This is second part of the essay under the same title written
earlier. It has been stated that when higher value is attained the more is the
automation process required or carried out and therefore the greater is the
unemployment rate. It is also assumed here that there is no change in the
demographic pattern in the country and each supply chain is on the process of
automation.
In this second part of the series the discussion will range from
not just changes taking place in the demographic pattern of a country, but the
difficulties that may arise in the labor forces when the transition is made
from low skilled, medium skilled to high skilled. In order to throw light into
the aspect we will use the same example of the pyramid yet study the same not
just on one side, but on all four sides. The pyramid base stands on a square
and therefore it has four sides. The structure of the pyramid is therefore more
elaborate here as each of its faces or sides shows interrelationship between
demographic patterns affecting each supply chain, automations taking place
within the supply chains, appropriate skills and training required for the
workforce and the government intervention mechanism.
Problems of automation
It has already been shown in the preceding essay how automation may
create immense problems for firms in a supply chain when demand for products is
tepid and large scale unemployment do not create the necessary aggregate demand
for them. Since, many large firms would take the opportunity to automate even
faster and faster to lower cost, the end result unfortunately would be squeezing
the pockets of the very small and medium industries and employed workforce that
eventually exit the scene or remain unemployed and thereby are not in a
position to purchase the products these larger firms in the supply chains are
producing. This is the vicious circle that leads to recession when the problem
is seen spreading to most of the other supply chains in an economy.
(Read Technological Improvement, High Automation and Unemployment
(Part I). The figure given below explains how automation would rise in a supply
chain where the bottom levels represents very low level automation and the
higher up automation reaches its height where eventually only very few people
are able to find employment. The Y or Z segment is never reached in the real
world yet not quite impossible either.
Again, if several supply chains in an economy resorts to high
levels of rapid automation then it will have to bank heavily on exports to
enable these supply chains to survive as domestic market may not be able to
sustain their purchase. Again, the biggest problem such economies would face is
that they would need to come to an unusually long term agreements with lesser
automated economies or non-automated economies as the price of their products
may be too high for such economies to purchase. Hence, gestation period over a
decade or more would be necessary to recover the cost of such products brought
forth due to high levels of automation.
Automation again may make it mandatory for economies to resort to
bringing in very high skilled immigrants and not just any of the common crowd.
This is because of continued upgrading in the levels of higher automation where
newer inputs are required and more worthy migrants are needed.
Another problem with automation is that the highly skilled labor force
of an economy with specialized skills in robotics may find themselves
unemployable in the lower end of the segments namely a, b, c, d or e if the economy slides down sharply due to
recession or depression.
Very high level of automation in an economy that has reached the
higher levels of P as shown in the diagram would make the lower ends of the
pyramid like a, b, c, irrelevant and immigration of common crowd would eventually
prove to be disruptive.
Employed and Unemployed Workforce in Economics
Before going deeper into analysis of automation and its effect on
the population of a country there is need to understand what employment is and
what constitutes unemployment in its truly economic sense. In economics it is
not the whole of a country’s population that constitutes the labor force, but
those that seek jobs. In other words, ‘Employed’ means those who seek jobs and
get them while ‘Unemployed’ means those who seek jobs and do not get them.
This also means that there are people who form part of the overall
population of a country and who do not seek jobs at all. These people do so
because they hold some inheritance or are looked after by others who are well
employed. These again may be spouses of individuals who do not need to work or
those who are covered under a security system or others who are under pension
schemes. It is therefore apparent that those who seek are those eligible for
jobs and not otherwise. Even self employment is akin to seeking and getting a
job to do work on ones own terms.
Here, it is seen that in an economic perspective increase in child
births or decrease due to death or increase or decrease in ratio of aged over
younger in the overall population has no direct bearing on the workforce other
than ascertaining the probabilities of a distant future outcome. This also
means that if a country produces children like a large factory may mean nothing
as per workforce is concerned. The determining factor of workforce in a partially
automated or semi-automated or fully automated economy means quality and not
quantity.
It is seen that although aggregate demand and consumption rises
where overall population is huge it is unfortunately narrowed down to food
consumption and some basic consumption levels only and not quality consumption
on all fronts the latter which is instrumental in spiking up activities of
production on wider and broader ranges.
Demographic pattern of population with respect to economic
activities
A population of a country in economical perspective means that it
undergoes changes in relation to the supply and demand of labor or workforce
with each stage of automation (non-automation, semi-automation or full
automation). Population in economic perspective has nothing much to do with the
overall population of a country. For instance, if a person seeks job and trains
to do so is said to be a seeker of job. This means that an individual who never
seeks anything does not become a part of the workforce nor has the potential of
becoming part of a workforce. Hence, workforce in economical term means those
that seek jobs and get them and those that seek jobs and do not get them.
