that robots are not only harmless to the labour market, but they will be the biggest job creators in the world history. Instead of destroying jobs, they will only free humans from spending time on repetitive, monotone tasks which require low qualifications and open new opportunities to highly qualified workforce. Robots will be the cause of the restructuring of the labour market, not for a massive job loss. To get an overall view on how this is possible along with unique statistics, take a look at TradeMachines' new infographic.

Whether the future will prove to be disastrous or utopistic, no one can know for certain. A massive change like industrial revolution and the appearance of robots always rises concerns. Looking back on history though, we should be optimistic about resolving these. 

Molly Connell is with TradeMachines.

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