In the award-winning book Rise of the Robots, futurist Martin Ford argues that automation will lead to widespread job losses, not only in the traditional blue-collar sectors, but also among white-collar workers. Conventional production chains and large industries have indeed invested massively in automation in the past few years. A study by McKinsey shows that many companies recovering from the 2008 financial crisis have replaced retrenched workers with machines, thus leading to “jobless” recoveries.
According to Oxford University, no less than 50% of all jobs will be lost in US and Europe in the next two decades due to the rise of automation and artificial intelligence.
In China, investment in automation is unprecedented, with leading companies such as Foxconn, which produces iconic gadgets such as the iPhone, having replaced more than 60,000 workers with robots.
In SA, too, we have begun to see the effects of automation in traditional sectors such as mining, which – coupled with plummeting commodity prices – has led to thousands of retrenchments in the past few years.
For as long as we keep supporting an economy dominated by large industrial systems, we cannot be surprised if we end up with fewer jobs and ever more concentrated profits. Top-down industrialisation is designed to maximise economies of scale and mass production, of which robots are the ultimate champions. What we need instead is a different industrial policy that puts small, medium and micro-enterprises (SMMEs) at the core of the development strategy.
SMMEs account for about 70% of jobs in the most industrialised countries, according to estimates of the Organisation for Economic Co-operation and Development, an institution representing the world’s richest nations.
Importantly, SMMEs also account for most new jobs. These companies are more flexible, adaptable and labour-intensive than large corporations, thus creating a much more dynamic professional environment and reducing the risk of alienation of the workforce.
Moreover, SMMEs benefit from a number of positive externalities, including the fact that they hire local workforces, reinvest in their communities and tend to reduce waste, thanks to customisation rather than mass production.
Yet small business faces huge challenges globally, especially in economies in which large industries capture most market opportunities. It struggles to access finance and is often confronted with higher interest rates than big business. SMMES are also hampered by regulatory burdens, red tape and convoluted procurement processes that put them at a disadvantage vis-à-vis larger and more established companies.
Read the full article in Business Day: https://www.businesslive.co.za/bd/opinion/2017-08-15-how-boosting-small-businesses-will-help-soften-disruptive-effect-of-machines/