Trade-Off Between Automation and Labor Employment

Automation of labor in industries has been happening for over a century. Replacing humans with machines have become a universal norm. Predictions of the disappearance of work abound in academic as well as in popular discourse. The exponential progress in new digital and robotic technologies implicates the demise of manual labor. It is predicted that soon most work tasks will be fully automated with the help of automated labor. Work is set to disappear through mass automation. Let us analyze a trade off between Automation and Labor Employment.

Trade-Off Between Automation and Labor Employment

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Automation takes the place of work, harmonizes it, increases production in manners that generate superior demand for work and mix with modifications in labor supply. Automation and labor employment go hand in hand. In the era of cut-throat competition, improved productivity is the only key to long term economic growth.

Technological advancements in the disguise of advanced robotics, artificial intelligence, and machine learning can outperform humans in a wide range of activities. From driverless cars to handling insurance claims, from managing investment portfolios to doing legal research, automation can help the industries in many ways. Some of the benefits of automation are below.

Improved productivity

Automation of labor can help streamline the production activities in industries which not only helps them to stay in business but also helps them expand and explore a plethora of opportunities. Automation ensures that every action is performed in an identical manner resulting in high and consistent quality products. Automation coupled with time-saving means that the businesses can start exploring the more top quality and more features in their products with little or no increase in production costs.


Manual work, besides time taking, is prone to human errors. Automation, besides lowering the time and ensuring consistency in work, helps reduce the number of workers employed for the job which can then be used for other activities. Thus it allows us to get more work done at the same time.

Governance and reliability

The consistency of automated work process makes the governance easier for the businesses. It also ensures that the business is reliable in the eyes of the consumers. Thereby ensuring competitive advantage for the business.   

Reduced costs

Investment in automated labor is a one-time cost and given the operational efficiencies; it helps to improve productivity. Manual work, besides being time-consuming is also prone to human errors and inconsistency which is a costly affair for businesses in the long run.

Better collaboration

In the case of complex projects, monitoring every team member and ensuring proper process flow becomes a very tedious task. Setting targets, keeping track of progress and updating the team is a lot easier in case of automated labor.

Deeper insights on business processes

Automated labor helps to analyze and gain better insights on business processes. The data generated through computational management further allows businesses to identify possible risks which might have gone unnoticed otherwise, and formulate strategies to mitigate those risks. 

However, this is only one part of the story.

Automation and Labor Employment must go hand in hand and in synchronous manner. The interaction between machine and human equivalent ascendancy enables computers to take the place of employees in carrying out standard, codifiable works. Labor economists have been pointing out the employment consequences of new digital technologies. Research by McKinsey Global Institute points out that roughly 15% of the global workforce could be replaced by technological automation by 2030. This means that as many as 800 million jobs could be lost in the automation process. 

Technological unemployment may generate significant disparities and a growing gap between the revenue to the labor and the earnings to the capital. It is predicted that income inequality is likely to grow in the process, many jobs will become outdated and there will be a change in the workforce dynamics. Some of the potential risks of automation are below.

Structural Change in Jobs

There will be structural changes in jobs. With the advent of automation, the new jobs will require higher educational qualification as well as advanced cognitive and analytical skills. 

Loss of Jobs

Most of the repetitive jobs will be wholly taken over by machines. Uneducated workers in developing countries will be severely affected by this as they possess limited or no skills. Automated labor will result in loss of jobs.

Income Inequalities

Automation will also result in income inequalities. High paying creative and cognitive jobs will enjoy more wages while the demand for low and medium skilled occupations will die. 

So what should be the goal ahead? 

While we cannot neglect the benefits of automation, the best way is to employ the best of both the worlds efficiently, i.e. Automation and Labor Employment in a beneficial way. Automation will require structural job changes and skill training. 

  1. More focus should be on skill development and training. New work requirements require new competencies, and the labor work should be well versed with new age skills. Employees should be trained on how to deal with new technologies so that the transition process is easier after automation.
  2. The government, organizations, educational institutes, and labor organizations should work in tandem to adopt more forward-looking knowledge of evolving skills and technologies.
  3. The labor market should be encouraged to be more fluid by helping them adopt digital technologies more actively and incentivizing their training programs.
  4. Reevaluation of income and transition support to help the displaced workers in their new occupation. Income inequalities can be lessened by making more and more people more able and skilled in automation.

While automation will displace many jobs, it will also create several different jobs. Amazon offers the perfect example. Over the past three years, the company has increased the number of robots working in its warehouse from 1400 to 45000. However, the rate of hiring human labors hasn’t changed a bit over the period. The robots help in lowering operational costs which in turn allows Amazon to keep lower prices, record higher sales and employ more workers to man its warehouses even though it needs less human work hours. 

Artificial intelligence could dramatically improve the economy and everyday aspects of life, but we need to invent ways to make sure everyone benefits. Making the AI revolution work for everyone will require systemic reforms, and the potential reinvention of social security, redistribution mechanisms, as well as education and skill development systems, to allow for repeated and viable professional transitions. Policy and regulatory frameworks will also need rebalancing to protect the most vulnerable from socio-economic exclusion, to prevent algorithmic discrimination and privacy abuses, to ensure control and accountability, as well as to avoid an exacerbation of wealth and opportunity inequalities.

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