Automation will create jobs, if we get it right

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These days, automation is all the rage. Companies are using AI and robotics to automate every possible task to create greater efficiencies and profits, leading to heated debates about the roles humans will play in business in the future.

On the one hand, there is the logical argument that as AI takes over mundane and repetitive tasks, there will be no need for humans to do these, leading to massive job losses around the world. Another argument states that as these jobs become automated, new jobs and roles – which currently don’t exist – will be created, leading to a mitigation of job losses as people “re-skill” to fill those new posts.

Automation will create jobs

The outcome of the debate will only become clear years from now, but many companies are already starting to displace people with machines, leading to retrenchments in many sectors. This silver lining in this, though, is that as companies become more efficient through automation, they will theoretically be growing more than they are currently, creating room for more jobs in the future.

A new report by McKinsey & Company highlights this, predicting that technology-related gains could triple South Africa’s productivity growth, more than double growth in per capita income, and add more than a percentage point to the country’s real GDP growth rate over the next decade. Most importantly, the McKinsey report estimates that digitisation and automation advancements could add 1.2 million jobs in South Africa by 2030. The report comes after the country’s unemployment rate climbed to 29% in the second quarter of the year, the worst recorded since 2008.

According to StatsSA, the country’s unemployment rate was 27.6% in the first quarter of 2019, meaning the rate has increased by 1.4 percentage points. The South African economy also faced a downturn in the first half of 2018. Nonetheless, according to official StatsSA data, the country’s GDP grew more than expected in the second quarter thanks to a recovery in mining and manufacturing.

These two sectors have the most to lose – and the most to gain – from these changes. Mining, the historic bedrock of South Africa’s economy, directly contributes more than R300 billion to GDP. The sector directly employs more than 450,000 people. McKinsey’s analysis shows that the productivity of South African mining operations for key commodities has declined over the past five years, even as mining companies in other regions have made rapid gains in productivity.

Automation, the analysts say, is a significant part of the solution. McKinsey’s analysis shows that South African mining companies can drive “real gains in productivity” within the space of a few years if they step up technology adoption, with the potential to increase margins by 15% in some commodities.

McKinsey points out that much of the public debate about automation, both locally and globally, tends to focus on fears that technologies such as machine learning, artificial intelligence and advanced robotics will destroy more jobs than they create. “But our research suggests that, while new machines will disrupt the world of work, overall, it will create more new jobs than those it destroys. A glance at history shows that technology has created large shifts in employment, but the increased productivity it ushers in generally creates many more jobs. For example, the introduction of personal computers from the 1980s destroyed an estimated 3.5 million jobs in the US (for instance, among typists), but created 19 million new jobs right across the economy.”

What this essentially means is that miners will be out of work as machines do their jobs, but that those that work behind the scenes in mining operations will be able up “up-skill” or “re-skill” to meet the needs of the automated version of the sector. And mining isn’t the only industry to face these concerns. For example, in data-processing roles such as payroll officers and transaction processors, 72% of activities are potentially automatable.

“We estimate that there will be a demand for an additional 1.7 million employees with higher education by 2030. Unless South Africa’s graduate conversion rate improves, much of that demand will go unmet – resulting in a serious skills shortfall across the economy,” McKinsey says.

What this points to is the fact that the “re-skillable” jobs of the future require a certain level of education, once again highlighting the deficiencies in South Africa’s education system. For South Africa to achieve the 1.2 million jobs McKinsey predicts, we need graduates who are capable of acquiring the skills necessary to run the automated enterprises that will keep the economy afloat (and in competition with) those countries that are focusing on meeting the needs of a future that will run on AI, robotics, and the human brainpower behind those.