Austrian Economics

Austrian Economics : Austria’s Automated Ai & Robotic Future Is Now​

Austrian Economics : Donawitz is a small mountainous and industrial town in Austria where miners have been digging for ore in the snowy Alps since the days of medieval knights.

During the Hapsburg empire the town grew even larger as an important industrial center and by the turn of the century Donawitz had become Europe’s largest mill. The nearby snow-covered peaks provide a dramatic backdrop for the town and the town’s transformation today is nothing short of dramatic.

Austria’s mills have contributed to some of Austria’s most dominant industries: steel, iron, and vehicle manufacturing.[1] One Austrian steel mill at Donawitz has employed hundreds and even thousands annually since the 1400s.

Yet, the rise of automation and digitalization has eliminated most of the need for human labor at these mills. By the end of 2019, the mill at Donawitz will require only 14 workers to produce 500,000 tons of steel annually, which would have required nearly a 1000 workers back in the 1960s.[2] 

The Austrian manufacturing sector (similar to Germany) is facing a massive retirement wave until 2025, prompting industrial companies to prepare for a future where low-skilled laborers can still deliver increased output despite a probable smaller low-skilled workforce from which to pull. The phasing out of human labor at Donawitz is merely a harbinger of Austria’s future.

The Center for European Economic Research (ZEW) reported that out of all countries in the European Union, Austria is tied with Germany for having the highest risk of automation, potentially displacing 12% of the jobs. On the other hand, Estonia has the lowest risk of automation – analysts forecast that potentially 6% of jobs will be displaced in the near future.[3]  

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These estimates are supported by PwC’s analysis of over 200,000 jobs in 29 countries, which concluded that there will be 3 waves of automation that will revolutionize the workforce in the coming years. One wave in early 2020s that will introduce revolutionary algorithms, another in the late 2020s that will expand and perfect new algorithms, and a final wave in the mid-2030s that will introduce a new era of autonomous computer systems.[4]

Given these forecasts, it is highly likely that Austria will lose jobs to automation. Clemens Wasner, Chairman of the Austrian Society of Artificial Intelligence or Ai Austria as well as Founder, CEO of Austrian think tank Enlite.Ai, explains the reasoning behind ZEW and PwC’s forecasts. Mr. Wasner says, “less than two thirds of employees in Austria earn below 30,000 per year and pay very little income tax. Half of them earn below 15,000 and don‘t pay any taxes at all. The general consensus is that low-skilled jobs will be the first to be automated… and in Austria, you have plenty of them.”

In fact, economists believe that the risk for automation of Austrian low-skilled jobs is 50% until 2030, especially in retail and tourism.

However, Mr. Wasner mentioned that Austria is less likely to lose jobs in manufacturing than other European nations such as Poland and Slovakia due to its expertise in those two areas.

Mr. Wasner foresees automation to strike faster than expected in retail, especially since there are more than 350,000 low-skilled employees in the sector that in most cases lack the basis for retraining.

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Regarding logistics & delivery, the Austrian government is fully backing a project to create an autonomous-vehicle friendly legislation to attract foreign testing on roads from companies such as Amazon and Uber, which includes not only self-driving cars, but drone delivery as well.

Concerning the public sector, Austria is investing heavily in automation of public sector jobs as they are trying to regain their spot as the leader from Estonia in eGovernment services. Investing in Ai & digitalization will make it cheaper to run the government and fill positions that will be phased out once current employees leave the workforce.

Styria and Linz are two cities that are being most impacted by automation in Austria as their traditional industry centers are at the forefront of retraining and upskilling the local workforce.

Although some may think that Vienna could be a promising automation hub, there is actually very scarce research, development, or manufacturing occuring there: companies simply do not see Vienna as a center for research, engineering, or knowledge.

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In the more rural areas of Austria, automation is especially changing transportation and agriculture. Due to lack of drivers and depopulation, Austria has tested self-driving buses in closed communities. Mr. Wasner expects this trend to accelerate within the next 5 to 10 years.

On larger fields, farmers are trying out Ai for crop monitoring and the optimization of feeding and vaccination cycles for kettle or general health monitoring. Farmers who cannot afford this advanced technology stick to “rather simple solutions e.g. automating the recording process, which is mandated by the EU.”

When we look at the current investments in Austria, it seems as if the first wave is already taking place. Companies such as Infineon Technologies & ABB have sped up the integration of automation & digitalisation in Austrian society. Infineon Technologies is reportedly investing 1.9 billion dollars in a new chip factory in Villach over the next six years.

This factory will be fully automated and is expected to create about 400 jobs. ABB, one of the current market leaders in automation in Austria, invested over 116 million dollars in Austrian machine & factory automation. ABB also built a training camp in Eggelsberg that is set to open in 2020. Purportedly, the investment will create over 1000 high tech new jobs.[5] 

Looking positively at the future, automation will ultimately help the Austrian economy evolve. Major firms such as Infineon Technologies, ABB, and even Accenture consider Austria as one of the countries with the highest Ai-induced growth potential due to the dual nature of the economy and the traditional manufacturing, industrial complex.

That said, in the long-term, unemployment will become a big problem due to the number of low-skilled laborers – Mr. Wasner predicts Austria will introduce universal basic income until 2030 to combat a population of jobless low-skilled workers as the robots take more Austrian jobs than they will create in the near future.

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Austrian Economics

Written by Albert Daniel Shub with insight from Clemens Wasner, Board Member of Ai Austria & Founder, CEO of Ai Enlight, Edited by Jack Vasquez & Alexander Fleiss

Sources for Austrian Economics:

[1]https://www.reuters.com/article/us-easteurope-automation-insight/enter-the-robots-automation-fills-gaps-in-east-europes-factories-idUSKBN1FR1ZK

[2]https://www.bloomberg.com/news/articles/2017-06-21/how-just-14-people-make-500-000-tons-of-steel-a-year-in-austria

[3] http://www.ifuturo.org/sites/default/files/docs/automation.pdf

[4]https://www.pwc.co.uk/services/economics-policy/insights/the-impact-of-automation-on-jobs.html

[5]https://www.businesswire.com/news/home/20180406005249/en/ABB-Invest-%E2%82%AC100-Million-Global-Innovation-Training

Austrian Economics