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Could smart factories of the future make humans redundant?

One of the greatest threats to jobs around the world is automation - smart factories of the future. Germany’s ‘Industry 4.0’ initiative promotes the computerization of traditional industries such as manufacturing, as do many government initiatives around the world. While some praise the idea of “intelligent manufacturing”, tech leaders have spoken out in support of a universal basic income (UBI) to avoid technology companies being perceived as job destroyers.

In 1962, the first industrial robot made its debut as ‘Unimate’ which came online at General Motors in New Jersey. Since then, the manufacturing industry has changed drastically. In the 1990s, production robots were lined up in factories piecing together products across assembly lines in a painfully repetitive process. Now, the manufacturing industry is going through the first stages of adopting artificially intelligent robots that can make production decisions in real time.

How does real time artificial intelligence work in manufacturing? The technology enables sensors to spot defects in production. When a defect is detected, the data is fed to a computer system in the cloud, which can then immediately remove the defective part of equipment from the production line and order a replacement. This efficient real time problem solving can save manufacturers billions of dollars in repairs and recalls.

Jeff Immelt, chairman and chief executive of General Electric (GE), says manufacturing and industrial companies “need to become digital to survive.” Immelt believes the manufacturing industry must “turn information into insights and into outcomes.”

The advantages of smart manufacturing are clear: it enables industrial product companies, for instance, to keep their inventories as lean as possible to reduce costs and keep stock on-hand for when needed. Germany’s Industry 4.0 initiative defines smart factories as being characterized by adaptability, resource efficiency, and making great use of wireless connections, sensors and big data.

5G, expected to be commercially deployed by 2020, will play a major role in connecting production line robotics by providing high-performance mobile services, says Ericsson’s recent report ‘The 5G Business Potential’. The manufacturing industry, it says, shows a strong market potential for ICT players.

The use of 5G in smart factories could offer “extensive benefits to manufacturing processes,” the report adds. “Connected cameras and sensing devices can, for example, provide feedback to control centers enabling skilled staff to control and steer manufacturing remotely, resulting in increased productivity and flexibility.”

Industry digitalization investments are growing, according to the report, generating revenue for ICT players worth an estimated US$3.3 trillion by 2026. In a nutshell, the manufacturing industry is entering a new digital intelligent era. Smart manufacturing aims to take advantage of advanced information and manufacturing technologies to enable flexibility in physical processes to address a dynamic and global market.

There will need to be increased workforce training for such flexibility and use of the technology rather than specific tasks as is customary in traditional manufacturing, according to experts. Many fear that smart manufacturing will become so advanced that the need for humans in the workforce will diminish.

“There is going to be a backlash when it comes to jobs,” said Sayantan Ghosal, an economics professor at the University of Glasgow speaking to CNBC, who has written about how unemployment could rise once AI is rampant in the workplace. Ghosal has spoken out in support of a universal basic income to support people who are affected by the digitization of industries such as manufacturing.

The pace of development of artificial intelligence software has “surprised” even top executives such as Sergey Brin, the co-founder of Google. The rapid growth of automated services and “intelligent manufacturing” has led many leading figures in the technology community like Brin to support the idea of a UBI.

At the World Government Summit held in Dubai this year, Tesla chief executive Elon Musk said a UBI would be necessary. “There is a pretty good chance we end up with a universal basic income, or something like that, due to automation,” he said. Echoing Musk’s prediction, Marc Beioff, chief executive of Salesforce, has warned that AI could create “digital refugees”.

The technology industry is becoming more aware of its role in driving automation and job displacement, according to experts, and technology companies do not want to be the punching bag for workers who are made redundant because of technology advancement. But it is still unclear how a basic universal income could work.

There have been suggestions that every government could pay its citizens a monthly sum to get by. However, this could backfire because it would only provide a bare minimum for living, and workers would still try to seek out higher standards of living by working. Another potential avenue for a UBI is through a sovereign wealth fund, where governments would take an equity stake in all of the major publicly listed companies in the country and pay citizens money from the investments.

Bill Gates, the founder of Microsoft, has floated the idea of a “robot tax” as a way for governments to generate more income for displaced workers in the future. In an interview with Quartz, Gates said, “If a human worker does $50,000 of work in a factory, that income is taxed. If a robot comes in to do the same thing, you’d think we’d tax the robot at a similar level.”

Faced with the potential job losses automation could bring, governments are finding themselves at a tricky crossroad. On one hand, alarm bells have been sounded, warning of the potential layoffs the role of robotics could cause. But on the other hand, automation has been a major driver of efficiency in manufacturing and other complex industries.

Information from the Bureau of Labor Statistics in the United States shows that manufacturing jobs increased in the country between 1994 and 2000. After that period, manufacturing jobs spiraled downwards – a loss of five million jobs in the intervening years. However, productivity during that period increased.

IDC’s ‘FutureScape: Worldwide Robotics 2017 Predictions’ report says almost one-third of robotic deployments will be smarter by 2018, capable of collaborating with other robots and working safely alongside humans. What’s more, the report predicts that by 2019, governments around the world will have drafted or implemented specific legislation for robotics and safety, security and privacy. However, the World Economic Forum predicts that automation will result in the net loss of over five million jobs across developed countries by 2020. Another study, conducted by the International Labor Organization, states that as many as 173 million workers across Southeast Asia are at risk of job displacement by robots, which are predicted to become prominent in the manufacturing of clothing.

Now that the evolution of technology is advancing at a faster rate than it ever has, governments, companies and experts are left to weigh the benefits of automation (efficiency, increased profits) against the disadvantages (mass job losses). Should jobs be sacrificed for the efficiency that technology can bring?