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Can CEOs Deal with the Challenge of Automation’s Impact on Job Creation?

It is not just the auto industry that finds itself in the cross hairs when it comes to job creation and destruction.

istock-498855436-compressorAt the recent Consumer Electronics Show in Las Vegas, Intel’s CEO Brian Krzanich responded to a question about automation and AI by saying, “I have this belief that technology drives transformation—it actually creates jobs.” Talking about overall net employment gains and losses, he said, “it rarely ever eliminates jobs.”

Ford CEO Mark Fields cautioned, however, that, “there’s going to be a lag effect here.” Fields was responding to a query about autonomous trucking displacing human truck drivers.“They could be trained for lots of different things, but are they going to be trained as data analysts, things of that nature?”

Fields said that, ultimately, technology creates more jobs, but during the transition, people will be displaced, and “they’re going to be vocal about it. I think we as a society are going to deal with that, because the last thing [we need] is for society to turn against technological innovation. That would be disastrous.”

“The last thing [we need] is for society to turn against technological innovation. That would be disastrous.

Labor market experts disagree about how many American jobs will be lost to automation. A 2013 report by Oxford University researchers concluded that about 47 percent of total U.S. employment is at risk because of automation. A 2015 report by McKinsey & Co. forecast that automation could eliminate as much as 45 percent of work activities currently performed in the U.S.
Forrester Research predicts that robots—all forms of automation, machine learning and intelligent machines—will replace 16 percent of American jobs but will create the equivalent of 9 percent of those jobs by 2025. That would represent a net loss of 7 percent of jobs.

CEOs have become acutely aware that the loss of jobs was a particularly hot issue in the 2016 elections. Labor market experts point to automation and globalization as the primary reasons for jobs being eliminated or shifted overseas. For decades, employers have hired young people and trained them to do a particular job. Today, however, employers are expecting job applicants to be better prepared for jobs with highly technical requirements.

The problem is that young people entering the workforce are often ill equipped with the required skills. “Educational systems can’t turn on a dime,” Mary V.L. Wright, senior director of national career education advocacy group Jobs for the Future told SHRM, but “employers can help colleges figure out what the competencies are.” While some local and regional job training partnerships involving employers have shown great promise—and apprenticeships are drawing increasing interest from employers—the best programs are not large and widespread enough to make a big dent in the ranks of the unemployed.

In his blog Anant Gupta, CEO of HCL Tech, an Indian IT services firm, sounded an optimistic note saying that most business leaders will find a way to forge “ an up-placement – of the workforce. At every stage, there has to be a sharp focus on reskilling of people, to not just move successfully into the next level, but to effectively fill all the new related jobs that will be created within each scenario. This is not wishful thinking but reality, as discovered in a study at the London School of Economics, which looked at the impact of industrial robots on manufacturing in 17 developed countries. They found no evidence that the robots reduced total employment. While robots did seem to replace some low-skill jobs, their most important impact was to significantly increase the productivity of the factories, creating new jobs for other workers.”

About J.P. Donlon

J.P. Donlon
JP Donlon is the Editor-in-Chief of Chief Executive magazine.