How to make automation a win-win for organisations and workers
In our recent article, The age of automation is here: is Australia ready?, we explored key points from McKinsey & Company’s 2019 report on automation in Australia:
– Machine learning, artificial intelligence (AI) and advanced robotics represent an opportunity for Australia to revolutionise productivity and boost national and personal income growth.
– The speed at which automation is adopted will determine the level of economic benefits.
– The impact these changes will have on income inequality and unemployment in Australia will depend on how effectively the country supports retraining and redeployment of workers.
But what are the implications for Australia if we fail to adequately respond to the age of automation? And how should companies go about embracing it?
Avoiding automation is not an option
The report’s verdict on ignoring trends towards automation is decisive: “Automation is already happening and can’t be stopped. Choosing ‘no automation’ is not an option.”
It details four potential scenarios based on the rate of automation adoption by 2030 and on the effectiveness of policies that aim to share the gains from automation (shown in the diagram below).
In three of the scenarios, there are losers:
1. Automated workers are left behind and incomes flatten while firms thrive if Australia adopts automation fast but fails to deploy effective policies.
2. Everyone loses as productivity stagnates and income flattens if Australia is slow to adopt automation and fails to deploy effective policies.
3. We’re left fighting over a ‘shrinking pie’ as productivity stagnates if Australia is slow to adopt automation, even if there are effective policies in place.
The fourth and best option is rapid adoption of automation, coupled with effective policies for sharing the spoils of productivity gains: “It is imperative that Australia taps into the collaborative, bipartisan and reformist spirit that launched its economic boom, so that it can continue to reap the rewards. Society must recognise that automation is inevitable and actively steer its course, rather than choosing fear and resistance.”
Only then, say the report’s authors, can we experience a win-win scenario of inclusive growth: soaring productivity, thriving firms and rising incomes.
Dealing with the inequality risk
Arguably the greatest risk facing Australia is that income inequality will rise as the landscape for workers changes. Increasing demand for some skills (e.g. professionals, managers, technicians and associate professionals) and falling demand for others (e.g. trade, manual and administrative workers) could lead to divergent pay cheques.
The report stresses that “the extent to which these market forces result in higher income inequality will depend upon how much Australia steps up its efforts to retrain and redeploy its surplus service, administrative and manual workers”.
To mitigate this risk, action needs to be taken both nationally (by governments) and at the organisational level (by private and public employers) to simultaneously:
1. accelerate the pace of automation adoption
2. work to ensure inclusive growth.
Advice for organisations
Organisations should:
– accelerate investments in automation technology and set ambitious targets anchored in long-term strategies
– carry out a gap analysis of current and future skill needs and develop a well-rounded strategic workforce plan to close those gaps.
In terms of supporting workers through jobs and skills transitions, organisations are advised to:
– invest significantly in worker retraining and building an agile and resilient culture by equipping existing staff with the skills they need for new roles
– support displaced workers beyond the organisation and prepare them for new careers
– improve morale among continuing staff and attract new staff with in-demand skills, funding and partnerships.
In short, companies need to act fast while thinking strategically about the big picture. “The challenge is clear,” states the report, “but so is the prize”.
Stay tuned for our next article on how Universal Field Robots is using automation technology to drive productivity, safety and sustainability improvements across multiple sectors.
