Automation enables firms to reduce number of workers, and this limits the power of trades unions and potentially disruptive strikes. Automation also enables a greater economy of scope. This means that one factory is able to produce a greater range of goods; this diversity and product differentiation is as important for firms as lower unit labour costs. In the s, the goal was to produce goods as cheaply as possible.
Now, consumers are looking for greater customisation of products. Automation enables consumers to be able to customise the size, look and function of your fridge — rather than just picking a standard model from the assembly line.
Automation can also enable shorter lead times, quicker delivery and more efficient use of stock and cash flow. Automation can improve safety records by implementing automatic fail-safe mechanisms and reduce the risk of human error. Costs of automation for firms Requires significant capital investment and the benefits may take several years to exceed current production methods.
Firms that are under short-term pressures may be reluctant to take the investment needed and lag behind. Lack of investment in automation has been put forward for poor growth in labour productivity in US and UK. Requires more specialised labour to develop software and maintain machinery.
Some forms of automation may put off consumers. For example, consumers may get frustrated speaking to a computer rather than dealing with a human on the end of the phone. In addition to the benefits accruing to firms, automation can have various benefits for wider society. Consumers have gained the convenience of greater choice of goods and services. For example, ATM cash machines are a very simple example of automation which enables people to get cash when banks are closed.
Lower costs of production enable lower prices, leading to more disposable income to be spent on a wider range of services. Leads to the creation of new kinds of jobs, which are more creative, less repetitive and enable more flexible labour markets.
For example, rather than do repetitive jobs in a factory, young workers can become software engineers to develop the ideas, design and methods that the robots will then make.
More profitable firms should, in theory, enable governments to receive more tax revenue to spend on public goods. Automation is essential to remain internationally competitive.
Problems of automation for the economy It can create winners and losers. Some will benefit significantly from automation — owners of more profitable factories, and software developers. However, those who lose jobs from the process of automation, may struggle to gain equivalent employment. Globalisation and automation has been suggested as one reason for these higher structural rates of unemployment — especially amongst unskilled male workers.
Even those who have found work, often find it is in the gig economy — zero hour contracts , involving low pay and uncertainty. This has created ill-feeling towards the direction of the economy — despite higher GDP. Impact on equality. The process of automation has co-incided with a rise in levels of inequality in UK and US.
There are many reasons for the rise in inequality, but the fear is that some benefit from automation more than others. Automation may increase corporate profit, but not necessarily median wages. Since , we have seen a rise in real GDP, but median wages have stagnated. Company profit has increased, but the share of tax revenue paid by companies is not increasing. Automation can increase monopoly power of the most successful technology firms, e. Apple, Amazon have all benefitted from automation to gain higher market share.
Loss of human element. We are moving to a society where we have less personal contact — self-service till, automated announcements and buying online. It means we can avoid having human contact and although the economy may be efficient, it could create problems of loneliness and a sense of separation. This human touch is something not measured by economic statistics like GDP. For example, if a human is making announcements about trains, they can make jokes and entertain waiting passengers.
An automated computerised announcement system has no sympathy, empathy, but is robotic. Uber uses an automated pricing mechanism.
This meant during some crisis, the price of Ubers went through the roof. This gave the impression Uber was profiting from tragedy. Uber later but cap on surge-pricing. Future trends of automation 3d printing and automation of customised production are just in their infancy. If this occurs, we could see further pressures on old fashioned styles of jobs.
Conclusion Automation is a major influence on the economy and will continue to be over the next decade. Related Luddite fallacy Flexible labour markets External links Larry Summers on the challenges of future labour markets The economic impact of automation technology paper. In india automation is not good for poor labour.
According to indian point of view Automation is not good. But still this is useful to mankind. We use cookies on our website to collect relevant data to enhance your visit. Our partners, such as Google use cookies for ad personalization and measurement. However, you may visit "Cookie Settings" to provide a controlled consent. Cookie Settings Close and accept all. Manage consent. Close Privacy Overview This website uses cookies to improve your experience while you navigate through the website.
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YSC session This cookies is set by Youtube and is used to track the views of embedded videos. Analytics Analytics. Analytical cookies are used to understand how visitors interact with the website. But similar trends can be seen in large swaths of the American economy.
One way to see this is by looking at the US Labor Department's projections of the fastest-growing occupations in the United States between and A bunch of slots are taken up by therapists and caretakers: physical therapists and their aides and assistants, occupational therapy aides and assistants, home health aides. In some cases, growing demand is driven by an aging population with greater need for personal care.
But that's not the whole story. Occupations like nurse-midwives, genetic counselors, and diagnostic medical sonographers are also expected to see robust growth. They mostly deal with pregnant mothers, and government statistics don't project a rapid increase in childbirth over the next decade.
In a sense, it's possible to automate many aspects of these jobs. Instead of having a therapist come to your home, someone could send you a video demonstrating therapy techniques. A website could ask the patient questions and recommend exercises. If these resources proved insufficient, the patient could hop onto a videoconferencing app for some personal advice.
For someone who needed therapy care, this kind of semiautomated therapy service would probably be better than nothing. But it's a lot worse than having a face-to-face meeting with a human being who gives you her undivided attention. Indeed, talking about "automating" this kind of job seems like a category error.
Another example: There's been a lot of excitement about massive open online courses and other internet-based learning platforms. And the prospect of giving anyone in the world access to information from the world's best universities is certainly exciting. But MOOCs are unlikely to ever pose a serious threat to conventional four-year colleges. But these same technologies, including robotics, big data, machine learning and artificial intelligence AI will also have a major impact on social inequalities.
It is this latter point that tends to make people nervous about — even hostile against — all things automatic. To accomplish this, project researchers are studying how AI and robotics impact work. They are also analysing how automation could affect various social groups differently and how technological innovations will likely change social inequalities. Although still a work in progress as the project will end in December , researchers have already made several important findings, including about how automation will impact the labour market.
Perhaps more importantly, they have determined that the effect that this automation will have on European society depends on a wide range of variables, including governance. Based on these findings, the project has produced policy suggestions that can help regional, national and international governments better respond to the challenges of automation. Last update: 10 June Record number:
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