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Does automation actually lead to job reductions?

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Does automation actually lead to job reductions?

The reduction of employment due to automation and the impact of this technology on the labor market are some of the key issues analyzed by contemporary economists. Meanwhile, employers are struggling with the negative perception of automation. Employees’ fears of losing their jobs discourage them from actively seeking the potential of automation. This makes it difficult to effectively implement improvements.

  • Is such resistance to automation justified?
  • What intentions do organizations implementing automation actually have towards their employees?

I try to answer these questions by comparing scientists’ forecasts and the results of my own research conducted as part of my doctoral dissertation on a sample of 62 organizations representing the pharmaceutical, financial, IT and sales industries.1 I also present recommendations for actions supporting sustainable technological development.

What do scientists say about automation?

From the perspective of the labor market, the key issue is the potential impact of new technology on the emergence of technological unemployment. This phenomenon is analyzed based on three questions:

  • How does the number of tasks to be completed change?
  • how is the nature of these tasks changing?
  • who has the advantage in performing them – machines or people?

It is assumed that, given the current technological changes, this phenomenon may affect professional professions based on knowledge, and the loss of jobs by professionals will become a general trend. The best and most brilliant professionals will survive2.

However, the research of scientists on this issue is not consistent. We can encounter both extremely positive and extremely pessimistic concepts. Supporters of the former indicate that there is no threat to maintaining jobs, assuming that new technologies will create many new jobs that will be available to people whose current tasks have been automated. In pessimistic visions, the authors argue that the creation of new positions will not cover the supply of labor.

Some authors also demonstrate a safe, i.e. neutral attitude to the impact of technology on the labor market, emphasizing that the ultimate impact of technology on the socio-economic environment will depend on a conscious approach to their implementation. I present a list of selected representatives of these three positions in the table below:

Scientists’ predictions regarding the impact of automation on the labor market:

OptimistsNeutralPessimists
L.P. Willcocks, M. Lacity (LSE)

D. Schatsky, J. Schwartz (Deloitte)
S. Hawking

A. McAfee, E. Brynjolfsson (MIT)

T. Davenport, J. Kirby (MIT)

J.C.R. Licklider

A. Pentland (MIT)

T. Friedman

J. Guszcza, H. Lewis, P. Evans-Greenwood (Deloitte)
C.B. Frey, M.A. Osborne (Oxford): 47% till 2033 r.

K.F. Brant, A. Gupta, D. Sommer (Gartner): 90% till 2030 r.

R. Susskind, D. Susskind

It is worth emphasizing here that optimistic forecasts only apply to the coming years. Scientists show that during this time, teams combining the work of humans and robots will be created, in which each will perform work best suited to their competences3. It is also emphasized that cognitive technologies have so far been used in narrow fields, and automation of entire processes or positions is unlikely in the coming years4.

At the very edge of pessimistic forecasts, we can point to representatives of the research company Gartner, who predict that by 2030 as many as 90% of the jobs we know today will be replaced by intelligent machines5. The very often quoted Carl Benedikt Frey and Michael A. Osborne from the University of Oxford, on the other hand, showed in a detailed analysis that 47% of people employed in the US are at risk of losing their jobs due to the introduction of automation6.

These are foreign forecasts. And what does it look like in our current reality?

Downsizing or delegating?

My research on the Polish market has shown that 31% of organizations currently indicate employment reduction as one of the key goals of their automation activities. This is especially true in areas focused on competing on low price. Among the analyzed companies, this indicator was the highest in the telecommunications industry.

Is this a lot? This result should draw the attention of employees, but it should be emphasized that even in organizations focused on reduction, not every automation will lead to layoffs. As a simultaneous goal of automation, 74% of organizations planning reductions also indicate the delegation of current employees to other tasks that generate greater value for the company.

In the entire sample, the vast majority, i.e. 69% of organizations, indicate the delegation of employees to new tasks that generate value as their current goal of automation. This indicator was high especially for the IT (78%) and financial (74%) industries. These are areas where the market lacks qualified employees, so employers want to develop the people available in their teams.

My forecast for the future is more pessimistic, however, as more than half of the surveyed organizations (56%) plan to ultimately reduce employment by relying on automation. 91% of them also plan to simultaneously delegate employees to other tasks.

I present the detailed results of my research in this area below:

Source: “Business Process Automation Maturity” study, Klaudia Martinek-Jaguszewska 2021

According to the above chart, both now and in the future, delegating to new tasks has an advantage over reducing employment. The key to answering questions related to technological unemployment is therefore to determine which positions are at risk and which positions will be created or reinforced at the same time.

Within the 56% of organizations planning layoffs, the expected level of employment reduction must also be determined. We know that layoffs are planned, but we do not know how many and which employees they may affect.

What’s next for my job?

Of course, when it comes to forecasts, one should be generally cautious. It is worth remembering that many assumptions made in the last decades of the last century do not come true in the face of current technologies, most often failing to live up to the high expectations. In the 1960s, when the foundations for the theory of artificial intelligence were being built, it was predicted, for example, that it would quickly achieve a general form (Artificial General Intelligence, AGI), which, however, even today seems like a very distant scenario. Then, in the 1990s, it was predicted that the first profession to be subject to automation would be programmers, which, as we know today, is far from the truth, because this is one of the professions with the highest staff shortages.

Therefore, when analyzing contemporary forecasts of the development of automation, it is worth adopting an open but cautious attitude. Both employers and employees need specific information that will help them plan the future.

Detailed research should come with support, allowing for the assessment of the susceptibility of individual professions to automation. On their basis, recommendations for the training profiles of future employees can be built. Such a conscious approach should reduce potential long-term negative effects of automation and enhance the benefits achieved, thus enabling sustainable technological development.

This area is my next research challenge! Are you interested in the results of such research in your industry? I encourage you to contact me!

1 K. Martinek-Jaguszewska, Automation Maturity of Business Processes, PhD thesis, Warsaw School of Economics, 2021.

2 R. Susskind, D. Susskind, The Future of Professions. How Technology Will Change the Work of Experts, Wolters Kluwer Polska, Warsaw 2019.

3 M.C. Lacity, L.P. Willcocks, A New Approach to Automating Services, “MIT Sloan Management Review” 2016, vol. 58(1).

4 D. Schatsky, J. Schwartz, Redesigning Work in an Era of Cognitive Technologies, “Deloitte Review” 2015, no. 17.

5 K.F. Brant, A. Gupta, D. Sommer, “Maverick” research: Surviving the rise of ‘smart machines,’ the loss of ‘dream jobs’ and ‘90% unemployment’, Gartner, September 2013.

6 C.B. Frey, M.A. Osborne, The Future of Employment: How Susceptible Are Jobs To Computerization? University of Oxford, 2013.

7 J. Guszcza, Smarter Together: Why Artificial Intelligence Needs Human-Centered Design, “Deloitte Review”, January 2018, vol. 22.

8 K. Toth, The Workless Society: How Machine Intelligence Will Bring Ease and Abundance, “Futurist” 1990, vol. 24(3).

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