Jul 21, 2018

Robots are stepping in to help solve the worker shortage

Reproduced from a National Bureau of Economic Reserach chart; Data extracted with WebPlotDigitizer; Chart: Axios Visuals

As the workforce ages in some countries and middle-aged workers are in short supply, industrial robots are stepping in to perform their jobs, according to a recent paper by economists Daron Acemoglu and Pascual Restrepo.

The big picture: Today, Asian countries have about eight workers for every person over the age of 65, and Europe and North America have 4 or fewer, according to the UN. But by 2050, seven Asian countries, 24 European and four Latin American will have a ratio of less than 2 workers per retiree, the UN projects. Experts say the U.S. social security system is stable at a ratio of 3 workers per retiree. When it falls to 2 to 1, they say the program becomes unsustainable.

That brings in robots: Germany, Japan and South Korea — all of which are aging rapidly — are seeing a comparatively fast rise in the use of industrial robots and automation. The U.S. and U.K. are "lagging behind in robotics because they are not aging as rapidly" Acemoglu and Restrepo write in a National Bureau of Economic Research working paper.

Aging, Acemoglu and Restrepo report, can account for 40%-60% of the difference between nations' adoption of industrial robots. "[I]f the United States had the same demographic trends as Germany, the gap in robotics between the two countries would be 25% smaller," they wrote.

Key assumption: Middle-aged workers more so than older ones "specialize in production tasks that can be automated using industrial robots." These tasks include welding, painting, assembly, machining, and loading.

The rapid progress and declining cost of technology also play a role in the adoption of automation, says Guy Michaels, an economics professor at the London School of Economics.

What's next: "People will adjust," says Michaels, who points to the generational aspect of technology being adopted. "Young people are probably readier to accept technology."

  • "At the same time, it doesn’t mean use disruptions will always go smoothly," he says. "It depends in part on who the losers are in terms of technology change."

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