Offshoring jobs and buying robots creates better new jobs
Buying robots to take over repetitive jobs and offshoring basic tasks to foreign workers is not bad for employment in the UK — instead, it creates more and better paid jobs.
Overall productivity receives a boost as relatively unproductive jobs are automated or performed more cheaply overseas, freeing up resources domestically for higher productivity work, The Telegraph wrote.
Those resources — including workers — are typically put to better use, pushing up wages, according to research from Martina Magli at the University of Nottingham, presented to the Royal Economic Society (RES).
“If the cost of importing the service is lower than the cost of producing it domestically, a firm will tend to import the service, which in turn increases its productivity. While this leads to higher revenue margins, it also decreases the number of local jobs,” the study found.
“At the same time, however, a more productive firm can pay higher wages to the remaining workers, and hire more local employees in different types of occupations than those offshored. Other firms in the area may also benefit from this, leading to ‘spillover’ effects.”
However, the gains are not necessarily spread equally, with higher paid workers benefitting more.
In particular, the general improvement in a local economy’s fortunes may be of little help to the specific individuals who find their jobs are moving overseas or being taken by robots.
A separate study, also presented to the RES, found that workers with ‘routine’ jobs who are vulnerable to automation can struggle to find new jobs.
When they do, those jobs are often unstable and have lower expected earnings.
Men are particularly vulnerable when it comes to jobs which are easily taken offshore, while women are more at risk when in work which can be automated, according to the research from Bernhard Schmidpeter at the University of Essex and Rudolf Winter-ebmer at the Center for Economic Policy Research in London.
Retraining schemes can help, they found, with women particularly able to move to new careers while men are more likely to struggle to switch to a different sector.
Even for women, however, the results of Government training schemes are not spectacular.
“For women, our estimates show that training assignees who were previously employed in occupations with higher automation potential have an increases in the re-employment likelihood by an additional 14 percent,” the study found.
Meanwhile a report from the Organization for Economic Cooperation and Development found that previous studies indicating that as many as 47 percent of US jobs are at risk of automation appears to be a significant overestimate.
Instead around 14 percent of jobs across the 32 countries studied are ‘highly automatable’, with a 70 percent risk of being taken by machines. Another 32 percent of jobs have a 50 percent to 70 percent chance of being eliminated.
Jobs in the UK and the Nordic countries are significantly less vulnerable than average, while those in eastern Europe and Germany are more likely to be taken by robots, the OECD found.