Artificial Intelligence - The Employment Scenario - Part 3

“Down with the machines!”, “Down with the machines!”, “Say NO to machines!” were the chants of the Textile workers in 1811 when the Industrial Revolution threatened to replace them with machines.

Well, history does have a habit of repeating itself, hence, I am here today writing on the topic of “Artificial intelligence – The Employment Scenario”

If you have read my previous two blog posts (AI - A new future - Part 1 and AI - Technical Nuances - Part 2), then you know what AI is, and if you don’t, to put it simply, AI is the technology which helps computers to think and behave like humans.  Machine learning is a subset of AI and it enables the software to learn by itself. And this is what makes this technology revolutionary - the intelligence exhibited by machines which till date was found only in humans. Now, this sparked off a concern that robots will take away our jobs, so even we started screaming, “Down with robots!”, “Down with robots!”, "Say NO to robots!". But my dear readers, today, I am here to try my best to help you dispel this doubt.

Accordingly, let me start by asking you all a few questions.

Does everyone reading this agree that it is not the first time we are having a technological revolution? We have had so many before this.

What is the reason for the common belief that technology will make people redundant? Is it due to the belief that productivity increases due to machines or something else? 

If we go by the "increased productivity"  logic then, when computers came in 1990s, many jobs would have been lost as it helped do a lot of things which never was possible before at a quicker pace.   

Therefore, if we take the unemployment rate as per 1990 and as per today, it should have significantly increased, right? 

However, that is what we are thinking! Let us take a reality check. The employment rate in 1991 in the US was 6.80% and in 2018 it was 3.93%. In the EU it went from 8.58% to 6.82%. And in the UK it went from 8.55% to 3.95%.

In India, if we compare unemployment reported by NSSO (National Sample Survey Office) per 1000 persons as per the current weekly status method in the 43rd round conducted in 1987-88 and 68th round in 2011-12, the results are the same.   For urban male it went from 66 to 38, for urban female from 92 to 67 and rural male from 33 to 45 and rural female from 44 to 35.

Overall worldwide also there hasn't been much change.

Well, not quite what you expected isn’t it? Even though tech has dominated our work-space, unemployment has not increased worldwide that too drastically as we expected. If we go back even further, in 1929 the unemployment in America was 3.2%, in 1947 it was 3.9% and in 2018 too, it is 3.9%.

Now that you are thoroughly confused, let us try to understand how job creation and employment work.

When a new technology disrupts the economy, the following factors affect employment.

1. The tendency of a job to be replaced

Not all jobs are subject to automation. Jobs that require personal interactions, human judgment, creativity, empathy will not at all be subject to automation. Routine and repetitive jobs are the ones that will fall prey to automation.

2. New jobs Created

Whenever a new technology comes in, it causes some jobs to be lost, but at the same time, new industries and their supporting ones and new job roles are created based on new technology, thus creating new jobs.

3. Cost

Whether a company will opt for automation or not depends upon the cost factor. In India, labor is very cheap. The Per Capita Income of India is Rs. 9315 per month. Machinery is also expensive and there is the cost of installation, training workers, electricity, repairs & maintenance,  etc. When many studies claim that jobs will be automated, their study is based in developed countries like UK, US, where labor is expensive. In fact around 14 to 15 times more expensive, as you can see from the images below. If benefits outweigh the costs of automation,  only then there will be automation.

4. Productivity & Output.

Automation increases productivity. Productivity is getting more things done in a short amount of time and in that time saved if we decide to produce more goods then our output too shall increase. Employment is an interplay between productivity and output. An increase in productivity causes job loss as you don't require people now, the machine is doing a good job in less time. However, an increase in output creates jobs, because many allied activities come with an increase in output such as management, distribution, and selling.  If both productivity and output increase at the same rate, then employment isn’t affected.  For example, Car Industries were completely based on manual labor before.  Now, cars are manufactured by machines, but at the same time has output also increased by 300% to 400%, therefore, causing no effect, as labor is required in other areas like sales, marketing, finance, etc. 

