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How Germany is Lulling the Employment Fears of the World

· Technology,Automation,Machine Learning,Ai,Germany

How Germany is Lulling the Employment Fears of the World

We live in the age of digitization, and an increasing number of countries are realizing the potential benefits of artificial intelligence (AI) for their respective economies and societies. However, as robots become more prevalent in every day life, with their emergence in industry as well as households, there is a growing concern that this technology might have a negative impact on employment rates.

This concern is not a new one, as earlier generations have found themselves in similar scenarios during past technological revolutions. In particular, the theory of “technological unemployment” became popularized in the early 1900s upon the introduction of improved agricultural technology, displacing workers from rural employment. Technological unemployment, an idea explored by John Maynard Keyes, is unemployment due to technological change [1], and is increasingly relevant today. In a study published by The European Commission, statistics show that, while a large majority of people believe that robots are necessary as an aid to people for difficult tasks, 74% of respondents expect that more jobs will be lost than will be created as a result of the use of robots and AI [2].

The fears of these people aren’t irrational, as automation could negatively affect employment by displacing workers from their tasks. It could also, however, positively effect employment. The rise of automation could create new jobs and industries, causing an increase in demand for labor [3]. While the ultimate impact is still uncertain, there are countries that are demonstrating increased employment from automation.

Europe as a whole has the highest number of service robot manufacturers in the world with 243 manufacturers, and is proving that high unemployment isn’t necessarily linked with high numbers of robots in factories [4].

Germany boasts one of the lowest unemployment rates in the world, coming in at 3.4% as of March 2018, the country’s lowest since July 1980 [5]. Despite this low rate, Germany also has one of the highest robot densities in the world. Robot density is measured by number of installed industrial robots per 10,000 employees in the manufacturing industry, and in 2016, Germany’s robot density was 309, a far leap from the world average of 74 [4].

In fact, it is possible that AI will stimulate economic growth in Germany. Being a highly developed country, Germany will increasingly need to depend on heightened productivity to achieve its GDP targets, which can be achieved through automation fueled by AI. Studies show that AI enabled work can increase the country’s productivity by anywhere from 0.8 to 1.4 percent each year [6]. This increase in productivity has the potential to have a huge impact on the economy as a whole. Strategists and corporate consultants at the company McKinsey have even concluded that artificial intelligence could boost the German economy by up to 10 billion euros by the year 2030 [7]. This massive boost would be the direct result of increased automation based on AI and the potential jobs and industries it would create.

While it’s easy to believe that the more likely outcome of automation in the workforce would be the displacement of workers, the effect of productivity on the economy cannot be ignored. It has already been successfully demonstrated by Germany, and perhaps other countries would stand to gain by following suit.

Written by Rachel Weissman & Edited by Alexander Fleiss

[1] Souto, E. (2017, November 13). Technological Unemployment: Why Keynes Is More Relevant Than Ever. Retrieved fromhttps://medium.com/new-tech-revolution-sciencespo/technological-unemployment-why-this-keynesianism-term-is-more-than-ever-up-to-date-479a31d5592d

[2] Attitudes towards the impact of digitisation and automation on daily life. (n.d.). Retrieved from https://ec.europa.eu/digital-single-market/en/news/attitudes-towards-impact-digitisation-and-automation-daily-life

[3] Do we understand the impact of artificial intelligence on employment? (n.d.). Retrieved from http://bruegel.org/2017/04/do-we-understand-the-impact-of-artificial-intelligence-on-employment/

[4] Making the most of robotics and artificial intelligence in Europe - European Commission. (2017, November 17). Retrieved fromhttps://ec.europa.eu/commission/commissioners/2014-2019/ansip/blog/making-most-robotics-and-artificial-intelligence-europe_en

[5] Germany Unemployment Rate | 1949-2018 | Data | Chart | Calendar | Forecast. (n.d.). Retrieved fromhttps://tradingeconomics.com/germany/unemployment-rate

[6] Smartening up with artificial intelligence. (n.d.). Retrieved from https://www.mckinsey.com/industries/semiconductors/our-insights/smartening-up-with-artificial-intelligence

[7] MacKinsey sees AI spurring economic growth in Germany - Artificial Intelligence. (2017, May 12). Retrieved fromhttps://www.cebit.de/en/news-trends/news/mackinsey-sees-ai-spurring-economic-growth-in-germany-182

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