New Study from McKinsey & Company Looks At How Automation Will Affect All Jobs

Tuesday, July 12, 2016

New Study from McKinsey & Company Looks At How Automation Will Affect All Jobs

Technological Unemployment

Many types of activities in industry sectors have the technical potential to be automated, but that potential varies significantly across activities. Those are the main conclusions of a detailed new study on the effects of automation on the global economy from the consulting firm McKinsey & Company.

A newly released study from McKinsey & Company postulates that automation will eliminate very few occupations entirely in the next decade, but it will affect part of almost all jobs to a greater or lesser degree.

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As the report point out, automation, is now going beyond routine manufacturing activities, and has the potential, as least with regard to its technical feasibility, to transform sectors such as healthcare and finance, which involve a substantial share of knowledge work.

New Study from McKinsey & Company Looks At How Automation Will Affect All Jobs

The study is a detailed analysis of 2,000-plus work activities for more than 800 occupations compiled from data from the US Bureau of Labor Statistics. "We looked at every single activity that we pay people to do in the economy," says McKinsey Partner, Michael Chui.

As the study shows, even when machines do take over human tasks and activities in a job, it does not necessarily spell the end of the jobs in that line of work. Actually, their number at times increases in occupations that have been partly automated, because overall demand for their remaining activities has continued to grow.

"One of the biggest technological breakthroughs would come if machines were to develop an understanding of natural language on par with median human performance."
In one example, the widespread adoption of bar-code scanners and associated point-of-sale systems in the United States in the 1980s reduced labor costs per store by an estimated 4.5 percent and the cost of the groceries consumers bought by 1.4 percent. The technology also enabled a number of innovations, including increased promotions. But cashiers were still needed; in fact, their employment grew at an average rate of more than 2 percent between 1980 and 2013.

The study also finds that just because an activity can be automated doesn’t mean that it will be. The broader economic factors still need to be considered. The authors point out that the jobs of bookkeepers, accountants, and auditing clerks, require skills and training, so they are scarcer than basic cooks. But the activities they perform cost less to automate, requiring mostly software and a basic computer.

The full report, will be released in early 2017, and will include data from several other countries, but a few initial findings are already out in public.

"One of the biggest technological breakthroughs would come if machines were to develop an understanding of natural language on par with median human performance," state the authors.

If computers gain the ability to recognize the concepts in everyday communication between people in jobs like retailing for example, such natural-language advances would increase the technical potential for automation from 53 percent of all labor time to 60 percent, find the authors. In finance and insurance, the leap would be even greater, to 66 percent, from 43 percent. Healthcare would also be impacted.  "While we don’t believe currently demonstrated technologies could accomplish all of the activities needed to diagnose and treat patients, technology will become more capable over time," state the authors. "Robots may not be cleaning your teeth or teaching your children quite yet, but that doesn’t mean they won’t in the future."
Want to know if your job is about to be automated away? The McKinsey report includes an interactive map on Tableau Public, where the report data from more than 800 occupations can be  assessed for the extent the jobs could automated using existing technology.

As Chui and co-authors James Manyika and Mehdi Miremadi conclude,
It is never too early to prepare for the future. To get ready for automation’s advances tomorrow, executives must challenge themselves to understand the data and automation technologies on the horizon today. But more than data and technological savvy are required to capture value from automation. The greater challenges are the workforce and organizational changes that leaders will have to put in place as automation upends entire business processes, as well as the culture of organizations, which must learn to view automation as a reliable productivity lever. Senior leaders, for their part, will need to “let go” in ways that run counter to a century of organizational development.

As technology continues to develop, robotics and machine learning will make greater inroads into our jobs that today have only a low technical potential for automation. The authors agree that new techniques are also enabling safer and more enhanced physical collaboration between robots and humans in what are now considered unpredictable environments. These developments could lead to automation of more activities in sectors where human skills are still required,  such as in construction. Artificial intelligence can be used to design components in engineer-heavy sectors.

SOURCE  McKinsey & Company

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