To date, we have gone through how automation can emerge at the boardroom level and shape strategies required for the businesses of today. We interrogated the issue of how retail industry leaders can use automation to align internal capabilities with unfolding market opportunities. We have also looked at the challenging business and operational intricacies which exist in the South African manufacturing industry, and how automation can revolutionise this sector.
While I have received overwhelming positive feedback with respect to the level of interplay between automation and business, I have also received few questions with respect to the impact of automation on job security. I refer to this subject as ‘the automation paradox’.
The automation paradox
The accelerating expansion of automation across industries, and notably the mining sector in South Africa, has raised a level of discomfort and fear of massive unemployment. In addition, a handful of theorists and practitioners are conducting research to examine if automation is an enabler or inhibitor of economic growth, i.e. exploring the impact of automation on variables such as GDP growth.
Our view is that the issue of automation as a source of unemployment is misplaced. The question of how automation interacts with unemployment rates is not an obvious or a rhetorical one. Contrary to common belief, the studies conducted in other countries, USA for example, found a positive correlation between automation expansion and the labour force. The issue of automation being seen as something that takes jobs away from the hands of humans ignores some basic economics. For example, if automation is implemented effectively, it reduces the costs of services and products and eventually attracts more customers. The lower cost structure, coupled with an increasing customer base, allows businesses to increase the number of operating facilities, offices and franchises, thus creating more jobs.
The industrial revolution of the retail sector in South Africa was a great example. When barcode scanners where introduced to automate the work of cashiers, efficiency and throughput increased, business expanded and employment rate in the sector grew. The lower cost structures and the increased throughput, driving prices further down, allowed the bottom of the pyramid markets to afford products and service and hence increased customer base and in turn increased consumption of products and services. On the top end, lower cost leaves more money in the hands of the customer, which is often spent on leisure. This creates new jobs and new demands, perhaps explaining the positive correlation between automation expansion and the growth in the tourism industry. My overall impression is that automation transforms jobs, destroys some (repetitive jobs), creates new ones, increases consumption and has a massive impact on the GDP.
What the future holds
McKinsey & Company examined the types of jobs that are likely to be automated and found that only about five percent of the current jobs are at risk of being completely automated or ‘fully transformed’ i.e. completely replaced in the near future. Again, our contention is that, automation will not eliminate jobs, but will redefine them – changing the tasks and the skills needed to perform them.
In conclusion, I believe that our generation will witness an evolution of the repair person. It takes a completely new skill set to fix a robot than to fix a vending machine. We have made a 180 degree turn to the April 2016 issue, the issue of new skills that are required for the future.
Yours Sincerely,
Oratile Sematle.
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