Constant change has been the only certainty in an uncertain world. Economy and society have constantly evolved with ‘creative destruction’ often assuming an important role. This change gains momentum with the introduction of technologies. The present is no different. Only the degree and speed of this change varies. Over the past few years, there is an increased investment in Robots by businesses especially (though not always) in the manufacturing sector. There are a number of similarities between the current emphasis on the use of robots and other related technologies to the large scale computerisation in India from the 1990s. Till the year 2000 and the sudden interest in Y2K, most Indians were not even aware of the implications while the world was silently introducing it on a large scale. A similar trend is being witnessed to the surge in the use of Robots in other countries.
The impact of robots will be diametrically opposite in different countries. In the developed countries and countries like Japan, China and South Korea which are rapidly ageing and where the demography is loaded against them, it will be beneficial. China witnessed a decline of 317,000 people joining the labour force last year. To overcome this problem, China hopes to automate 80% of the production lines by 2030. Chinese government estimates that one robot can replace 6 human labourers. This is not the only reason why China is encouraging the use of robots. Massive urbanisation, investments in education is leading to a major shift in the nature of work force and labour shortages leading to a sharp rise in wages. This is making Chinese goods face competition from other low cost producers like Vietnam. The government hopes that deploying robots will not only free up the labour force but will also enable its industry to climb the value chain by providing high quality goods rather than only those goods that are cheap. Little wonder that China is buying robots aggressively: the country bought nearly 25% of the total industrial robots sold in the world in 2014 (54000 out of the total 227,000). In contrast, in countries like India and Africa where huge number of youngsters are joining the labour force Robots need to be used for a different purpose than what they are being used in the developed world. A simple copying of the western countries (or Japan, China and Korea) will lead to an unmitigated disaster and even social chaos.
The use of robots in businesses is not new. Automobile sector is the largest user of robots with nearly 60% of all auto production of the major companies globally is automated. In recent years, use of Robots is finding increased utility and attraction in industries like Food packing, electronics and is gradually picking up in the pharmaceutical industry where it is now increasingly being deployed in labelling, watering, cleaning and other processes.
There are innumerable advantages when robots and related automation are introduced in the work place. They lead to a quantum jump in productivity, substantial improvement in quality of output apart from giving an opportunity to increase production. In 2010, ABB claimedthat introduction of robots in welding led to a 60% decrease in the rejection rate of Zinc Ingots. Amazon’snew warehouse in Robbinsville, New Jersey (USA) have given a huge boost to productivity since it automates a number of tasks that were undertaken by humans. This enabled the company to redeploy the existing workers into other duties. There was no retrenching of workers – a common fear that comes to mind when one thinks about robots. Businesses expect major benefits from the use of robots. Recent studies expect the use of robots to reduce labour costs for businesses by another 25% in the next five years (from the present level).
This does not mean that a country or business can simply buy robots off the shelf and introduce them in the work. Benefits have flowed only when this introduction of robots is taken up concurrent to increased investments in science, technology, related research and the broader education system. A successful introduction of robots needs to be part of a larger automation drive which in turn is possible because the countries invested huge amount of money in Research and Development (R&D) as a percentage of their GDP to provide the human resources to service these sectors. This in turn has a positive spin-off in the intellectual property possessed by a country which tends to draw more investments that help create jobs. Israel’s technology sector is one such good example.
| Country | Industrial Robots per 10000 workers | Gross Expenditure on Research and Development as a % of GDP(2012)# | Patents Filed by Residents (2013)* | Patents Granted to Residents (2013) |
| South Korea | 396 | 4.36 | 159,978 | 95,667 |
| Japan | 332 | 3.39 | 271,731 | 225,571 |
| Germany | 250 (approx) | 2.92 | 73929 | 23,209 |
| USA | 150 (approx) | 2.79 | 287,831 | 133893 |
| China | 11 | 1.98 | 704,936 | 143,535 |
| India | NA | 0.81 | 10,669 | 594 |
| Israel | NA | 3.93 | 1209 | 484 (2012) |
Source for Industrial Robots per 10,0000 workers: International Federation of Robotics
Source for Patent Related Data: http://www.wipo.int/ipstats/en/statistics/country_profile/
*Excludes patents filed by overseas residents of a country. Excludes filing of Trademarks and Industrial Designs.
