The need for robots - services and soft skills?

I’ve been sent an article from heise AI will take our jobs, if we are lucky.

The start irritated me as it has sloppy journalism that equates regulation to an innovation blocker. They are separate and China are a great example of how innovation thrives in a highly regulated environment.

This is the interesting aspect from the article though. It talks to the question “what is the need for robots and what skills will we need them to have?”.

The real problem: Our demographics

Let’s briefly set aside the science fiction scenarios from Silicon Valley and look at the German reality: We are heading towards a demographic precipice that is almost unprecedented in the history of modern industrialized nations. To understand its implications, we need to look at a simple mechanism of economics.

Economic strength, in simplified terms, arises from two things: how many people work – and how productive they are. In recent decades, OECD countries have enjoyed a “demographic dividend”: Baby boomers entered the labor market, increasing the labor supply, keeping wages stable, and simultaneously boosting demand. This cycle has now completely reversed.

The International Monetary Fund and the OECD warn that without countermeasures, global growth between 2025 and 2050 will be around 1.1 percentage points lower than before – and about three-quarters of this decline is directly attributable to demographic change.

Why? Because an aging economy bleeds out in three directions simultaneously:

1. Labor shortage: Fewer people in the workforce mean less production capacity . This is the most quickly visible damage.

2. Structural change: An aging society buys fewer cars and more care services. We are therefore shifting from easily automated industrial goods to services that were previously difficult to scale.

3. Capital depletion: Retirees are drawing down their savings to cover their living expenses. This reduces the global capital stock and tends to drive up interest rates. Precisely at the moment when we desperately need capital to invest in technology, money becomes more expensive.

Looking into the crystal ball: South Korea

Anyone wanting to know what this means in practice need only look to South Korea – to its “demographic zero point”. With a fertility rate of 0.72, the lowest in the world (far from the necessary 2.1), potential GDP growth threatens to approach zero by 2050.

South Korea is responding with the world’s most aggressive automation strategy: over 1,000 industrial robots per 10,000 employees – a global record. Not because robots are cheaper, but because they are simply indispensable. At the same time, the country is highlighting another problem: while the population is shrinking, highly skilled talent is emigrating. Technology can compensate for the loss of numbers, but it can hardly compensate for the loss of innovation.

This is why we should welcome AI and the resulting automation – even if it seems extremely disruptive and frightening. The alternative – the desperate attempt to save the status quo solely with our dwindling human workforce – is heading towards an inevitable collapse.