The slower companies embrace robots, the more jobs are lost. Organisations that embrace robots in a short time often see their turnover rise as a result. They respond by hiring more staff, which actually increases their headcount.
In general, the implementation of robots in the workplace leads to a shrinking workforce. However, research by MIT economist Daron Acemoglu, senior research economist Clair Lelarge of the Banque de France and the Center for Economic Policy Research and adjunct professor Pascual Restrepo shows that this is not always the case.
55,930 French manufacturing companies surveyed
The economist examined the embrace of robots in the French manufacturing industry. He did this by including information from the French Ministry of Industry, customer data from French robot suppliers, data on imported robots and financial data from companies on sales, labour force and salaries. The data covered 55,930 French manufacturing companies, of which 598 switched to purchasing robots from 2010 to 2015. These companies account for 1% of French manufacturing companies, but at the same time account for 20% of French manufacturing output.
The 598 French companies that embraced robots during the period studied include a variety of companies. The most common organisations are pharmaceutical companies, chemical companies, plastics manufacturers, food and beverage producers, metalworkers, machine builders and car manufacturers. Paper and printing companies, textile manufacturer, clothing companies, white goods manufacturers, furniture manufacturers and mineral company embraced robots least often.
Higher productivity and profitability
MIT figures show that companies that embraced robots saw their productivity and profitability rise. By betting on automation, they reduce the percentage of their turnover they invest in employees by 4 to 6 percentage points. In practice, such investments in robot technology often translate into growing sales and market share. In response, many companies hire more workers, after which they often actually employ more workers than before embracing robots.
Acemoglu and Restrepo showed in an earlier study that embracing robots in the United States (US) costs an average of 3.3 jobs. Thus, at first glance, the results of the French study seem at odds with those of the US study. Acemoglu: "However, this is only because they grow at the expense of competitors. If we add the indirect effect on competitors, the overall result is negative and similar to what we see in the US."
Large companies are of great influence
The researchers also point to a recent study by MIT economists David Autor and John Van Reenen. This research shows that very large companies in particular have a high impact on employment in an industry. This is striking, as these companies often hire relatively large numbers of staff and, in many cases, pay relatively well. However, overall employment in sectors where these companies operate is shrinking.
This earlier research did not provide insight into the cause of this. Acemoglu argues that his new research, however, shows that declining employment is largely attributable to automation.
Author: Wouter Hoeffnagel
