Many words come to mind when thinking about how the COVID-19 pandemic impacted the economy, but perhaps chief among them is uncertainty. The manifestations of this were everywhere—unemployment spiked, the stock market crashed, and speculation on securities ran wild.
A less-appreciated outcome of economic upheaval and uncertainty is the corresponding increase in automation. As many people started working from home, lost their job, or altered their work to account for pandemic safety, businesses were incentivized to accelerate the automation of particular tasks. This is not an entirely new phenomenon—spikes in the number of automated positions during recessions have been observed for some time; the same occurred during the pandemic, but probably to a larger extent.
For several reasons, many of the industries that were most at-risk for pandemic-related disruptions—those that relied on face-to-face interactions—are also those with the most positions that can be easily automated. Investments in automated processes have rapidly climbed in the hospitality, retail, and manufacturing sectors over the last year as robots and algorithms offer an alternative to human workers.
Some observers have expressed excitement over these changes, such as Katy George, a senior partner at McKinsey. She expressed her opinions on the increased rate of automation during the pandemic to the New York Times: “For the first time, we’re seeing that these technologies are both increasing productivity, lowering cost, but they’re also increasing flexibility. We’re starting to see real momentum building, which is great news for the world, frankly.”
There does not appear to be a consensus on whether these trends will continue, accelerate, or slow down once the pandemic begins to fade. Some reports suggest it will be some time before we can tell if these changes are permanent. Others suggest that the uncertainty driver will eventually fade away, reducing the scope of the problem.
One report on the retail industry’s plans for automation shows that more than 60% of retailers, and nearly three-quarters of large ones, have “a clear, executable, and budgeted” automation strategy as of this year. According to Josh Baylin, Senior Director of Strategy at Brain Corp, this is a direct effect of the pandemic, and the shift towards automation will accelerate. “The global pandemic brought the value of robotic automation sharply into focus for many retailers,” Bayline wrote, “and we now see them accelerating their deployment timelines to reap the advantages now and into the future.”
An International Monetary Fund working paper also suggests that fears of some jobs being permanently automated as a result of COVID are perfectly justified. Its authors suggest that policymakers should begin dealing with the adverse effects of this now. Meanwhile, a World Economic Forum survey from last year suggested that as many as two-thirds of business owners still expect things like upskilling and reskilling of workers to generate a positive return on investment, though they’re concerned about when that return will materialize. Despite current conditions, the value of human capital is still high. However, the same report mentions that more than 40% of businesses expect to replace some workers with technology in the near term.
Most automation increases have been in industries that were susceptible to pandemic-related uncertainty, and with positions that were already considered candidates for automation pre-pandemic.
According to the previously mentioned reports, these highly automatable jobs are disproportionately held by women and racial minorities. This is concerning for many reasons, and should put additional onus on employers to sustain a diverse workforce. Many of these positions are also on the lower end of the pay scale, and increased automation will potentially lead to an increase in social inequality as fewer jobs exist for lower-wage earners.
Concerns about the Delta variant make predicting the future all the more difficult, and it may prove safest to presume that the eagerly-anticipated end game of the pandemic is still some ways in the future. The silver lining here is that automation can offer certainty in the face of this pandemic when humans cannot.
