Complex Made Simple

COVID-19 will drive further automation post-pandemic

With potentially 195 million jobs at risk in Q2 2020, and businesses experiencing diminished demand and productivity, automation is looking like quite the viable option for the near future - and even the present.

Businesses liked to talk about and flaunt their adoption of AI and automation services while throwing around fancy words like Industry 4.0 pre-COVID-19 However, the current pandemic has proven to us that the world's economy is still very much human-intensive, which has severely hurt businesses As we embrace the new normal, automation will likely see accelerated adoption

The novel coronavirus continues its march across the world, bringing entire nations to heel and causing a worse financial crisis than the one we experienced in 2008. 

In terms of global unemployment, the International Labour Organization (ILO) said in April that for the second quarter of 2020 – from April to June – we could see the equivalent of 195 million job lost, with working hours declining by 6.7%.

Additionally, the ILO said that full or partial lockdown measures are affecting almost 2.7 billion workers – four in five of the world’s workforce, which is truly unprecedented. 

The four worst-hit sectors worldwide, according to the ILO, are:

  • Food and accomodation services (144 million workers) 

  • Retail and wholsale (482 million) 

  • Business services and administration (157 million) 

  • Manufacturing (463 million) 

Most of the world’s workers live in countries where workplaces have temporarily closed. Graph: ILO

Accelerated automation adoption

With the outbreak putting so many out of work and impacting nearly 3 billion jobs, businesses’ production levels, revenues and profits have all suffered. While businesses liked to talk about and flaunt their adoption of AI and automation services while throwing around fancy words like Industry 4.0 pre-COVID-19, the current pandemic has proven to us that the world’s economy is still very much human-intensive. 

During times of recession, we’ve often seen unemployment talk often followed by automation anxiety. 

“With jobless claims rising at record rates and the world economy shrinking, automation anxiety looks set to witness a revival — and with good reason. Coronavirus is likely to accelerate automation,” the Financial Times (FT) writes. 

“For one, companies strive to cut costs during downturns. An influential study… showed that routine jobs that can easily be automated vanished with the 2008 financial crisis and didn’t come back, contributing to a jobless recovery.”

Another effort at cutting costs that companies have always adopted has been the offshoring of production to countries with cheaper labor like China. With COVID-19 showing the world the flaws of over-reliance on globalization, with broken supply chains disrupting both big and small firms, manufacturing companies for example could decide to invest in more machinery to reduce their exposure to external risks while maintaining low production costs. Case in point: An American clothes manufacturer would not be able to find cheap staff in its home country as it did in China, so the next best option would be to invest in automation that will cut costs in the long run. This ‘what-if’ reality could be accelerated into existence with the mounting tensions of the US-China Trade War. 

Let’s not also forget the health paranoia that has come with this highly contagious virus. COVID-19’s ease of transmission has led to entire production facilities being shut down, where the virus is spread rapidly across production floors. With a vaccine still nowhere in sight, this health paranoia will continue as the economy returns to operating at limited capacities. Automation has never been more important. 

“Typically, an automation road map is five years, with the out years somewhat ambiguous in terms of the plan,” Peter Bendor-Samuel, the CEO of Everest Group, writes for Forbes. “In a booming economy, that slower approach is very understandable. But in a recession such as the one we’re heading into as a result of the pandemic crisis, companies need to consider a different approach. I believe they will attempt to compress the typical five-year automation journey down to six to nine months.”

The new normal post-pandemic

If businesses are to survive this grueling economic catastrophe, automation will no longer be an ‘If’ question, but a ‘When’ question. Wage subsidies and business support initiatives by governments can only last for so long after all. 

“Automation provides us with excellent tools both to fight the COVID-19 pandemic and to redefine the new normal in a post-COVID world,” UI Path, a Robotic Process Automation firm, notes. “We’re beginning to see the foundational innovation that will power the future of work: governments exchanging slow, manual processes for workflows that are fast and scalable, and hospitals abandoning inefficient procedures to support their frontline caretakers.”

While automation often equates to job loss, it also opens up new roles. In 2018, the World Economic Forum (WEF) released a report that stated that automation will eliminate 75 millions jobs by 2022. However, it will offset this by creating 133 million new jobs during that same period, proving a boon to the job market overall. 

When this pandemic will end is anyone’s guess. What we can be certain of, however, is that automation will only see increased adoption.