In sharp contrast when ascertaining the rate of consumption and
aggregate demand the whole of population is taken into consideration and not
just the job seekers alone.
From the above it means that when the population increases or
decreases with respect to productivity it is only in relation to the level of
stress the workforce experiences during work and the transition problems it
faces in the economy. Some salient points when there is an increase in workforce
population (economically) are as follows:
Increase in Workforce population
·
Increase in
skilled and semi-skilled people in the population due to special training and
education
·
Migration of labor
seeking employment from other countries
·
Higher ratio of
working younger workforce population in relation to retired or semi-retired
older workforce population. (This has nothing to do with higher levels of
overall aged population with that of overall younger population). The
unemployed workforce population is still job seekers and includes people with
disabilities, people not getting appropriate placements or is reluctant to work
due to lower pay.
·
Higher levels of
automation in different supply chains rendering skilled and semi-skilled
workforce surplus and unemployed.
·
Economic growth
stalls or enters negative territory with firms in several supply chains
experiencing unutilized capacities resulting in excess labor.
·
Winding up of
firms – large and small – increases the workforce population
·
Some part of
workforce fails to catch up with the higher level of skill requirements due to
improper training and non-standard education rendering them unemployed and
thereby increasing unemployed workforce.
Decrease in Workforce Population
·
Decrease in
skilled and semi-skilled workforce due to several reasons (educational,
economical and political)
·
Decrease in
migration of semi-skilled and skilled workforce
·
Higher ratio of
retired or semi-retired workforce population in relation to younger workforce.
·
Outflow of skilled
or semi-skilled workforce from the economy to other regions or countries
·
Death due to
diseases, war or accidents
·
Government rules
and regulation in controlling the rapid growth of high automation in supply
chains
·
Appearance or
creation of newer supply chains in the economy
Transitional stages of automation
Little is heard about automation during its transitional momentum
but more is reported about the havoc that automation may create among the
general workforce in an economy. It is the transitional stage of automation
from one level to another that creates the maximum disruption on the workforce
in an economy. Transitional stages occur from lower to higher level segments of
the above pyramid. Each pyramid signifies one particular supply chain and not
all. As one goes up from c and above then one realizes that in each segment
there is greater degree of risks involved in the employment process.
The workforce has to increasingly rely on newer training procedures
and education to increase their skills in lieu of the increasing automation
introduced within each of the successive segments of the pyramid. As one goes
up the segments the narrower is the opportunities available for general
workforce or semi-skilled people and only skilled people are able to move up.
During each transitional stage in majority of such supply chains
the government has to step in with rules or regulations as discussed in the Part
I of the essay. These may be either intrinsic or extraneous interventions or
both. If there is no such action then this causes maximum disruption for the
workforce and greater pain in transition. Special training and education has to
be imparted substantially to these workforces.
Obviously, lesser job opportunities are also available due to
narrower segments on the upper levels of the pyramid. It is usually because of
higher levels of automation taking place in supply chains. Naturally, the value
of goods and services too go up enormously. This is the curse of value
concentration.
Growth in relation to workforce employment
Growth in relation to workforce employment can be studied by taking
each individual supply chain. There are four sides or faces for the pyramid
each side signifying the influence over growth pattern of a supply chain. The
four sides of the pyramid are population demographics (Face I), automation
process (Face II), education and training for workforce (Face III) and
government interventions (Face IV).
The first two sides of the pyramid represent population
demographics and automation process and these are namely the Face I & Face
II. Given below is the diagram.
Here, in Face I of the diagram each segment of the pyramid
symbolizes the workforce increase or decrease when automation is simultaneously
carried out as in Face II. Population at a or b segment is representative of
ordinary crowd with little or no skills and as the economy picks up there will
be shortage of skilled labor for operating basic automation systems and
therefore the transition to higher levels of skills and training becomes
mandatory and is quite a painful transition for labor as most of them may prove
to be incompetent during this transitions. There would also be similar stress
experienced when quality immigrants are not there for filling up vacancies.
The transition period of the whole workforce from low levels of
skills to higher skills may take several years and in some cases a decade or
more. It is also seen that in the higher levels of automation as in ‘P’
segments there is a distinct acceptability of workforces irrespective of their
physical and age wise handicaps that are relatively more to be found in the
levels of a, b, c, or d.
