Reference no: EM133143478

EXTRA EXERCISE

Automation Doesn't Just Create or Destroy Jobs - It Transforms Them

The Covid-19 pandemic has accelerated the adoption of cutting-edge technologies. From contactless cashiers to welding drones to "chow bots" - machines that serve up salads on demand - automation is fundamentally transforming, rather than merely touching, every aspect of daily life. This prospect may well please consumers. Forsaking human folly for algorithmic (and mechanistic) perfection means better, cheaper, and faster service.

But what should workers - who once provided these services - expect? Can they also benefit from technological progress? If so, how? The labor market impact of technology is often viewed through the lens of job creation or job destruction. Economists - with near ubiquity - treat technology as being either labor displacing or labor reinstating. If technology displaces workers, jobs are lost. If technology creates (or reinstates) work, jobs are created. Under this dichotomy, the key question is whether technology creates more jobs than it destroys. The World Economic Forum estimates that by 2025, technology will create at least 12 million more jobs than it destroys, a sign that in the long run, automation will be a net positive for society. Technology's job boosting ability is often touted by tech advocates. Take Waymo, the Google backed startup developing driverless taxis. In recent years, the company's sensor-laden, white minivans have become a common sight in some American suburbs. However, mobility sans driver raises concerns about job losses. What will otherwise would-be cab (or more likely Uber and Lyft) drivers now do? Waymo's response? Take up new jobs created by self-driving technology, gigs like self-driving fleet technicians, rider support operators, and software engineers. "We can be helpful as a company that creates jobs," noted one Waymo exec. Job creation isn't everything, however. Equally important is what workers can earn for working those jobs. Do wages rise or fall owing to technological progress?

Bots Can Boost Wages

Wages - conventional economic theory posits - are dictated by supply and demand. When jobs require specialized skills, wages rise because fewer people can meet demand for these skills. Wages also rise when workers are - regardless of requisite skill - scarce because there are fewer people available to supply their labor. This explains why pilots earn more than plumbers, chemists more than cashiers. Pilots require more specialized skills than plumbers and chemists are (in part because of pricy education requirements) less plentiful than cashiers.

However, as technology improved - air traffic-control systems became more mature, aircraft engines more reliable, and cockpit displays more accurate - the risk associated with night flying diminished. Lower risk lessened the necessity for specialized skills and temperament required to manage that risk. The result? A gradual elimination of the skills-based wage premium. Today, pilots who fly at night earn no more than those who fly during the day. Nor do they command a wage premium for flying over hazardous terrain (like mountains). That's something early aviators could also count on for added earnings because it was considered more dangerous (and hence required more skill). The wage-hindering effects of technology have been observed in other industries. Cab drivers in London could once command a hefty wage premium. The reason? Becoming one wasn't easy. Would-be cabbies had to demonstrate encyclopaedic mastery of London's streets, and few could do so. The result was an earnings boost for cabbies: Scarcity after all, breeds value. But along came Uber. The ride-hailing giant equips its drivers with a powerful smartphone app that provides turn-by-turn instructions on where to go and how to get there. Landmarks, street names and routes are all laid out in meticulous detail.

That should benefit aspiring cabbies. And it did. Uber has - since its 2012 entry into London - created jobs for more than 40,000 drivers. It has afforded these drivers an opportunity to "make money and support my family," as one driver told the BBC. But by purging the need for specialized knowledge, by making ferrying passengers around London easier, the Uber app also purged the need for encyclopaedic mastery that had historically commanded a wage premium. The result? Accusations (and plenty of litigation to boot) that the ride-hailing giant underpays its drivers.

Automate with Caution

Technology can boost earnings particularly when using that technology demands specialized skills and knowledge. But bots can also depress wages by making some jobs easier to perform. If a job is simple, anyone can do it. And if anyone can do it, why pay some workers a premium? When the market demands fewer skills, workers with anything extra become less valuable.

This prospect may please firms. Paying workers less is a sure-fire way to boost margins. But this strategy is also risky. Technology does not purge the need for human labour but rather changes the type of labour required. Autonomous does not mean human less. Technology can and will fail. And when it does, firms will confront the prospect of making nice with the very workers who - during automation's better days - were short-changed. In 2018, "Flippy," a hamburger-flipping robot was forced to the side-lines after one day after being unable to keep up with customers' orders. The restaurant's response? Asking human cooks to step in.

Automation can increase productivity, improve efficiency, and reduce errors. Robots can, and should, occupy professions that are too risky for human workers to perform, offer little in the way of purpose, and deprive human workers of the joys of free living. Machines have - as Bertrand Russell aptly noted - "given us the possibility of ease and security for all." Ignoring this reality, reasoned Russell, makes us foolish, "but there is no reason to go on being foolish forever."

Yet the long-term benefits of forsaking humans for robots are hardly guaranteed. Firms stand to lose cash should the productivity benefits of technology adoption dwarf costs. These costs (and there's always a cost) are typically discounted by firms keen to show solvency. But adopting bots can push firms further into the red. Technological singularity - the idea that machines know all, and can fix call - remains, despite what we're told, a long, long way away. Firms should consider this reality when adopting technology. Execs should ask themselves three questions when scrutinizing the value of bots. First, what can't technology do? Technological valour may be dizzying but it too - much like humans - has limits. What are they? Second, how do those limits impact the operation? Investing in tech can boost productivity but only up to a point. What does that point look like and is it acceptable to shareholders? And third, how does the cost of overseeing technology affect is value proposition? Technology should be observed and kept in check. This is particularly true in safety critical industries like transportation, energy, and healthcare. What is the cost of doing so and how does it impact a bot's cost advantage?

Source : Ashley Nunes. (2021). Automation Doesn't Just Create or Destroy Jobs - It Transforms Them. Harvard Business Review Case. November 02, 2021''

DISCUSSION QUESTIONS:

1. What can you summarize from this article? Highlight and discuss 4 main points that you can summarize from this article.

2. What are 3 types of training that you think are suitable for these types of environments? Discuss all your answer in detail.

3. Assume that you were the employee, what are your roles in crafting your career advancement in this such environment?

RUJUKAN / REFERENCES

1. Dressler, G. (2020). Human Resource Management, 15th ed. Pearson: Prentice Hall.