Are automation jobs best for the future

Are machines replacing people? Since industrialization began 200 years ago, this fear has haunted the earth's inhabitants. From the early uprisings of the weavers to the 1970s slogan of the "job killer computer" to the thesis of researchers Michael Osborne and Carl B. Frey in 2013 that machines could soon rob every second job. Terry Gregory from the Institute for the Future of Work (IZA) counters this with a counter calculation: According to this, automation brought Europe an additional 1.5 million jobs in the past decade. The unpublished study also provides arguments against the fact that, for example, the Chinese are buying up the majority of German companies.

Whether machines are friends or enemies of humans is one of the most intense economic debates. Extreme positions dominate. On the one hand, there are optimists who only calculate models in which machines and people complement each other perfectly. On the other hand, skeptics à la Osborne / Frey who use rough job descriptions and neglect positive effects.

Gregory and his colleagues, for example from the Center for European Economic Research (ZEW), try to come closer to reality with comprehensive models. According to this, machines definitely cost Europe jobs from 1999 to 2010: 1.6 million, especially in production. According to the company's original plans, it would have been three times as much. On the other hand, computers and robots made it possible to manufacture goods more cheaply. As a result, consumers bought more and created new jobs. The companies made more profits, which also turned into more consumption and thus more jobs in the wallets of their owners. This created a total of three million jobs - twice as many as the machines destroyed.

Machines made goods cheaper, consumers bought more and created new jobs

This positive balance can also be explained by the fact that factories are becoming less important. Three out of four Germans now work in services, deliver parcels, care for the sick, and design houses. So, at least so far, they are not as easy to replace as assembly line production. If, unlike at Osborne / Frey, one looks at specific jobs instead of rough job descriptions, the automation potential drops from 50 to ten percent of jobs, argues the organization OECD, the think tank of industrialized countries. Even the Institute for Employment Research does not see computers as job killers. According to the IAB forecast, digitization in Germany will create about as many jobs by 2025 as will be lost.

This in no way means that those laid off automatically get a new job that suits them. In certain industries, the risks are concentrated. One in four Germans now has a job that can largely be done by machines. Two million work in warehouse management, drive trucks or buses, which can be replaced by autonomous vehicles. "The employees have to train themselves, the companies have to retrain," demands economist Gregory. "Away from routine to analytical, socially interactive activities. That is the transformation that economies have to create". That means: How the machine era will affect people in the future depends very much on politics. This is also proven by scientists from the World Bank. Accordingly, the automation of the past decades has hit workers in the US, UK and Australia harder than elsewhere. The reason: a bad social network - and poor basic training, which prevents industrial workers who have been rationalized from being retrained for new jobs.

The consequences of the machine boom also depend on who they belong to. Terry Gregory identifies as a positive effect that automation generates additional profits that company owners spend - and thus create additional jobs. However, if a German company is owned by foreign shareholders, they spend most of their money abroad. The model shows that if all the profits had flowed out, 300,000 fewer jobs would have been created in Europe. Accordingly, it does not seem irrelevant whether the Chinese, Indians or Arabs buy most of the German companies. And so there is a strong argument in favor of making as many Germans as possible shareholders in order to let them share in the earnings of the machines - and thus to stimulate consumption.

"People will have time to adapt to it"

The bottom line is that automation in Europe would have had such a positive effect on jobs in the noughties. The question now is: will this also apply in the future? This is the biggest counter-argument from skeptics like Osborne and Frey: The new technology cannot be compared with the previous one because it dwarfs everything. According to this, robots, computers and algorithms could destroy simpler and more demanding service activities at the same time. They could deliver parcels, care for sick people, answer customer inquiries in the call center. And at the same time design houses, prepare lawsuits and diagnose patients like architects, lawyers and doctors. In the USA, such activities are being replaced more often. If machines make products cheaper, the additional demand may not create new jobs - because machines are also doing them.

Terry Gregory thinks this is too pessimistic. "There have been such horror scenarios over and over again in the past centuries," he says. Artificial intelligence, for example, brings a lot of new things with it. "But such technologies are spreading more slowly than expected". So far, for example, only five percent of German companies have used networked robots and other Industry 4.0 technology. "Of course, nobody knows what exactly the future will bring. It's a look into the crystal ball. But people will have time to adapt to it."

But then they have to do that too. According to a study by the World Economic Forum, not even every second German has the knowledge that the jobs of the future will require.