Journal № 2 (16) 2022

Definitely, as 100 years ago, manufacturers strive to maintain the competitiveness of their companies, for example, they resort to transferring production abroad. Is it always justified? Most often, the key argument is the cost of labor. However, other factors are also significant: currency fluctuations, lead times, needs for raw materials, legislative support and stability in the country, logistics reliability, intellectual property protection, etc. Product quality control is not the last factor. Automation of production is a good alternative to cost reduction.

What testifies in favor of such a decision?

Population ageing and the shortage of skilled labor.

According to the UN, by 2030, for the first time in history, there will be more people over 60 than children under 10. The number of people over 65 will increase by 300 million people compared to 2014. And the number of economically active population aged 20–59 years, on the contrary, will decrease. For example, by 2035, the number of workers at this age in Japan will decrease by more than 11 million and will amount to less than 52 million people. In Italy, over the same period, the number of able–bodied active-age population will decrease from 32.5 to 26.7 million, in Germany – from 44.3 to 38.4 million. It is noteworthy that the United States, on the contrary, will increase the number of workers aged 20-59 years by 9 million to 181 million people during the same time.

The population of the CIS countries is increasing, but only slightly. At the beginning of 2021, it was estimated at 287 million people. Today it is about 4% of the world's population. The population of the EAEU countries is slightly more than 184 million people: in some post–Soviet countries, the population is declining, in others it is increasing. The topic of the single labor market is connected not only with the emergence of the EAEU: in the early 80s of the last century, regional demographic imbalances were already openly discussed.

To solve the problem of shortage and ageing of staff, we usually increase labor productivity and automation. Moreover, on average, it takes the doubling of labor productivity over the next decade just to maintain the current GDP growth rates. Thus, the ageing of population is not just the shortage of labor, but also the impossibility of further economic development.

The need for maximum performance.

The transfer of production to countries with low wages requires scrupulous calculations. The facts show that they successfully compete with such companies due to automation and the associated cost and quality of products. In addition, it is not necessary to outsource on the principle of “all or nothing”. Outsourcing makes sense only for products and production processes with a large share of manual labor. Automated processes, products that require final finishing and massive products are better left in the original country. In addition, the decision to replace workers with robots in the future may face a program to protect the employment of indigenous population.

There was a similar dilemma last century.

For example, in 1900 in the United States, agricultural workers made up more than 38% of the total labor force compared to today's 2%. Nevertheless, the volume of agricultural products has increased significantly. Similarly, the number of workers in the steel industry fell by 74% (from 289,000 to 74,000 people), and output increased by 36% (from 75 million to 102 million tons).

If we take into consideration the potential problems associated with production outsourcing, it makes sense to consider expanding the capabilities of existing enterprises.

A large volume of standardized actions.

Monotonous physical operations, routine work first of all are subject to automation and robotization. McKinsey Global Institute (MGI) analysts note that 81% of the time spent by an employee on regularly repeated actions can be robotized. It is believed that a robot is capable of performing the work of three or even five people, which significantly reduces direct labor costs.

Various studies highlight about 2000 labor actions performed by representatives of different professions. For example, the costs that go to data collection and processing (by the way, in the USA they amount to 51% and cost employers 2.7 trillion dollars) can be reduced through automation, using existing technologies. Typical tasks prevail in almost all sectors of the economy: manufacturing, hotel industry, catering, retail, etc.

It is predicted that automation may affect about 1.2 billion people, whose total salary is about $ 14.6 trillion. The main share of these figures falls on the economies of 4 countries: China, India, Japan and the USA. Among European countries, it is assumed that Italy, Spain, France, Germany and the United Kingdom will become the leaders in automation. Thus, technological innovations become a kind of indicator of progress.

The abolition of a number of professions and types of employment.

MGI estimated that 400 million people would become redundant due to automation by 2030 – this is 15% of all jobs in the world. In banking and insurance spheres, technologies are changing the processes of loan approval and fraud detection, communications with customers are being built in a new way: 20% of jobs will be cut by 2030. In energy sector and extractive industries, 30% of jobs will disappear. Technologies that do not require human labor are being introduced for the extraction and transportation of oil and gas, etc.

In production, 46% of employment falls on manual labor: conveyor assembly, feeding materials to machines, managing packaging machines. Half of these jobs will be abolished. Retail trade will “lose” 25% of employees: drivers, packers, employees who put goods on shelves, due to self-service cash registers, merchandising robots, sensors and machine learning. There will be fewer office and warehouse workers.

The changes will affect white-collar workers of average qualifications; their work is replaced most intensively: 60% of designers and engineers will change their profession. As a result, the trends show three layers of labor resources: a highly qualified elite in demand, a small middle stratum and low-skilled workers whose automation of labor is unprofitable.

The emergence of new professions and specialties.

Automation and robotization leads to the retraining of labor resources, instead of mass unemployment. By increasing productivity, technological progress frees up resources, creating opportunities to meet needs that previously people could not meet. Improving the quality and standards of life is a basic human need. And the unsatisfied desire of one person is a potential workplace for another. Humanity will continue to exist for a long time in conditions of limited resources.

According to MGI estimates, income and consumption growth will create 300– 365 million new jobs in entertainment and leisure, finance and telecommunications, healthcare and education by 2030. Due to the increase in demand for energy and water by 50% and 40%, respectively, new jobs will be created in the production of alternative energy, waste recycling and the use of secondary resources. And another 80–130 million new places will appear so that there will be someone to serve the growing number of elderly people.

We should understand that new jobs meet the request for technology. Thus, the transition to mass robotics and automation are becoming one of the key factors in maintaining the pace of labor productivity. There is no alternative to this process.