# UNESCO release of Gross Expenditure on Research and Development for latest year (http://data.uis.unesco.org/)
The success of South Korea has important lessons for India: it has nearly doubled spend on Science and Technology (including R&D) from 2.18% of GDP in 2000 to 4.36% in 2013. Its per capita income was about US$10,000 in 2000. By 2013, the GDP had increased to approximately US$25,000. One of the reasons was its investments in R&D and high quality education. It has been reported that by end of 2014, China’s investment in Science and Technology as a percentage of GDP had risen to 2.08%. China has fixed a target of 2.50% of GDP by 2020. Historically, countries that have reached the equivalent of 2% of the GDP witness major gains in the form of economic growth. But, reaching this level can take a long time. US took 10 years to reach that level (1950-60), Germany 11 years (1951-62), Japan 19 years (1959-78), China more than twenty years while South Korea took only 5 years (1983-88)
Rise of Machine Age
Japan is the leader in manufacture of industrial robots. It has used Robots since at least the 1980s in different industries. Recently, the Japanese government started an initiative (Robot Revolution Initiative Council) that will help expand the use of robots beyond the factories to other areas, especially into service sector. This initiative attempts to bring together nearly 200 companies and universities in a five year programme that help build new types of machines and help deploy them in newer segments of the economy apart from exports. Japan, South Korea and China hope to grow their Robot industry and application of robots by at least four times from present levels by 2020. Even the US has inaugurated a programme (National network of Manufacturing Innovation) that will modernise its US$3 trillion manufacturing sector by facilitate automation of their factories.
Among the countries that are making a renewed push to increase the number of robots are China and Japan. China has targeted that the number of robots should increase to about 100 per10,000 workers by 2020. In the case of Japan, the push is to introduce robots in the service sector. Japan has a relatively large presence of robots in the manufacturing sector. China’s push is interesting for a number of reasons and it has immense implications for a country like India. Chinese Central Government and provinces (Guangdong, Shenzhen, Foshan and others) have started subsidising production of robots. Last year in a trade fair, nearly 400 new manufacturers of industrial robots showcased their products – never seen in the past.
Unlike the other countries, robots are more of a double edged sword in the Indian Context. There is a need for India to be better prepared for such a future. It is estimated that if the current trends in unemployment continue then by 2030 about 46 crores (out of a total estimated population of 148 crores) will not have skills that will allow them to participate in the labour force and will be unemployed. If millions of these people are not skilled in the next 5-7 years, it is likely that in order to remain competitive business will be find it more profitable to invest in robots. This will mean that millions of low skilled people will not find work.
Presently a pervading assumption is that introducing Robots is expensive. No doubt that has been the case till date. But, we have to remember that Technology is getting cheaper by the day and the benefits of technology have dramatically altered the economy. The case of Robots is no different. The fact that they are costly does not mean that they will remain costly in the future. On the contrary, if the present push by Europe, North America, China, Japan and Korea is indicative, then it will lead to a massive decline in cost of robots. This is already happening in Japan in certain categories of industrial Robots where prices have declined from US$1lakh five years ago to the present US$25,000. Hence, it is not a question of “if” robots will be introduced in different segments of the economy. Rather, it is a question of “When” they will be introduced and what point businesses will find it viable business proposition to introduce robots instead of poorly skilled humans.
This is not claim that Robots will displace all human labour or that human beings will not find employment. There will always be jobs that will require humans to take the decisions and those where human intervention is compulsory. Rather, the nature of the work force, profile of jobs, type of jobs available and requirements will undergo a substantial transformation. This will require new types of skills. Over the past two decades, the nature of jobs created is very different from those created in the four decades before that. Hence, it is imperative for the government to not only undertake reskilling quickly but also to keep future requirements and the impending introduction of robots into the work place. If Japan is an indicator then it is not only the manufacturing sector that will use robots – even those in the service sector will have to use robots to improve productivity and to overcome demographic issues.
In India, the increased use of robots will mean that more skilled labour will be required than at any time in the past. New job opportunities will be those where humans will use robots to extract greater productivity. Unfortunately, the impending adoption of robots and automation means that a majority of our education and reskilling programmes may be redundant even before they are implemented. The huge amount of money that people have borrowed for acquiring degrees through formal education may not be relevant in the rapidly changing context. This means that it will become more difficult for policy makers to create a conducive environment that can create millions of jobs for those without sufficient skills. Only the skilled will be able to take advantage and their incomes will grow. Hence, in the near future, the problem of dealing with huge incomes disparities will be a bigger problem than at present. A failure to provide jobs will lead to social anarchy.
Hence, when the new re-skilling programmes are conceptualised or when people think of joining a reskilling programme, it is important that they consider what value addition or niche set of skills they will impart. Importantly, it will require acquiring skills which machines cannot fill or are unviable. Essentially, it could mean a complete new orientation to the type of skills that re-skilling programmes are attempting. Despite all these technological changes, automation and introduction of robots, a business will always need and will hire will be people who can think, ask questions and offer solutions apart from those who can put the machines to work. The net result of all these technological innovation is that there never will be anything to beat investment in knowledge – which need not be indicative of the degrees that a person acquires.
A modified version of this post appeared as a column in the Telugu Newspaper, Eenadu on 25th July 2015 (Image of the paper below)
