How the boom in ‘virtual’ manufacturing will change Australian economy
Industrial automation, the “internet of things”, the use of 3D printing and a new wave of robots have created a new global class of manufacturing workers that could change how Australian workers are paid, according to a new report.
Key points:The report from the Institute for Fiscal Studies (IFS) predicts the economy will be hit by a 2.5 per cent rise in average wages, the loss of some skilled workers, and a 1.5 to 1.8 per cent drop in manufacturing employment in the medium termThe report says the impact will be “disproportionate” to the economic damage it has causedThe report, titled The Impact of Industrial Automation, forecasts the economy would be hit “disprofportionately” by a rise in the average wages of manufacturing jobs in the next 20 years, with the loss and reduction of some of the country’s most skilled manufacturing workers and a rise to a $7,000 threshold in the 2020s.
It also warns the impact could be “in the billions of dollars”, with the “displacement of workers” due to the loss in skill levels and “an increased reliance on robots”.
“The effect on Australian workers and on their economic well-being will be very different,” the report says.
The report is the first to look at how the Industrial Robots Association (IRDA), the union that represents industrial robots in Australia, is responding to the impact of these developments.
“The industrial robots industry is on the back foot,” said IFS Senior Fellow and senior research fellow Dr Peter Schofield.
“It is not yet clear what the impact on the economy is going to be.”
Industrial robots, or robots that use computers to create and process objects in a factory, have been used by companies around the world for years, but have largely fallen out of favour in Australia.
Dr Schofild said the report is likely to make the impact more pronounced for the manufacturing sector, which accounts for about 60 per cent of the Australian economy.
“For the industrial robots sector, the impact has been quite substantial,” he said.
“Our forecast is that if this continues, it’s going to have a much greater effect on the industry than other industries, particularly in the agriculture sector.”‘
You will be unemployed’Industrial robot owners, such as Ikea, Amazon and Amazon Prime, have recently been hit by increased competition from the new technologies.
But the impact is not likely to be as severe for manufacturing workers, Dr Schofold said.
The industrial robot industry is growing, but not as fast as the broader manufacturing sectorDr Schorofield said that despite the industry’s growth, the manufacturing workforce had remained relatively stable over the past decade.
“There’s been a lot of growth in the manufacturing industry, but that has not translated into a lot more of people working in the factories,” he explained.
“We’re looking at a big shift, where the workers will be in a situation where they’ll be unemployed, and it’s not going to get any better.”
So there will be a lot worse job losses.
“The IFS report says a rise of 1.7 per cent in average wage will be the loss for manufacturing jobs, with about 1,000 manufacturing workers lost over the next 10 years, a reduction of about 30 per cent.”
If you go back to the mid-1980s, when we started this, there was an average wage of about $130,000 a year, but we’ve actually seen wages decline from $180,000 to $130,” Dr Schorold said, referring to the average wage for manufacturing in 2015.”
That’s quite significant.
So that’s not just going to happen for the workers.
That’s going for the entire workforce.
“Dr Schohield said the impact would be more than just a “loss of some workers” in the future.”
What it is going do is create a whole new class of people who have no skills, who have a lot less training and no experience, who are going to become the workers of the future,” he told ABC Radio Melbourne’s Morning Show.”
They’re going to replace some of these existing jobs with machines.
“The report warns that if the trend continues, the workforce of the manufacturing industries in Australia will shrink by almost a third between 2020 and 2030.”
Manufacturing employment is going from a high of almost 60 per of all employment in Australia to a low of around 30 per of employment in 2020, and by 2030 that’s going up to around 50 per of the workforce,” Dr Schmidt said.
Dr Schmidt said the trend was “very, very hard to forecast”.”
But it’s a very tough forecast,” he added.”
You’re not going as fast on this as you were a couple of years ago.
You’re not as flexible, you’re not having as much of a focus on how you develop and how you produce and how we can manage