Blog Post: Automation and Structural Unemployment

When Covid-19 struck, economists warned that a wave of robots would shatter the labor market, leading to high and structural unemployment. A prominent economist, in congressional testimony, even claimed employers were “substituting machines for workers.” As we see technologies progressively advance, from AI to robots, there is a high risk of structural unemployment behind these innovations. Jobs that involve repetitive movements and low skill are more vulnerable to becoming reliant on automation. It is important to keep in mind and search for what value humans bring to the labor market that machines created with algorithms do not, and what policies may best regulate this. 

With new technological feats achieved by computers, there is an underlying question of what this would mean for the labor market. Technology plays a great role in the growing disparities within the workforce in many countries, with middle-wage earners losing ground. High-level estimates say the effect of AI and automation could include the elimination of one-quarter of United States jobs. An example of this is how one of the largest occupations in the U.S., employees in truck driving, could face displacement as artificial intelligence advances with self-driving cars. Market trends suggest an 11.5 percent annual growth rate for advanced driver assistance systems, suggesting around 6 million vehicles in 2030. In 2021, there was an all-time-high shortage of truckers at 80,000 with this number likely to grow with autonomous driving advances. Companies like FedEx and TuSimple have already begun testing their new self-driving technology in the Southwestern U.S., making the future filled with uncertainties about the impact of automation in the labor force. 

As we prepare to draft solutions in the ECOFIN committee session, it is imperative we understand how workers, in emerging and established economies, are impacted by the threat of automation. We must look for policies that help workers adapt to new technologies arising. Keep in mind what policies and steps governments can make to protect workers in the labor market from economic changes resulting from automation. What can countries actively do to help the employment effects of technological advancements? What type of jobs are at risk? What technology can be used to aid workers or create future employment opportunities rather than harm the job market? What improvements can be made to structural employment that implements automation without harming employment rates, and how will that differ from developed and emerging economies?