Digital & Technology
Opinion Article
November 16, 2022
9. Industry, innovation and infrastructure

9. Industry, innovation and infrastructure

Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation

Are robots taking our jobs?

A brief overview of technological disruption on industries.

The automation of activities via technological breakthroughs is no novelty to society.It no longer strikes us as surprising that pilots only steer the planet themselves for around 10% of the course, or that money is drawn from ATMs rather than from a bank teller, as opposed to what happened a few decades ago. However,as we experience AI and machine learning development at an ever-accelerated pace, the future of many industries and employment as we know it may be at stake.

Overall, economies had to adapt to maximize the value they get from the digital disruption phenomenon, but at a micro-level, how did businesses across industries change? First, they transferred some of their power to consumers,making their needs the company's main focus. Also, they changed the way they operated, shifting to a more agile and sharp way of acting, simplifying the decision-making process and making their dynamics more competitive. And lastly, firms reinvented their operating models, using advanced analytical tools to reduce costs and drive revenue while improving insights.

Recently,AI has been subject to groundbreaking discoveries, accounting for significant advances in many sectors and placing us in the middle of the fourth industrial revolution. As the world’s top enterprises strive for the best AI in order to capture its vast market (Amazon with Alexa, Apple with Siri, IBM with Watson, and countless other examples), we observe time and again a broader scope of industries that are possible to restructure and enhance via technology- healthcare, retail,  manufacturing, finance, customer service and transportation, only to name a few.

As more companies adopt artificial intelligence for revenue boost and cost reduction,global AI startup funding has been growing vertiginously over the past years.The ease with which AI capabilities manipulation can be done allows each industry to tailor it to their value chains and, consequently, increase efficiency. 

Source: McKinsey

What’s more, machine learning is also a tool increasingly more explored by corporations, from financial services to entertainment. For instance, PayPal uses machine learning to analyse and compare users’ activity to detect legitimate and fraudulent transactions, namely money laundering. Netflix makes use of intelligent machine learning algorithms that compare viewing activity in order to make recommendations on what to binge-watch next. These sorts of tasks involve the quick analysis of big data, a task in which humans cannot compete with machines.

One of the sectors that is already being revolutionized by technology is transportation, and one does not even have to go as far as Tesla to mention automated vehicles. As Mobiccascais rolls-out its first automated bus, the future of self-sufficient public transportation is imminent. And it does not stop here: with multiple trials on autonomous ships, mining trucks and aircrafts, the only thing stopping driver less vehicles from becoming mainstream is regulation.

When it comes to manufacturing, the automotive sector is historically known for using cutting-edge technology to improve efficiency. While Industry 4.0 technology brought considerable gains in productivity, ranging from production design to quality control, being able to keep up with increasing consumer demands for more choice, it has also been able to mitigate the fear that this industry belongs to the robots. Breakthroughs in the field of robotic technology brought the so-called “co-bots”, artificial intelligent robots that are much lighter and agile - thus safer for humans to work around - and, more importantly, they are trained rather than programmed. A study conducted by the MIT in alliance with BMW found robot-human teams to be 85% more productive than either of the malone, and the manufacturing industry is responding, tending towards a common-ground future for man and machine.

By affecting industries, automation is bound to change labor. In fact, this has been a trend for decades now, and the further development of AI will inevitably change the workplace and how we work, which will bring positive and negative consequences. The global impact, however, is still unknown.   

Since the 80s, computers have led to 3.5 million jobs destroyed in the US, according to a McKinsey study. Nevertheless, in that same time frame, over 19 million jobs were created as a result of the personal computer, as technology increased productivity and spending power, which consequently created new demand and new jobs. Technology has changed labor, not destroyed it. As the service sector gained weight, so did the median household income, as a result of some low-paying and low-skill jobs being replaced. Also, automation led to vast improvements in quality of life, hours of work, and replacing repetitive tasks,meaning its impact extends beyond just economic indicators.

AI,machine learning, and other recent technologies stand to change the labor market similar to how computers did, although to a further degree. The World Economic Forum claims that from 2018 to 2022, automation will destroy 75 million jobs, but, as was seen previously, 133 million jobs will emerge in that period due to the same event. However, when talking of automation and job destruction, it is important to distinguish between occupations and activities.According to McKinsey, 45% of activities performed can be automated by adapting currently demonstrated technologies. When it comes to occupations that may be fully automated, that figure is only 5%. This scenario is far less drastic because the change affects primarily tasks rather than occupations themselves. Nonetheless, 60% of occupations could have 30% or more of their constituent activities automated, which means the vast majority of professions will still suffer significant changes, namely job redefinition along with a transformation of business processes.

The difference from previously seen automation lies in the incidence. Whereas the industrial revolution led to mainly low-skill tasks disappearing and the computer age affected workers more in the skilled middle, such as travel agents, technology will also affect high-paid occupations, such as executives and physicians. Machine learning and AI’s expertise will exceed humans’ and,as a result, more demanding tasks and decisions can be automated, making even high-skill professionals subject to the phenomenon, something not seen before. As profound as these changes may seem, they will not occur all at once,instead, AI will slowly move into the workplace, gradually replacing humans. 

All in all, additionally to affecting companies financially, automation will deeply affect workers financially, because as labour becomes a less important factor in production, a majority of citizens may find the value of their labour insufficient to pay for a socially acceptable standard of living, which will require society to come up with solutions to prevent a part of the population from falling behind. AI and machine learning are successful as long as they create value for human lives. To safeguard human labor from becoming obsolete and inequality from increasing, it is vital that governments take an active role in defining policy. While it is important to stimulate investment in R&D, it is crucial to adopt a "humans first" position.Although it may be difficult to predict in which direction technological disruption may point towards, it will surely be impossible to go back from it,so legislation must be shaped in a way that advances in technology-focused solely on corporate profit and disregard human capital are forfeit.

Students authors: Diogo Alves, Lourenço Paramés and Tiago Rebelo

This content was originally published in The Awareness News

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