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The Automatisation and Its Impact on the Swedish Labour Market

A Qualitative Study on how Automatisation within the Retail Market Contributes to the Job Polarisation in Sweden

Written by S. Bhiladvala, E. Gustavsson & C. Larsson

Paper category

Bachelor Thesis

Subject

Economics

Year

2018

Abstract

Thesis: General Views on Automation The general discussion about automation and its impact on work and life focuses on how machines will replace human and capital in the future. Roine (2016) emphasized the role of machines as a supplement to workers rather than a substitute, pointing out that without manual control, most machines and equipment cannot do anything at all. Autor (2015) believes that task automation is a supplement that can increase production and, in the long run, can increase the demand for labor. He believes that it is important to consider the value of comparative advantage brought by human labor in the form of problem-solving, adaptability, and creativity. In addition, the occupation in question includes tasks that cannot simply be replaced by computers or machines, although some tasks can be replaced to simplify productivity. Autor (2015) went on to explain that journalists and experts often overestimate the extent to which machines can replace humans, while underestimating the complementarity that automation brings to cooperation in terms of productivity, wage growth, and labor demand. In addition, as described in The Economist (2016), pessimists generally view the increase in automation as the end of human labor, while optimists view it as the process of job creation. In addition, Bessen (2016) claimed that these concerns are wrong because the trend towards automation is neither simple nor obvious. He put forward the hypothesis: If workers' tasks are automated to a certain extent, as long as they can use new tools, they will get more job opportunities. However, Bergström and Roine (2016) argued that just because a job or task can be automated does not necessarily mean it will be automated. If human labor is considered cheaper and can provide value that machines cannot provide, then no matter whether the technology is advanced and suitable for a particular occupation, there will be no change. 3.2 Automated Retail Market Retail is an important link in the value chain from manufacturer to consumer. A characteristic of retail trade is that goods that are traded too slowly will be destroyed (Broekmeulen & Donselaar, 2009). Intensified competition in the retail industry is largely due to technological developments. Therefore, the focus is on increasing productivity and thus automating all parts of the supply chain (Dubelaar, Bhargava, and Ferrarin, 2002). For retail companies, not adopting new technological solutions is a huge danger. If some participants accept the new technology and others do not, the risk is that they will fall behind. In turn, this may lead to a reduction in market share and competitive advantage. 3.3 The polarization of the labor market In one of the most famous books on automation, The Second Age of Machines, Erik Brynjolfsson and Andrew McAfee (2013) painted a rather frustrating picture of employment decline, pointing out that we need to stimulate creation Employment opportunities to reduce the damage of automation. They described how well-educated people whose incomes increase on average seem to have brighter lives compared to people who have not received higher education. The author's hypothesis is supported by Stefan Fölster's book Robotrevolutionen (2015), who claims that the overall impact of automation on wage formation over the past 20 years can strengthen the author's description. According to Brynjolfsson and McAfee (2013), the overall pie of the economy is expanding. However, for most people, the impact of technological progress can be called a negative correlation. Technological changes will have an increasing impact on individuals and organizations, and these changes may lead to a more polarized labor market. Brynjolfsson and McAfee (2013) and Fölster (2014) both show that the income gap in most countries seems to have widened, and if this trend continues, it should be a cause for concern. However, Bergström and Roine (2016) responded to this suspicion by calling it excessive alarmism. Point out that automation has not led to the exclusion of labor and has no clear connection with the widening of the income gap. Instead, their focus is based on the assumption that Sweden’s rising wages are evenly distributed, and these differences cannot be systematically linked to the extent to which tasks can be automated. However, they do not rule out that technological change may be one of the main forces explaining the widening gap in Sweden. Several authors are describing structural changes in the labor market. According to Autor and Dorn (2013), today's workforce is moving in two different directions. The labor force is moving away from regular occupations with medium wages, and these employees are turning to low-wage service labor. This trend is becoming more and more obvious. Autor and Dorn (2013) describe this situation by explaining that the manual tasks of service work cannot be easily automated. This is because some of these jobs require physical adaptability and a higher degree of flexibility. Related to this, Frey and Osborne (2013) and Manyika et al. published articles. (2017), discuss the adaptability of service professions and the impact of automation on these sectors as mentioned earlier. In addition, the cashier in the retail industry is a highly routine occupation with clear instructions on how to operate. Read Less