HomeInternet of Things (IoT)Automation doesn’t cost jobs in Germany, concludes Industry 4.0 report

Automation doesn’t cost jobs in Germany, concludes Industry 4.0 report

Automation technologies are creating more jobs than they are destroying in Germany, according to a new report by the Centre for European Economic Research (ZEW).

Recent investments in digital technologies, including standard automation techniques like analytics and artificial intelligence (AI), have seen a one per cent increase in employment levels among German enterprises between 2011 and 2016, equivalent to a rise of 0.2 per cent per year.

The research said growth attributable to new technologies is relatively small, compared to the total growth in employment in Germany between 2011 and 2014, which reached 8.5 per cent. However, planned corporate investment in technology in the period from 2016 to 2012 will raise total employment in the country by 1.8 per cent, equivalent to an annual increase of just under 0.4 per cent per year.

The research concluded the impact of automation is “weakly positive”, with higher employment and lower labour costs. Melanie Arntz, acting head of the ZEW research department, said: “Though these technologies have a labour-saving effect, up until now they have created more new jobs than they have replaced. The overall employment effect is therefore weakly positive.”

Around half of German enterprises are already using technologies characteristic of ‘Industry 4.0’. These combine traditional industrial production techniques with new digital technologies. ZEW said digital technologies are playing an increasingly important role in Germany industry, even if they underpin only five per cent of manufacturing processes, and eight per cent of office and communications equipment at present.

The research showed routine tasks are dwindling in significance as automation takes hold, while analytical jobs like software programming, and interactive jobs like medicine and dentistry, are experiencing growth. ZEW said the “real challenge” posed by Industry 4.0 is to equip workers for the emerging labour market, and warned of a rising technology gap among German enterprises, according to their investment in digital technologies.

“Establishments that invested heavily in modern digital technologies early on are still among the leaders in their industry, while those who came late to the party are noticeably falling behind. This divide needs to be tackled in a targeted way,” said Arntz.

Investment in digital technology is a contributing factor in rising wage inequality, she said. “High-wage professions and sectors are the ones that are profiting the most from new technologies in the form of higher employment and wage increases, while low-paid jobs and sectors, on average, are losing out.”

The German government should focus on training its country’s workforce to move between professions and sectors. “Worker mobility helps to reduce skills shortages in growing sectors and to confine the worsening labour market prospects for workers in shrinking professions and sectors,” said Arntz.

By contrast, UK manufacturers are falling behind their counterparts in Asia and the US in the race for industrial transformation, and are bottom of the pile for integrating AI into their manufacturing processes, according to a parallel report by PwC research arm Strategy&.

In Europe, the government in Brussels , including collaboration between members states on artificial intelligence, blockchain and digital health. At the same time, the European Commission has warned the progress the region has made with data privacy and cyber-security, and more recently with AI and blockchain, will count for nothing if new funds are not found from regional administrations and private sources.

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