Briefing: October 15, 2014

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Skills shortages drive workforce automation

When Henry Ford designed the first moving assembly line in 1913, it was at once groundbreaking and terrifying. If machines could do most of the work, what would happen to all the people who used to do those jobs?

While the cause may be different, the circumstances today are the same. Companies are turning to machines and robotics to do jobs once done by people. But often the primary driver is not greater efficiencies, but because they can’t find enough suitably skilled people to do the work.

With greater numbers of professionals opting to work as contractors, costs are rising — fast. Sourcing workers from abroad can be expensive and there is also increasing competition for those resources. A logical solution for companies is looking at ways to streamline their production. The most obvious of which is to invest in increased automation; with a single upfront cost, the cost of maintenance, and no loss of productivity through training, while giving companies the ability to operate 24 hours a day.

As the chief HR officer for German car manufacturer Volkswagen, Horst Neumann, recently wrote in newspaper Süddeutsche Zeitung, over the next 15 years, an estimated 32,000 workers will retire and there are not enough young people to replace them.

Neumann noted labor is more than €40 ($50.70) per hour in the German auto market and €11 ($13.94) in Eastern Europe, but in China, it's still less than €10 ($12.67). He went on to note a “robotic replacement for assembly work currently costs around €5 ($6.37) an hour. Predictably, next generation robotics will be even cheaper. We have to take make the most of this price advantage."

The world of work has changed numerous times; from rural agriculture, to industrial revolution, to technological evolution, to the online workforce. With every shift there have been naysayers and doomsday prophets. Yet the world of work had adapted and survived.

For more information on the impact of artificial intelligence and robotics on the staffing industry, click here.