The Strategist

Oxford Economics: Robots will destroy 20 million jobs by 2030

06/27/2019 - 11:17

Oxford Economics research agency said that robots could “occupy” about 20 million current jobs in industrial production by 2030. This is 8.5% of the entire global labor market in this sector. Experts fear that a sharp increase in automation may hit the less developed countries the most, causing an increase in unemployment.

Oxford Economics is a commercial research division of a business school at Oxford University. The study “How robots change the world” published on Wednesday provides data on the dynamics of introduction of robots and automation in recent years and gives forecasts up to 2030.

It is reported that since 2000 the number of robots used worldwide has tripled to 2.25 million. During the same period, 1.7 million industrial jobs all over the world have disappeared — about 400 thousand in Europe, 260 thousand in the United States and 550 thousand in China. Experts are confident that in the next 20 years this trend will accelerate significantly, and by 2030 the number of robots in industrial production will reach 20 million: “As a result of robotization, tens of millions of jobs will be lost, especially in poorer countries that actively use low-skilled labor. This, in turn, will increase inequality.”

Nevertheless, the growth of robotization will also bring such positive moments as an increase in labor productivity and economic growth, which will lead to creation of new jobs,” the study says.

According to forecasts of Oxford Economics, by 2030 almost 2 million robots will work in the industrial sector in the EU alone. There will be 1.7 million of them in the USA, and about 14 million - in China.

It is noted that in the first year after installation each robot replaces an average of 1.3 human workers. In subsequent years the replacement rate rises to 1.6.

Taking into account productivity growth by 0.1% in terms of one workplace, it is expected that global GDP will receive an additional $ 5 trillion by 2030 thanks to automation only in the industrial sector.

The report's authors note that the effect of accelerating industrial robotization will vary depending on each country: the poorer the country is and the more it depends on low-skilled labor, the more it will suffer from robotization. In turn, countries that develop highly skilled labor resources and timely get ready for reassignment of employees who will be replaced by robots will have the opportunity to send the released personnel to other areas in need of human work force.

The growth of robotization will prompt productivity and economic growth. It will also result in the creation of new jobs in industries that have either not yet appeared or have just begun to emerge, said Adrian Cooper, general director and chief economist at Oxford Economics. However, many current business models in different sectors will undergo major changes. Tens of millions of jobs will be lost, living workers will be crowded out by robots increasingly faster as the robots themselves become more complex and sophisticated. For people and businesses, the effects of such a process will be very different depending on countries and regions. In places where there are disproportionately many low-skilled workers, this can lead to economic and social upheavals due to rising unemployment and inequality - just at a time when increasing political polarization is already a concern trend.