This means that age and physical disability or gender would prove
to be of no hurdle so long as the workforce is highly skilled. Here, skill
means more brain power and work associated with greater thinking and
imagination and less of physical movements.
Below there is yet another diagram representing the other two faces
of the pyramid namely the training and education Face III and government
interventions Face IV. Here, in Face III, it would be necessary on part of
firms within each of the supply chains to train and educate their labor force
to take skills to the next level so as to be able to retain their high
performance of productivity. They must also be able to operate the higher
levels of automation process as the economy picks up and therefore need to
update their knowledge and skills to handle the same.
There is also the need for quicker government responses if several
supply chains start off automation in a rapid way.
At higher segments of ‘p’ one would find that it is immaterial if
the person is 25, 45, 65 or 75 years of age so long as their brain is working
perfectly. Again, there will be as such no differentiation between physically
fit or handicapped people as on the higher levels as there is less need for
physical movement. Again, there are no gender differences at these levels.
In the above diagram showing Face III & Face IV the Ph
signifies the higher levels of ‘P’ while Pl signifies the lower levels of ‘P’.
It is at this stage that the transition from lower to higher levels is most
painfully experienced by the workforce in an economy. The same holds true for
Face I and Face II too. It is also obvious that it is the Face III and Face IV
of the pyramid that holds the promise of mitigating the highly stressed
workforce and they must be given skilled training and specialized education to
enable to go to higher levels.
The government may intervene by looking at the scenario of the
unemployed workforce and may even invite non- workforce part (Idle populace) of
the population to undergo specialized training and higher levels of education
to handle jobs so as to sustain the growth of the economy. More automation may
look more promising yet there must be generally significant percentage of
population who are at the higher end of the income bracket to sustain high
demand and consumption levels including those small and medium industries
entrepreneurs. Otherwise, though the firms within each supply chain produces
very high value added products there will be no demand to sustain them if
unemployment persists. This is the curse of value concentration as explained in
the Part I of the essay.
If on the other hand there is need to explore natural resources or
products and services that perhaps run for and towards serving the very purpose
of automation and robotics due to their unavailability on earth or easier
access like that in outer space then this may be sustainable. In this case the
motive to run such enterprise should be based on the larger interest and needs
of the general workforce as the cyclical pattern suggests that human being
create the ultimate demand for goods and services and not otherwise. In future
this may happen due to the changes in the lifestyle options of the human
beings.
For instance, if several group of people on earth in the distant
future at the heights of their robotics and fanciful entertainment spirits
start to play real game of star wars with each of their fully automated positions
in different moons of Jupiter and Saturn through remote control from earth then
an enormous supply chain starts to form. This becomes so huge that the entire
GDP of several economies may increase several thousand folds with firms within
each supply chain on expansionist phase. However, if these very groups of
people change their lifestyle options and think that all this is simply waste
of time and energy and they rather meditate and lead a tension free life in
peace, then the whole of the supply chain would come to a standstill. But the
worst assault due to this would be on the GDP of each of the countries and may
be so severe in its magnitude and painful to the workforce population that
generations of people or the countries may never be able to recover from the
crash and deflation for several centuries. This is the larger picture yet one
may be able to understand the smaller picture too from this.
In short, when recession or economic downturn happens it is the
highly automated economies that will experience the maximum pain and sufferings
than a non-automated or semi-automated economy. This is seen in the upper
segments of ‘P’ when the growth slides as seen in the diagram below.
This means that robotics is good so long as it serves immediate
needs of human beings, but automation that is stretched beyond that may mean
throwing oneself on to the winds of economic and social uncertainties and
disasters of future outcomes in the economy.
The Snake and the Pyramid
In the following diagram the snake represents the growth momentum
in the particular supply chain while the pyramid has four sides. The growth is
spiral form and encircles all the four sides as seen on the coils of the snake.
Here, the snake coil over each segment as it reaches the top
stages. In the diagram the snake coil has overlapped another of his coil around
the pyramid and this is because of the slump in the supply chain or stagnant
growth during that period of time. However, there may be more such overlapping
of coil over the other and not limited to just one as in this diagram namely
‘cc’.
It is also seen that the chances of slump are more when automation
is increasing and the amount of stress experienced by the workforce is
significantly higher.
The government intervention on Face IV is necessary in such cases
when the economy experiences downturn. The Face III would be imperative to
provide newer tools and education so as to keep the workforce updated on their
level of skills and enhancing them further. When the economy is in recession
the level of automation needs to be curtailed or workforce population needs to add
as in Face II and Face I respectively.
