Universal Job Losses & Universal Basic Income

Sep 02, 2020
5 min read

Adopting AI and robotics in industries is one of the biggest steps towards a better and faster world. It marks the start of a new digital era, which will offer much higher profits and efficiency.

However, no innovation comes without a cost, and in this case, it's the job losses. The following post will tell you more about this part and discuss strategies that may help deal with it.

Automation And Job Losses

Automation and application lack basic human instincts. They don't need rest, food or break during their work. These systems never get sick or distracted from their work.  You can run them continuously for days, and they will provide you the same quality and speed of work. Therefore, a simple machine can replace multiple employees in the industry.

For instance, say that you own a gear manufacturing plant with 1000 employees working in it. Each of these employees will have expertise in only one or two particular sections. Hence, you will have to create a proper timeline and work schedule to get results. You may also have to set a different department to manage the process. Each of these steps will add cost and time required for manufacturing, which will directly affect your profit.

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Now let's remove the manual work and add automated CNC to this scenario. This machine will have a tool crib that will allow you to perform all the necessary manufacturing processes at the same spot. It will work faster than the manual device and eliminate the time to spend on task planning. The machines also don't need any management or quality analysis team. One operator and maybe one helper will be enough for one machine. So, you only need half of the employees, and you still get the same profits as before. The bonus point is that it's a one-time investment. You don't have to pay it monthly. Isn't this method better than hiring humans?

Well, it is, and that is the main reason why most of the industries are moving towards it, leading to unemployment. The studies by the oxford university involving 702 occupation groups reveal that 47% of US workers' jobs will be automated by the next two decades. Another study by Bruegel presents somewhat the same result for Europe. The study reveals that 54% of EU jobs are at risk of computerization. The researchers at OECD (Organization of Economic Cooperation and Development) also support the stats. They say that more than 14% of jobs are automatable, and another 32% are at risk.

48% of the experts at a Pew Research Centre study involving 1896 experts also stated the risk of automation. The study established that robots and digital agents would replace a considerable number of blue- and white-collar workers by the next few years.

Is There a Solution?

The present estimates of automation and its rising stats make it clear that it's the future of industries. There is no obvious way to stop it, but you can't exactly let it go. If the governments and industries don't find solutions for it, millions of employees will have to suffer poverty. It may even become difficult to sustain even the basic need for life. Therefore, some states came with the concept of UBI or the universal basic income.

It was a no-strings-attached program that focused on providing a certain amount to all members of society. This program aims to ensure that everyone has enough money to at least afford their basic needs. It's like a monthly payment system from the state government side. Each payment will be unconditional, recurring, and guaranteed for life (may differ according to government and conditions).


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Some of the countries have also started taking steps to introduce UBI for their people. Countries like Finland have even begun to deploy and test the concept. Its government studied people's conditions and selected the ones that have been suffering due to low jobs and incomes. The government has been providing these selected candidates with 560 Euros per month for the last two years. There have been some controversies over the concept as many believe that a fixed income will make people lazy, but it's proving beneficial. This income has provided stability to many students and unemployed struggling with their basic needs. [1]

Kenya has also started a similar experiment program to test the efficiency of Universal Basic Income. Their researchers plan to partner with GiveDirecty to evaluate the villages for the experiment and study its effects. Presently, they have created four categories for the regions for this experiment. The first category is the Comparison group and will include villages that won't get any payment. The second group is the long term UBI and includes villages that get paid for the next 12 years. The next category is the Short-term UBI with the eligibility of 2 years and Lump-Sum UBI with one $500 per adult payment. The payment started in 2018 and is still running using mPesa apps. GiveDirectly plans to run it for some time and conduct surveys every 3-5 years to analyze the results. [2]

Another country that will soon start using the UBI system is Spain. Its government has planned this experiment in the wake of the recent Covid-19 outbreak that has affected the country's finances. Spain has a 3-35 billion euros budget for the UBI program and will provide financial help for over 1 million families. Spain plans to set criteria for categorizing people according to their annual income and asset for finding the once eligible for the UBI payment. The economy ministers also stated that if the experiment proves useful, Spain may consider its permanent affiliation. [3]

Therefore, it's possible that by the next decade, your country will also introduce this scheme for combating job losses due to automation.

Is Your Business Ready?

The UBI is a government scheme and doesn't seem like a big deal for business, but it is. The scheme will affect the whole market in the coming time and may cause the downfall of many prospering companies.

Think of it like this, the student, the unemployed, and struggler who never had an income now have a fixed source. They don't need to search for jobs anymore, which means they have enough time to plan businesses. Your market competition might increase to a great extent. It also means that most people will prefer to start their own businesses over jobs. Therefore, wages for workers may rise.

On the bright side, since everyone will have a reliable income, they would not be interested in saving. People will spend more and invest more. It can mean a huge difference for your business, provided you are ready for it. You will need more innovative products and better work culture. Employing better marketing trends and investing or potential future start-ups may also come in handy.

Final Words

Automation has entered almost every field of work and is influencing the market to a very great extent. It has replaced a considerable number of human workers and will cause job loss for many. However, the world is not helpless against this rising trend. The government schemes like UBI can combat it.

However, the trend is new and has a lot of different aspects that are still unsolved. It will also cause a massive change in the global market. So, be prepared for the change that's coming.