How about we look at a few practical examples?

Let us take the example of CA’s (Chartered Accountants). Imagine the work opportunities for a CA in the 1990s and now, apart from tax, audit, and accounting, we have something called as Information system audit, special assignment for IT general control testing, assistance in setting up accounting and ERP systems, etc. Accounting, which required 10 people, due to computers, got reduced to 5, but due to the same technology, it also increased by 5.

Not only with CA's, if we take marketing, digital media marketing was unheard of even in someone's wildest imaginations. There were only 3 modes of marketing back then - Print, Radio, and Television. Now you need an Instagram manager, a Facebook manager, a Twitter manager, etc. You also need someone to monitor comments and reply to them. Even blogging is a real job now. Back in the days, being a "Stenographer" was considered as a cool job, but now I think "Youtuber" is trending. 

The same goes for products, you have MNC's manufacturing a product which was unheard of back then, but now it is one of the most used items! Yes, I am talking about mobile phones. We have an entire industry for mobile phones, then we have wearable devices, accessories and the list goes on and on. I know you get the picture.  

Another way to look at things is when Companies opt for new technology, their productivity, and output increase enabling them to expand or lower their prices to compete. When they expand, new job opportunities are created. And if they lower their prices, people buy more of the product, in turn increasing demand & production, thus, creating new jobs. If people don’t buy more of the same product, due to increased purchasing power, they will buy other products, causing new businesses to come up and hence creating more jobs.  

Hence, we can conclude that new jobs are always added and old jobs are upgraded and shuffled, causing very little impact on employment, and this has also been proven by history. Hence, till the time the rate of technology growth does not exceed the rate of job creation, the effect of automation on employment will be nil. Besides in India, it will take some time for technology to catch up and if proper measures are taken by the government for job creation and the youth also take efforts to adapt themselves and learn new skills, the effect on unemployment will be negligible. 

Now, here you might argue with me saying, do you know how many businesses have been impacted by AI? From warehousing, where robots aid humans to pick up items from shelves to business analytics, customer service chatbots, delivery drones, etc., AI is revolutionizing the way we work. One of the best examples of AI integrating with business will be the Amazon Go Store.  It is powered with AI and sensors to make your life easier. You can just walk into the store by scanning your phone, pick whatever you want from the shelf and walk out, the money will be automatically debited from your account. Another example in Retail is Softbank’s humanoid robot Pepper, which can recognize people’s emotions by facial expressions, converse with them and guide them with their purchases. And it would be a crime to not mention Sophia - the world's first social humanoid robot to hold citizenship! Do you know on an average a shopping mart like D'mart or Food Bazaar employs roughly around 50 to 100 people depending on the store size and products stocked up and if a concept like Amazon Go store emerges, do you realize that you would require a lot fewer people in general!

I know, I get what you are trying to imply, but what I am trying to say here is that there will be unemployment, but not the apocalypse type which we are fantasizing about! At least in the near future! Again, I would like to reiterate that, if the question “Impact of AI/Automation on employment opportunities” was a multiple-choice question and the options were:

a. Massive unemployment.

b. Automation will cause unemployment, but it will not be that drastic.

c. No effect on employment at all.

d. No clue, everyone is saying different stuff, I don’t know what to believe! 

My answer would be "b".

Whether jobs will be destroyed or not depends on a lot of factors like which country you live in, the attitude of the government, the measures taken by the state to up-skill and equip the workforce, education level, the state of the economy, the age distribution, the natural resources of the country, whether you are a developing or developed country, the distribution of the workforce, cost, etc.

In my next blog post, I am going to do a sector-wise analysis of employment and the impact of automation on the same!

I think here it is imperative for me to mention that we need to take a positive mindset and march forward, as we do require AI in India to solve a lot of socio-economic problems. Do read my blog post on the problems AI can solve and the changes it can bring by clicking here.

Please share your opinions in the comments below, constructive criticism is always welcome!! Thanks a lot for reading!! 

Read ->Artificial Intelligence - The Employment Scenario - Sector-wise Analysis - Part 4