Friday, 25 April 2008

Robots to replace the "unskilled"

China has expanded on the back of export driven growth with markets won through low cost production. Across the water Japan has a relative abundance of skilled labour but a relative shortage of unskilled workers.

Trade solves this problem. However, Japan wants to solve this problem using its abundant capital - the solution to build 3.5 million robots.

The economic implications are interesting. The low skilled will yet again see their wages under pressure. However, it is hard to see how the capital required can ever be cost effective compared to Chinese wages.

But, crucially, the robot solution means no immigration costs or social unrest associated with immigration of low skilled. The key to the robot solution is Japan's unwillingness to contemplate large scale immigration. I suspect, given Japan's demographics, that this attitude will have to change.

There must be a paper in here somewhere.

Robots seen doing work of 3.5 million in Japan [Reuters]

TOKYO (Reuters) - Robots could fill the jobs of 3.5 million people in graying Japan by 2025, a thinktank says, helping to avert worker shortages as the country's population shrinks.

Japan faces a 16 percent slide in the size of its workforce by 2030 while the number of elderly will mushroom, the government estimates, raising worries about who will do the work in a country unused to, and unwilling to contemplate, large-scale immigration.

The thinktank, the Machine Industry Memorial Foundation, says robots could help fill the gaps, ranging from microsized capsules that detect lesions to high-tech vacuum cleaners.

Rather than each robot replacing one person, the foundation said in a report that robots could make time for people to focus on more important things.

Japan could save 2.1 trillion yen ($21 billion) of elderly insurance payments in 2025 by using robots that monitor the health of older people, so they don't have to rely on human nursing care, the foundation said in its report.

Caregivers would save more than an hour a day if robots helped look after children, older people and did some housework, it added. Robotic duties could include reading books out loud or helping bathe the elderly.

"Seniors are pushing back their retirement until they are 65 years old, day care centers are being built so that more women can work during the day, and there is a move to increase the quota of foreign laborers. But none of these can beat the shrinking workforce," said Takao Kobayashi, who worked on the study.

"Robots are important because they could help in some ways to alleviate such shortage of the labor force."

The current fertility rate is 1.3 babies per woman, far below the level needed to maintain the population, while the government estimates that 40 percent of the population will be over 65 by 2055, raising concerns about who will look after the graying population.

Kobayashi said changes was still needed for robots to make a big impact on the workforce.

"There's the expensive price tag, the functions of the robots still need to improve, and then there are the mindsets of people," he said.

"People need to have the will to use the robots."



Bill said...

It is one thing to replace service workers with robots. We all know that robots are doing a lot of the manufacturing in US, Europe and Japan. But mostly on high value added steps, because of the cost of robots, and the process to deploy them - training, maintenance, etc. What if the cost are lowered through mass utilization ? Will robots become the low cost producers even for low valued added steps and goods ? What will happen to the manufacturing industry in the third world ?

Economist said...

Thanks for the comment Bill. Your fears are those that all low skilled and third world countries must face up to. It demonstrates the importance of education and acquiring human capital.

However, I suspect that robot carers for the elderly and children are not as good (and clearly not as caring) as another humnan.

What sort of adults will we have that have been bought up by robots?

J.C.A. said...

I love the idea of robots replacing workers in any situation as long as the gain in money is fairly distributed across mankind. If it is not, than rich get richer and poor get poorer. But even if we do distribute this money, we will eventually run out of materials while we continue to junk up the Earth. I am an upcomming economist, so I definately understand the way our economy works...but the fact is...that we will continue to dig holes in the Earth to gain resources ...but we will eventually start going back in time as we start running out of resources...until...

the rate of resources used up by the earth = the rate of resources that are replenished by the earth

...and we can add or subtract from either side of the equation to help our Earth stay in an environtmental friendly equilibrium...that is how mankind will last the longest and continue to prosper. So we should work on balancing the equation before one side gets too large to where there is no going back...(global warming etc..)...distribution of income is our largest problem here in the US. All the decision makers are rich and don't want to loose their money. They only care about themselves and keeping people stuck in this stupid trap. I am in college and have never tried as hard or competed as hard just to find out that I have made it this far and I may be managing a factory one day, driving people to struggle harder, getting $30,000 a year for my 23 years of scholarly workmanship. That is bull. That is why I am a fan of Robots and distribution of income of robots...JUST BALANCE THE EQUATION (increasing both sides equally is fine too).

Economist said...

Good comment JCA. You are showing some of the intuition required by an economist.