Commentary: Robots need to move faster to save the world
Alarmists say AI will steal jobs, but underlying demographic trends foretell continuing worker shortages, says Ruchir Sharma for the Financial Times.
NEW YORK: Not so long ago authors were churning out dire books on how The Rise of the Robots would lead to The Jobless Future, amid authoritative forecasts that half of all US jobs would be at risk from automation starting right about now.
Recent jobs reports, however, raise a different threat: Not whether robots will replace human labour, but whether they will get here fast enough to save the world economy from worker shortages.
Worldwide unemployment is at 4.5 per cent, the lowest since global records began in 1980. Labour shortfalls are at historic highs in advanced economies, including the UK and US. There are now 11.2 million openings for 5.6 million job hunters in the US, the widest gap since the 1950s.
Millions of workers who quit during the pandemic have yet to return, adding to the desperation of bosses.
FEWER WORKERS GUARANTEE SLOWER ECONOMIC GROWTH
These pressures are boiling up now in large part because growth in the working-age population - those between 15 and 64 - has started to decline, while the share of the elderly swells. Accelerated ageing is in turn a delayed result of societal shifts that started decades earlier: Women having fewer children and science extending the average lifespan.
The working-age population is shrinking in nearly 40 nations, including most of the major economic powers, up from just two in the early 1980s. The US is declining less precipitously than most, but is in the same basic fix.
More than any other factor, fewer workers all but guarantee slower economic growth, so most nations will need more robots just to keep growth alive.
Techno-pessimists still sound the alarm, saying the spectre of robots stealing jobs and undercutting wages will resurface as the pandemic fades and job-quitters return to work, which they may … or may not. Either way, underlying demographic trends foretell continuing shortages.
Among the hardest hit nations are China, Japan, Germany and South Korea - all are expected to see the working age population drop by at least 400,000 a year through to 2030.
Not coincidentally, these countries already host high concentrations of robots, and are rolling out more. Japan’s manufacturers deploy nearly 400 robots per 10,000 workers, up from 300 just four years ago.
China, in its top-down way, is heavily subsidising robot makers, aiming to boost their output by 20 per cent a year through 2030. Even at that pace, Bernstein analysts predict, robots cannot fill all the holes in the labour force, which China expects will shrink by 35 million workers in the next three years.
ROBOTS KILL SOME PROFESSIONS BUT CREATE OTHERS
Governments can respond to labour shortages in other ways - by paying bonuses to parents to have more children, encouraging women to enter or return to work, welcoming immigrants or raising the retirement age. But all these steps trigger human resistance, particularly in an angrily populist era.
Robots provoke a different reaction, a vague fear of machines and artificial intelligence that takes form mainly in books, rarely in protest against stealing jobs. Meanwhile, robots arrive quietly at the loading dock, unchallenged.
Like previous innovations, robots kill off some professions and create others. The gas engine made the horse-drawn buggy driver obsolete but spawned the taxi driver. About a third of the jobs created in the US are in fields that did not or barely existed 25 years ago.
And a third “will change fundamentally over the next 15 to 20 years”, according to the OECD. Technology brings disruption, not destruction followed by nothing - as the “jobless future” implies.
Each robot can replace three or more factory workers, the hardest hit group. But the degree of disruption depends on the often-exaggerated pace of change.
Forecasters have been predicting since the 1950s that full-blown AI would arrive in 20 years, but it is not here yet. Dire warnings that autonomous vehicles would wipe out one of the most common jobs in America - truck driver - have given way to a trucker shortage.
Now recession is looming, but unemployment is unlikely to rise as high as in previous downturns, owing again to shrinking labour forces. Fewer workers will leave the labour market tighter than usual through the business cycle, even as robots continue to multiply.
They can’t arrive too soon. Owing to an unexpectedly steep drop in birth rates, the UN recently raised its forecast for the pace of population decline, from the US to China. It takes years for births to affect the workforce, but smart governments will act now, by drawing more women, immigrants, seniors and - yes - robots into the workforce.
The other option is fewer workers, automated or not, and a growthless future.